Inflation, Ecopterol and Pension Reform to Make Headlines this Week in Colombia

This week’s main headline this week, as we stand, should be the February inflation reading on Thursday — which is expected to drop to 7.73% from 8.35% in January.

There will be a number of things to look out for within the various sectors such, as the impact of El Niño on energy prices and transport costs related to fuel. Overall, however, the expectation is for a headline number that will allow Banco de la República to take affirmative action when they next sit down. Finance Minister Ricardo Bonilla is asking for a 1% cut (down to 11.75%), but given strict orthodox conservative nature of the committee, he may have to settle for less.

The other major macro number that will be released by from the National Administrative Department of Statistics (DANE) is the export data for January. While 2023 was a disappointment for overseas sales, hopefully 2024 will go better.

Ecopetrol’s latest results (released last week) — and the company’s offshore gas update previous to that — have brought the sector into the headlines once again.

While oil production in 2023 hit an eight-year high (on the watch of anti-fossil-fuel President Gustavo Petro), the reality is that Colombia needs to realize that it isn’t Saudi Arabia or even Venezuela. The oil boom is now behind us, and while there is still oil to be found, companies are now comparatively scratching around. The oil field auctions under the administration of former President Iván Duque told us as much, with only lukewarm interest in the offering.

When it comes to gas, there is a lot of talk about — in terms of both possible discoveries and reserves, Ecopetrol dialed back somewhat on its Orca-Norte field information. And, again, there are no guarantees. Adding to the issues are the damage to the pipeline, reported by Natugas, that is to be used to import cheap gas from Venezuela.

Ecopetrol has been a dividend cash cow for many years, which has helped the Colombian government, but those days are surely coming to an end. While the company has offshore interests in multiple locations around South and Central America, the reality is that the political minefield of Venezuela — with its need for overseas help — may represent the final frontier for the Colombian oil industry.

In politics, the Senate will try once again try and discuss the pension reform. Hopefully this time there will be a quorum. The opposition’s attempt to derail the process will only result in two things: (1) reforms being imposed by decree, which is utterly unsatisfactory, and (2) continued questions regarding the Colombian political class — and their being fit for purpose.

Ecopetrol headquarters in Bogotá, Colombia (Credit: Dvalencia)

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