Oil Majors Keen to Expand at Colombia Gas Blocks, Ecopetrol Says

(Bloomberg) -- International oil majors are pushing to expand production at natural gas projects off Colombia’s Caribbean coast, Ecopetrol SA Chief Executive Officer Ricardo Roa said in an interview.

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Companies including Petroleo Brasileiro SA and Shell Plc have expressed interest in increasing involvement in the deep-water gas fields that could eventually turn Colombia into an exporter of the fuel, he said at New York’s Bloomberg headquarters.

“We’ve let it be known, to the different market participants, our willingness to allow the entrance of new players, or existing players, in these exploration areas,” Roa said. “We’ve been incorporating and receiving a lot of interest in participating.”

Bogota-based Ecopetrol is focusing future investments on offshore gas in Colombia and a fracking project in the Permian Basin in the US, in the hopes of reversing declining oil and gas output. The first offshore gas production could start as early as 2027 and could grow enough to meet domestic demand for the power-plant fuel and even allow for exports. Ecopetrol is looking for other companies to help cover the investments needed to bring these natural gas projects on line, he said.

Petrobras and Shell didn’t respond to requests for comment.

President Gustavo Petro has stopped awarding any new oil and gas exploration licenses as part of a pledge to wean Colombia’s dependency on fossil fuels, which means oil companies will need to focus on developing the existing 11 offshore licenses. Roa said that Ecopetrol is looking into reviving onshore oil licenses that were previously abandoned by other operators due to issues including conflicts with local communities, which could help shore up the country’s overall production.

Wind Farms

After tapping bond markets twice this year, Ecopetrol has financed capital expenditures and short-term obligations for 2023, said Ana Milena López, the chief financial officer. Ecopetrol debt has returned nearly 5% this year, more than twice the average for Latin American corporate notes, according to a Bloomberg index.

The transition to producing more gas and renewable energy may open opportunities for its subsidiary Interconexion Electrica SA to eventually sell sustainable debt, she said. ISA already has peso-denominated green bonds.

Ecopetrol is looking to accelerate renewable energy production as part of its energy transition strategy. It plans to add 900 megawatts by 2025, up from the 1,300 megawatts it’s producing now for its own energy consumption. One of the options is taking over planned wind farms that Enel Spa and EDP-Energias de Portugal SA have decided not to carry out in Colombia, Roa said.

Enel announced in May it had suspended the construction of its Windpeshi wind project in La Guajira province due to conflicts with communities and that it would look to sell it.

--With assistance from Ezra Fieser and Maria Elena Vizcaino.

(Updates with CFO comments starting in 7th paragraph)

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