Colombia’s Oil Industry Faces an Existential Crisis

Core Insights - Colombia has not made any world-class oil discoveries exceeding 500 million barrels since the early 1990s, with the last significant find being the 1.1-billion-barrel Caño Limón oilfield in 1983 [1] - The country faces considerable risks due to its dependence on hydrocarbons, with petroleum being its top export, generating $15 billion in 2024 and accounting for about 10% of fiscal revenue [2][5] - Proven oil reserves have sharply declined from over 2.4 billion barrels in 2013 to just over 2 billion barrels in 2024, with a short production life of 7.2 years [4] Exploration and Discoveries - Major oil discoveries have been rare in Colombia over the past 20 years, with only two significant finds exceeding 200 million barrels [3][6] - The lack of new discoveries has led to speculation that the industry is in a "death spiral," exacerbated by President Gustavo Petro's policies to reduce fossil fuel dependence [5][7] Regulatory Environment - President Petro's administration has imposed a ban on hydraulic fracturing and halted new oil exploration contracts, contributing to declining energy investments [7][9] - Tax hikes on the oil industry have further burdened companies, with additional levies imposed based on international oil prices [9][10] Foreign Investment Trends - Foreign direct investment (FDI) in Colombia has significantly decreased, with 2024 inflows totaling $14.1 billion, down from $16.8 billion the previous year [11] - Investment in the energy sector has also declined, with only $2.3 billion received in 2024 compared to $3.1 billion in 2023 [12] Future Outlook - There are signs of a potential uptick in foreign investment in the oil sector, with $1.5 billion invested in the first half of 2025, but ongoing geopolitical tensions and regulatory challenges may hinder sustained growth [14][15] - The urgency for Colombia to discover new oil reserves is heightened by declining production and the global shift towards renewable energy sources [15]