SierraCol Energy Andina, LLC, a wholly owned subsidiary of SierraCol Energy Limited, has initiated a cash tender offer to repurchase up to $300 million in aggregate principal amount of its outstanding 6.000% Senior Notes due 2028. The offer began on October 23, 2025, and is contingent upon the successful issuance of new senior debt securities.

SierraCol Energy, headquartered in Bogotá, Colombia, is the country’s largest independent oil and gas producer by gross operated and jointly operated production. The company was formed in 2020 by the spinoff of Occidental Petroleum’s Colombian assets. It operates across the Llanos, Middle Magdalena, and Putumayo basins.

The company has been the subject of recent divestiture discussions, with Carlyle reportedly exploring a potential $1.5 billion sale of its stake in the firm.

SierraCol is backed by The Carlyle Group (NASDAQ: CG), which holds its investment through Carlyle International Energy Partners (CIEP). CIEP manages approximately $21 billion in assets focused on the global energy sector outside North America.

As of 2024, SierraCol reported free cash flow of $172 million and net debt of $511 million. The company has been the subject of recent divestiture discussions, with Carlyle reportedly exploring a potential $1.5 billion sale of its stake in the firm.

The notes, originally issued in September 2021 with a total principal of $600 million, are listed under CUSIP numbers 82653L AA9 (Rule 144A) and U8215L AA2 (Regulation S). The tender offer is being conducted in accordance with the terms outlined in the Offer to Purchase dated October 23, 2025.

The company has set a maximum repurchase amount of $300 million, though it may adjust this figure at its discretion. Holders who submit their notes by 5:00 p.m. (New York City time) on November 5, 2025, will be eligible for an early tender payment of $50 per $1,000 principal amount. These early participants will receive a total consideration of $1,000 per $1,000 principal amount, inclusive of the early payment.

Notes tendered after the early deadline but before the expiration time of 5:00 p.m. (New York City time) on November 21, 2025, will be eligible for $950 per $1,000 principal amount. All accepted tenders will also receive accrued and unpaid interest up to, but not including, the applicable settlement date.

SierraCol may elect to settle early tenders on any date at least three business days after the early tender deadline and before the expiration time. Final settlement for all accepted tenders is expected within two business days following the expiration time.

If the offer is oversubscribed at the early tender deadline, SierraCol will prorate accepted tenders to remain within the $300 million cap. In such a case, tenders submitted after the early deadline may not be accepted. If early tenders do not reach the cap, later tenders may be accepted, also subject to proration.

The tender offer is conditional upon the receipt of sufficient proceeds from a proposed issuance of new senior debt securities. The company has not disclosed the terms or timing of the new issuance. SierraCol retains the right to amend, extend, or terminate the offer at its discretion, subject to applicable law.

Contact Information

Investors and noteholders seeking further details can contact the dealer managers:

Citigroup Global Markets Inc.
Phone: +1 (212) 723-6106 (Collect) / +1 (800) 558-3745 (Toll-Free)
Email: ny.liabilitymanagement@citi.com

Deutsche Bank Securities Inc.
Phone: +1 (212) 250-2955 (Collect) / +1 (866) 627-0391 (Toll-Free)

J.P. Morgan Securities LLC
Phone: +1 (212) 834-7279 (Collect) / +1 (866) 846-2874 (Toll-Free)

Copies of the Offer to Purchase and related documents are available from the information agent:

Global Bondholder Services Corporation (GBSC)
Address: 65 Broadway, Suite 404, New York, NY 10006
Email: contact@gbsc-usa.com
Phone: +1 (212) 430-3774 (Banks and Brokers) / +1 (855) 654-2015 (Toll-Free)

For general inquiries, SierraCol can be reached via its contact page or by phone at +57 (601) 3454155.

Headline image: Oil Pump Courtesy Kobiecanka – Pixabay

The discoveries made in the region in 2017 represented, at the time, some of the country’s most promising natural gas discoveries. Former president Juan Manuel Santos and Juan Carlos Echeverry, president of Ecopetrol (Colombian state-controlled petroleum company and Shell’s partner in this venture), made the announcement and labeled them the most significant gas finds in nearly three decades, with early estimates pointing to more than 3 trillion cubic feet of recoverable gas, exceeding the country’s proven reserves at the time.

However, enthusiasm faded due to logistical and economic hurdles. Transporting the gas from deep water wells to shore requires costly infrastructure, including a long-distance undersea pipeline and onshore processing facilities. Industry sources referred by the Latin-American news website Infobae pointed out that the scale of investment needed does not justify the currently confirmed volume of gas. Bureaucratic procedures and insecurity were other reasons that could have led to the decision.

Ecopetrol has confirmed in a press release in response to Shell’s decision that despite this setback, they are working on a plan to ensure the continuity of these projects without the British company’s investment. The company also confirmed it is actively seeking options to connect future production and distribution of gas to Colombia’s National Transportation System.

