President Petro is Killing Colombia’s Oil Industry

Core Insights - Colombia's hydrocarbon output is experiencing a significant decline due to a lack of new discoveries and increasing decline rates in mature oil and gas fields, with no world-class oil discoveries since the 1990s [1] - The country's oil production has dropped to multi-year lows, with foreign energy investment decreasing sharply due to regulatory reforms implemented by President Gustavo Petro [5][6] Production Decline - In January 2026, Colombia lifted an average of 746,444 barrels per day, which is 3% lower compared to the same period a year earlier and a significant drop from 985,671 barrels per day in January 2016 [3] - Commercial natural gas output has also seen a decline of 16.7% year-over-year, with only one oil discovery exceeding 200 million barrels since 2010 [2][1] Regulatory Impact - Petro's reforms, including tax hikes and a ban on hydraulic fracturing, are deterring foreign investment, leading to a collapse in oil production and a looming fiscal crisis [4][5] - Several foreign oil companies have reduced spending or exited Colombia due to the uncertainty created by these regulatory changes [6] Fiscal Challenges - The fiscal deficit is projected to reach 8.1% of GDP in 2026, exacerbated by falling fiscal income from the oil sector, which has decreased from 11% in 2019 to 7% in 2025 [7][9] - The oil industry's contribution to GDP has declined from nearly 4% a decade ago to just over 2% by the fourth quarter of 2025 [9] Investment Shift - Higher oil prices are unlikely to benefit Colombia's economy due to the unfavorable investment climate, with foreign companies redirecting investments to more profitable regions like Guyana [11][12] - ExxonMobil has exited Colombia in favor of operations in Guyana, where it has secured favorable terms for oil production [12] Future Risks - The ongoing decline in hydrocarbon output poses risks of a natural gas shortage, which could impact the stability of Colombia's electricity grid and exacerbate the fiscal crisis [13]