The dollar rises to record highs in Colombia, uncertainty continues in the oil markets

The stock market has not reacted positively to the economic proposals of the elected president of ColombiaGustavo Petro, especially on the issue of energy transition and in the face of uncertainty in the world market due to a threat of global recession, analysts say.

The dollar rose to record highs in the first two weeks after the triumph of Petro, who proposed not to hand over oil exploration and production contracts. At the close of trading on Tuesday, the price of the dollar stood at 4,265 pesos, the highest value in the country’s history.

For the executive director of the Foundation for Higher Education and Development (Fedesarrollo), Mauricio Santamaría, Petro’s proposal is a very strong blow to the Colombian economy.

Petro’s proposal is not to award any new oil exploration and exploitation contracts, and to follow up on the current ones (180) so that the Colombian economy does not depend on oil exports. The president-elect considers that the energy transition in Colombia to renewable energies should be carried out in 10 years.

“Although Petro’s proposal includes maintaining the contracts [petroleros] current, these revenues will not be enough if exploration does not continue. It will not be possible for these resources to be replaced in 10 years, and therefore there is no way that this proposal can be carried out,” Santamaría said.

Alejandro Martínez, former executive director of the Colombian Petroleum Association (ACP) and today director of Gasnova, a union of propane gas distribution companies, assured the voice of america that “not allowing oil exploration in the country is a decision that would have very strong implications for the national economy.”

“That would force us to have to import hydrocarbons to supply Colombia’s needs and today the oil industry is an important part of the country’s exports, foreign exchange earnings and also the state’s tax revenue,” he added.

This would translate into lower income for the government and therefore a greater need to increase taxes or public debt. For consumers it would be very difficult because it would force up the price of gasoline, diesel, natural gas and liquefied petroleum gas (LPG), which is sold in cylinders, he added.

“To the extent that exploration stops and there are no new discoveries, the supply for the country would drop and imports would have to be made, which would be reflected in an increase that would affect the pockets of Colombians,” he added.

For the former president of the National Hydrocarbons Agency (ANH) Luis Miguel Morelli, the proposal to suspend the execution of new exploration and production contracts, as well as the reduction in the near future of oil production and exports, is an “economic suicide”. for the country.

“Colombia needs these hydrocarbon resources, since with these royalties a great social investment is made in the regions, in the departments and in the municipalities of our country,” he added. “Colombia has one of the six cleanest energies, because it comes from a hydraulic matrix that generates that clean energy for Colombia.”

“It is important to recognize that not only do we have clean energy and that we are already in that energy transition, but that argument related to the pollution that the extractive industry brings, particularly hydrocarbons in exploration and production, there is no such environmental impact. negative that cannot be controlled or mitigated,” he said.

Oil will continue to be important

Alejandro Useche, an economist at the Universidad del Rosario, said that the Petro government will not be able to “stop oil exploration or export overnight.”

What Petro is proposing, Useche said, is “a change of orientation in what refers to the dosage of exports and in the face of internal oil consumption.”

“There is a very large number of deposits that are going to continue to be exploited and that production will depend on consumption, on the internal and external demand for Colombian oil,” he assured.

The energy transition “will be gradual,” he told VOA the president of the Colombian Oil and Gas Association (ACP), Francisco José Lloreda.

Meanwhile, the Colombian Association of Petroleum Engineers (Acipet) said in a statement that it invited Petro “to dialogue with the hydrocarbon industry, one of the most important in the country, with the sole purpose of working for the well-being of all Colombians, through a process of responsible energy transition”.

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