Adding to the realignment, Shell is also considering selling other Colombian assets, including its stake in the offshore block COL-3, co-owned with Noble Energy (now part of Chevron). While Shell will retain its fuel distribution and lubricant businesses in Colombia, the move marks a broader retreat from exploration and production operations in the country.

Shell’s departure is not an isolated case. Over the past five years, other major oil and gas companies—Chevron, Repsol, ConocoPhillips, Cepsa, and ExxonMobil—have either scaled back or exited their exploration or production operations with oil or gas in Colombia. Many of these exits were linked to regulatory uncertainty, challenges in project viability, and shifting corporate priorities toward lower-risk or more profitable regions.

Reactions have been swift. According to La República, over the last decade Colombia had an almost 50% decrease in gas production: while there were 329 contracts in 2015 that yielded a production of 5,048 million cubic feet per day, between January and February, by the same period in 2025, the number of contracts had dropped to 277, with a production of 2,608.1 million cubic feet per day; as per data from the National Hydrocarbons Agency.

“That a company as important as Shell is withdrawing from Colombia’s offshore gas activities; that foreign investment in hydrocarbons has fallen 30% in the last year; that the development of the Sirius project (the most promising ever found offshore) is subject to the absurd requirement of 116 prior consultations before its gas molecules can reach land; that domestic gas production has fallen to its lowest level in 10 years; that 130 exploratory wells were drilled in 2012, while only 27 will be drilled in 2024…. None of this is a coincidence; it is the result of a deliberate policy by the Petro administration to end the country’s gas self-sufficiency, which we Colombians have already begun to pay for with expensive imports,” Juan Camilo Restrepo, Former Deputy Finance Minister, stated on X.

However, optimism still remains for the Sirius project—an initiative led by Petrobras and Ecopetrol in the same region. Discovered in 2024, Sirius is touted as the most promising gas find in Colombia’s deepwater history, with production expected to begin in 2029. Industry analysts now view Sirius as the country’s best bet for restoring long-term energy self-sufficiency, even if its development has not been without its hurdles.

Moody’s noted that the global rating of ‘Ba1’ reflects the company’s status as the main producer of oil and gas in Colombia, with approximately 60% of the country’s production, its significant energy transmission business in Colombia and other Latin American countries, and the solid and stable cash flow in its subsidiaries Interconexión Eléctrica S.A. E.S.P. and Cenit SAS.

The rating agency highlighted the increase in production and the reduction of the balance of the Fuel Price Stabilization Fund (FEPC), which supports Ecopetrol’s liquidity. It also mentioned that Moody’s expects that Ecopetrol’s financial obligations will continue to be supported by access to global and Colombian capital markets and government support.

Photo credit: Ecopetrol.

Though Ecopetrol is listed on the New York Stock Exchange, the Colombian government controls almost 90% of the shares, and the board of directors is dominated by Petro appointees. Gustavo Petro has held an anti-petroleum and anti-mining stance, and is completely opposed to hydraulic fracturing (fracking) technology in the oil and gas industry.

Referring to the joint venture, Petro said during a televised cabinet meeting, “I want that operation to be sold and to invest the money in clean energies…We are against fracking because fracking is the death of nature and the death of humanity.”

With Petro opposed to drilling in Colombia, Ecopetrol’s Texas operations made up over 11% of the company’s production in 2024. Under Petro’s governance, Colombia has gone from being a net exporter to a net importer of natural gas. Last October, Ecopetrol suspended plans to drill its Komodo-1 well in the Caribbean due to Petro’s opposition. Ecopetrol is led by Ricardo Roa (above, right), appointed as Ecopetrol’s CEO after running Petro’s presidential campaign.

Medellín-based utility Empresas Públicas de Medellín (EPM) projected during the 2024 Oil & Gas Congress that retail natural gas prices are predicted to rise 100% during 2025 due to the resulting scarcity.

See also: Petro Administration Announces Natural Gas Rationing in Colombia Despite Abundant Hydrocarbon Resources

Above photo: Colombian President Gustavo Petro (l) with campaign manager & now Ecopetrol CEO Ricardo Roa (resolution enhanced photo: ANH)

Breaking news update:

Colombian President Moves To Block Ecopetrol Occidental Permian Basin Joint Venture

This agreement includes a drilling plan for 34 wells between April 2025 and June 2026, in addition to those being executed under the current development plan for the first months of 2025.

The agreement also maintains the possibility of signing a new extension of the Development Plan in the future, subject to the macroeconomic environment, industry situation, and partners’ interests. Furthermore, the two companies will keep active an independent contract for the development of the Delaware sub-basin, will remain in force until 2027.

After five years of operations, Ecopetrol Permian and Occidental have achieved positive operational and financial results in the Permian Basin, reflected in the growth of production and its contribution to the Ecopetrol Group’s results.

