Sectors where most oil contracts have been terminated

In the first months of the year The oil industry has a tough dynamic Because of announcements to withdraw from exploration and production contracts they had bought in previous years.

(See: Ecopetrol: Why tax and other factors ended record profits).

A situation that generates warnings because of the impact on regions that have oil, even if they are not major producers A major contribution to their economy and employment, It also generates important resources for national and regional public funds.

Announcements from Emerald Energy, Geopark, ExxonMobil and Frontera They have revealed persistent problems in the regions and difficulties in making the process successful in these agreements. These have announced suspension or termination of contracts in major sectors Pudumayo, Santander and Caqueta.

This year, according to the data National Hydrocarbons Agency (ANH), A cancellation of the contract is sought. That is, in the first five months, when there were nine requests, 11% of the total seen in 2022 has been requested.

(See: Ecopetrol Profits Plunge 13.9% in Q1 2023).

Additionally, like Emerald Energy, contracts under suspension were also included, after a series of serious public order incidents including the kidnapping of 79 police officers and the death of one of them, a letter was filed with the ANH. Requesting suspension of the Ombú constituency in Caquetá, In 2022 the Capella field produced 1,939 barrels per day.

Minister of Mines and Energy Irene Welles said:We have always entrusted in all cases of conversation to the person who directly discovers what is going on; I myself had a meeting with the company orders to understand what they were willing to do. Unfortunately, this has escalated and it is the responsibility of the government to achieve a negotiation that allows peace to be restored at this time.”.

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After this happened, it was also known that ExxonMobil would give up its operation VMM-37 Agreement, After reaching an agreement with Cintana Energy, it had a joint venture agreement with it to undertake the operation.

This means that the decision is voluntary The oil company no longer has any contracts in the country. The four he was now with were being fired or he quit the operation.

Latin American oil major Geopark has announced it is pulling out of six of its contracts. Innovation, 12 in the sector. Of these processes, four were started in the Duke’s government, although none reached production. The company announced that the three terminated contracts were due to force majeure. Of the six, two are under analysis and two have already been liquidated.

Finally, Frontera is also in the process of canceling two contracts that have been suspended for two years.

(See: Challenges of ESCAPE Agreement for National Oil Industry).

These are located in Caguan Blocks 5 and 6, Putumayo and according to the oil company’s Vice President of Public Affairs, Andres Sarmiento, They have been in conversations with ANH, showing evidence of safety issues to build them.

According to data from the Colombian Petroleum Association (ACP), from 2016 to 2022, conflicts in the regions have quadrupled and the highest concentration is in the sectors. Santander, Meta, Casanare and Pudumayo, They got 67% of the votes.

This is not small, because in Arauca, Santander and Putumayo alone, the 123,048 barrels per day produced in the first quarter of the year is 16% of the national total.

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In other words, Daily sales are at least $8.6 million People who are at risk of infection if security conditions continue to increase.

Luis Fernando Mejia, director of FedExarolo, said oil activity has a high impact on regional development, through financial resources, royalties derived and the creation of formal jobs. “Results from previous studies show that oil fields and municipalities have high growth and high urban and population growth. In addition, positive impacts were found on the coverage of indicators such as education, health insurance and development of the agricultural sector.“, he said.

(See: ANH to promote gas and oil exploration in already signed agreements).

For his part, Francisco Jose Loreda, president of the ACP, gave the assurance Companies are committed to moving business forward They are focused on carrying out existing exploration and production contracts and not leaving the regions.

However, the director pointed out that “Social conflicts have intensified and the length of the current government based on sanctions has increased. Apart from the above, great commitment will be required from the Ministry of Environment and Ministry of Home Affairs and the Department of Advance Consultation so that these projects can complete their process effectively.”. Loreda points out that even if the government tries to reactivate the suspended contracts, there are areas where it is very difficult to open the door and start operating.

Petroleum barrel


Areas with high royalty

This has been found in a study conducted by the Financial Observatory of Javeriana University The municipalities of Bezeril and César allocate large amounts of individual royalties; Porto Gaitan, Meta; New Castile, Meta; Tauramena, Casanare and Cantagallo, Bolivar.

See also  Official Bulletin of the Argentine Republic - Ministry of Economy Undersecretary of Hydrocarbons

(See: Are there contradictions in Petro’s talk about oil?).

The capitation allocation for 2023-2024 is $13 million to $4.7 million. It should be remembered that Congress approved a royalty budget of $33 billion, of which $29.1 corresponds to investment. Monitoring calculations show that Puerto Cayón, with an allocation of $518 million, is the municipality receiving the largest amount of resources, followed by Beceril at $270 million and Castilla La Nueva at $118 million.

Daniela Morales Soler
Journalist portfolio

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