The ACP report has been prepared based on investment budgets and perception of the investment environment for the industry, provided by the companies which account for 96% of oil and gas production and 82% of the exploration. Reuters

There Colombian Oil and Gas Association (ACP) presented the economic report “Investment trends in oil and gas exploration and production (E&P) in Colombia 2022 and outlook for 2023”. This is the ninth edition of this annual study which also includes an analysis of the global and country investment climate.

The document reveals that investment in exploration by 2023 will be USD 1,240 million, 4% less than in 2022 when it reached 1,290 million dollars. Indeed, despite the fact that the public company’s investment in exploration will increase, that of private companies, according to estimates, will be between 650 and 700 million dollars, or 33% less than in 2022.

“The decline in exploratory investments by private companies is mainly due to uncertainty. The increase in Ecopetrol exploration would be due to the search for reserves, with an emphasis on offshore,” said ACP President Francisco José Lloreda.

The report highlights that investments in natural gas continue to grow in importance in the budget of exploration. By 2023, it is expected that they will be $740 millionwhich represents 60% of the total exploration budget and shows the value of developing this resource.

In off the coast (at sea)whose main activity is gas, investments are planned for $280 million. Likewise, the drilling of a well is planned, continuing the evaluation of the wells drilled in 2022 and carrying out preparatory activities for the drilling campaigns planned from 2024.

According to the study, the The Caribbean region will continue to be the main beneficiary of exploratory investments in 2023 with $485 million. 58% of investments in this zone will be made offshore and the rest onshore. Besides, 61% of the investment will be executed in the Caribbean whose objective is the search for natural gas.

“Investments in gas have been increasing for several years. It is a clear sign of the industry’s interest in turning to primary energy sources which, in addition to being clean, are called to be the transmission belt of the transition,” said Lloreda.

The total investment in production in 2023, it is estimated at $3.810 million, an increase of 6% compared to 2022 ($3,590 million). These investments will be allocated as follows: 52% to drilling development wells (to produce more oil and gas), 25% to production facilities12% to assisted recovery projects and 11% to other activities.

It is expected that the oil production by 2023, it will be 770,000 barrels per day (b/d)16,000 bpd more than the average production of 2022. And in gasa gas production potential of 1,183 million cubic feet per day (mcfd). The department of Meta will continue to be the largest recipient of production investments with $1,859 million, followed by Casanare (USD 754 million), arauca ($325 million), Santander ($143 million), putumayo ($126 million); among other departments.

According to the survey of private companies affiliated with the CPA, the largest tax burden approved in the tax reform generated a decrease in the 2023 investment budget of around $370 million. Of these, $170 million corresponds to a drop in exploratory investments and $200 million less in production investments.

“Some companies have seen the need to reduce their investment budget in exploration and production to comply with the tax reform, which is unfortunate since we are talking about very important resources that the country needs,” said the President of the ACP.

The E&P Investment Trends report also presented the results of the investment climate survey, to which 14 private sector companies responded, which analyzes the main strengths and weaknesses for investing in the country. Their main conclusions are as follows:

  • Advantages of the country for investing in E&P: An interesting prospect, the announced respect of the existing contracts and the support offered by the national government to carry them out and favorable expectations for the supply of natural gas in the years to come.
  • Weaknesses to investing in E&P: The fiscal changes that make the country less competitive, the uncertainties related to public policies and gas – including the announcement not to sign new exploration and production contracts and, finally, the growing risks in terms of social conflicts and of security.

It should be noted that, for most of the companies, no aspect was valued as an improvement, but on the contrary, 100% of the respondents declared that the tax conditions had deteriorated and that 79% of the companies considered that regulatory and institutional security and political stability deteriorated sharply in 2022. Legal uncertainty, tax increases and political stability are weaknesses.

“Public policy signals will be decisive in improving the investment climate in the sector. For this reason, we reiterate the willingness of the hydrocarbon industry to work jointly with the national government, departments and municipalities and to continue to contribute to the dynamism of local economies, job creation and social and environmental development. of Colombia and its regions”, concluded the President of the ACP, Francisco Jose Lloreda.

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