Colombia studies need for new oil and gas exploration as reserves dwindle, Minister Says

Colombia is studying the need for more exploration contracts after a report showed oil and gas reserves dropping, according to a senior minister. 

The government wants to lead a transition away from fossil fuels while limiting any negative impact on the economy, Trade Minister German Umaña said Thursday in a phone interview. 

“We’ll certainly take measures to ensure environmental sustainability, but also economic sustainability,” Umaña said, speaking from Washington where he was meeting with US officials to discuss the trend toward growing global protectionism.  

Gustavo Petro won the presidency last year pledging to phase out oil and coal. So far his administration has refused to issue any new exploration licenses, though some of his ministers have hinted that this policy could be modified. 

Colombia needs to take into account the importance that oil and gas still have for the balance of payments and the fiscal accounts, Umaña said. Oil and coal represented about half of Colombian exports in 2022. 

The government also needs to consider how sectors such as tourism are performing, to gauge how quickly Colombia can manage the transition, he added.  

Period of Hostility 

Trade with Venezuela is expected to rise to $1.2 billion this year from around $700 million in 2022, Umaña said. Business between the two neighbors is growing rapidly after Petro reestablished diplomatic relations as soon as he took office last year, ending a long period of hostility between Bogota and Caracas.

Venezuela was formerly a top export market for Colombian goods, receiving some $6 billion of products in 2008. But bilateral trade slumped as relations soured. Umaña says trade could gradually increase to about $4.2 billion by 2026.

“The biggest obstacle to the growth of exports is the demand capacity of Venezuela,” he said.

As long as Venezuela’s economy continues to grow, Colombia could boost exports toward the pharmaceutical, agriculture, auto, as well as metalworking, and steel sectors, which are vital for recovering Venezuela’s oil sector, he said.

Import Tariffs 

Colombia needs to protect some sectors against anti-competitive practices in developed nations, such as production subsidies, that make it difficult for Colombian products to compete, Umaña said. 

He didn’t say which sectors need protection, though Petro has often argued for measures to protect Colombian agriculture. In December, the nation imposed a 40% import tariff on clothing to protect its textile industry.