2020 Petroleum Exploration & Production In Colombia Expected To Increase By 23%

Today the Colombian Petroleum Association, (ACP for its initials in Spanish) presented their report on investment trends in exploration & production (E&P) for 2019 and their outlook for 2020, consolidating information from the 26 most important petroleum companies in Colombia, representing 94% of the country’s production.

According to ACP, the investment in E&P is expected to reach $4.97 billion USD, 23% higher than in 2019. The investment in exploration is expected to be between $920 million and $1 billion USD, 18% higher than in 2019. 70% of investment attention will be directed towards terrestrial projects and 30% destined for offshore activities.

• The investment in exploration for 2020 will be 18% higher than in 2019, representing an increase of 25% compared to the previous year.
• Potential gas fields lead the increase in projected exploration.
• The investment climate was rated between acceptable and good. Political stability, geological prospects and contractual aspects leaning favorable.

“To be able to materialize these investment projections, it is important that Colombia maintain political stability, continue advancing in contractual and fiscal aspects, work on improving environmental conditions and reducing processing times and transportation costs. This will allow us to catch up with other countries that are now taking the lead, because while in Colombia the investment in E&P fell in 2019, international projections estimate that in the rest of the world it grew approximately 4%, ”said Francisco José Lloreda Mera, president of the ACP (pictured above).

Production activity during 2020 should be valued, according to the report at $4.05 billion; 25% higher than in 2019. 53% of those resources will be towards drilling, and 15% to improved recovery, making up 19% of Colombia’s current production. The remaining amount will go to production facilities and other needs.

Gas exploration should be at approximately $300 million USD, or 1/3 of the projected total spend. $340 million USD will go into natural gas production, or 8% of the total production budget.

• To view the report (in Spanish) click here.
• To view the associated presentation (in Spanish) click here.

Though exploration and production expenditures decreased 7% in 2019 compared to the previous year, greater efficiencies in production meant that actual production held stable.

The ACP estimates that 2020 oil production will be approximately 890,000 barrels per day, up 1% over 2019, and commercial gas production will be roughly 1.09 billion cubic feet per day, or 190,000 BoE (Barrels of Oil Equivalent). 90% of the production will be in Colombia’s Eastern plains, the Middle Magdalena region (near the Barrancabermeja Refinery), and Caguán-Putumayo.

“Companies are focusing their investment efforts on sustaining production at the levels we had in 2019, avoiding the natural decline of the fields. If these investments were not made, the report indicates that the production of crude oil would fall to values ​​close to 730,000 barrels this year, hence the importance of continuing to boost the dynamism of the sector, overcome internal obstacles and be more competitive against the behavior and conditions of the industry in the rest of the world,” said Lloreda Mera.

According to the ACP, Colombia’s political stability compared to other jurisdictions is the country’s primary advantage, though stoppages and protests that took place last year do create a climate of uncertainty. Environmental, social and security issues are the primary challenges to investment attraction. The country’s geology remains very promising, with a prospect of significant additional finds.

In the report, the ACP calls for a continuation of collaboration between the industry, communities and the government to make operations in the regions of Colombia feasible, advance contractual reforms, and encourage new investments.

Photos courtesy ACP