Oil outlook: why pre-pandemic production has not been achieved

The Ukraine-Russia conflict has had a series of global implications in various fields. One of the first impacts was on fuel prices, which rose sharply, as countries began to impose restrictions on oil exported from Russia. This has meant advantages for exporting countries, such as Colombia, which, according to the Ministry of Mines and Energy, sells about 60% of its production abroad.

(June, highest month in oil production since December 2020).

The market began to require crude from other latitudes to replace the production of the Asian country. At the time, President Iván Duque stated that Colombia could increase its production to alleviate this need. He even said that the country could reach a million barrels.

However, figures from the Ministry of Mines still show a lag in complying with this. In June, oil production reached 752,290 barrels of oil per day (bopd). This means that a level not seen since December 2020 was achieved.

“These results continue to show that the reactivation of the hydrocarbon sector is a reality. In these four years of government, we have managed to sign 70 new exploration and production contracts with investments of more than US$4,000 million and we have also managed to increase reserves, both oil and gas, up to 7.6 and 8 years, respectively,” said the Minister of the Ministry of Mines and Energy, Diego Mesa.

During the semester, the figure reached an average of 746,853 bopd. The data is an increase of 2.31% compared to what was generated in the same period last year, when it was 729,953. However, remains lower than the first half of 2020 and 2019.
Despite the affirmations of the Minister of Mines and Energy that this year they expected to return to pre-pandemic levels, the truth is that there is still a significant lag. Between January and June 2019, the daily average was 892,340, which is higher by 145,486 daily.

(In the first half of 2022, Ecopetrol exceeded profits for all of 2021).

However, the Medium-Term Fiscal Framework published in June projected a more conservative figure, which is below 800 kbopd. The official figure estimated on this is 755,000 bopd.

The Colombian Petroleum Association (ACP) expects a similar figure between 750 and 755 kbopd throughout this year.

Paola Gutiérrez, a researcher at the Externado University’s Department of Mining-Energy Law, explains that due to this government’s policy to encourage exploration and exploitation, it is possible that the figures will improve in the future.
The 70 contracts that Minister Mesa highlights will be able to improve reserves as well as total production. For his part, Gutiérrez assures that if the conditions of legal stability are maintained for the companies that are currently in exploration, they could mean discoveries and subsequent production.

In fact, the Fiscal Framework estimates that by 2023 the country will have better figures regarding the exploitation of this energy “associated with greater investment in exploration and production by 2022.” By 2023 it forecasts that the average will reach 810 kbopd and even in 2024 it will scale up to 855 kbopd.

gas production

The case of gas production is different. In the first six months of the last four years, production has increased gradually, only interrupted by a decrease in 2020.

In 2019, the daily average was 1,038 million cubic feet per day (mcfd). For 2022, the data reached 1,082 mcpd.

DANIELA MORALES SOLER
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