Ecopetrol Permian’s 2025 Plan for Midland and Delaware sub-basins will include the drilling of approximately 91 development wells, with an estimated investment of $885 million USD and an average annual production of approximately 90,000 barrels of oil equivalent per day (net to Ecopetrol Permian). This plan aligns with the Ecopetrol Group’s strategy, capital discipline, and the diversification of its portfolio.

Permian is recognized as one of the basins with the largest hydrocarbon reserves and one of the most productive in the world, with robust infrastructure for the development of oil projects.

Headline Photo credit: ARMBRUSTERBIZ / Pixabay

The Komodo-1 well, located offshore near San Antero in Córdoba, was projected to contribute to Ecopetrol’s exploration portfolio. However, Ecopetrol’s decision reflects ongoing concerns within the energy sector regarding Colombia’s regulatory framework for environmental licensing. According to the company, delays and ambiguities in obtaining the necessary permit from the National Environmental Licensing Authority (ANLA) have significantly impacted project timelines and created uncertainty regarding future offshore drilling operations.

Regulatory Delays and Licensing Challenges

In its statement, Ecopetrol pointed out that ANLA has not issued a definitive decision regarding Komodo-1’s environmental license, a requirement for any drilling activity to proceed. These delays have become a recurrent issue for oil and gas projects across Colombia, with regulatory agencies facing scrutiny for protracted licensing processes and policy shifts affecting energy sector operations.

The suspension of Komodo-1 follows a series of recent regulatory adjustments and policy shifts by the Colombian government that have focused on transitioning toward cleaner energy sources. While the government has promoted renewable energy investments, industry stakeholders have voiced concerns over inconsistent licensing procedures and the potential impact on Colombia’s ability to meet its energy needs.

Industry Implications and Energy Sector Concerns

Ecopetrol’s decision to halt drilling at Komodo-1 adds to mounting challenges faced by Colombia’s hydrocarbon sector as it navigates environmental regulations and shifting government priorities. The company indicated that these uncertainties could influence its future investment strategies in offshore exploration, an area where Ecopetrol has been expanding its portfolio over recent years.

The Komodo-1 well was among several exploration projects aimed at maintaining Colombia’s oil reserves, which are critical for the country’s export revenues and energy self-sufficiency. Ecopetrol has previously highlighted that such projects are necessary to ensure a stable energy supply and maintain production levels. Industry analysts have noted that a continued delay in regulatory approvals for exploration activities could deter new investments and affect Colombia’s long-term energy outlook.

Ecopetrol has not specified whether it plans to resume the Komodo-1 project should the licensing situation be resolved. However, the company’s statement indicates an increasing reliance on government agencies to streamline regulatory processes if Colombia is to balance its hydrocarbon production goals with environmental oversight.

Calls for Clearer Regulatory Guidance

The decision by Ecopetrol adds to broader calls from the industry for clear, consistent guidance on environmental licensing from the government. Delays and uncertainty around project approvals have intensified debates over Colombia’s regulatory framework for energy projects, particularly in oil and gas, as companies face challenges meeting both operational goals and environmental compliance standards.

With Ecopetrol now joining other industry voices in expressing concerns about regulatory bottlenecks, energy sector representatives are urging the government to address the existing gaps and provide greater predictability in licensing processes. Whether regulatory adjustments are forthcoming remains uncertain, but industry stakeholders are pressing for prompt reforms to support future energy investments.

As of now, Ecopetrol has confirmed that it will continue monitoring developments in the regulatory landscape and evaluate the viability of its offshore exploration projects in light of future licensing decisions by ANLA.

Above photo: Colombian President Gustavo Petro (l) with campaign manager & now Ecopetrol CEO Ricardo Roa (photo: ANH)

According to the current Minister of Mines and Energy, Andrés Camacho Morales, “it is a discovery that the country hasn’t seen in 45 years; it’s a historic find, and it will mean a significant backup reserve for the country.”

The well is located in the Tayrona Block, approximately 31km off the coast, and will be operated by Petrobras, which holds a 44.44% stake, while Ecopetrol owns 55.56% of the project.

According to the Presidency of the Republic of Colombia, Petrobras’ initial estimates indicate that production from the Sirius well will begin between 2029 and 2030 with four production wells and an expected output of 13.3 million cubic meters per day over ten years. In the second stage, which would start in 2031, one or two production wells would be added, with a production rate of 15 million cubic meters per day.

An important reserve, but it does not solve gas problems

In September of this year, Colombia’s nine most important energy associations called for measures to be adopted to ensure that the country does not run out of energy in the next two years. In this statement, the associations highlighted the following:

Situation in the Electric Sector

• According to experts in the sector and the Mining and Energy Planning Unit (UPME) itself, by 2026 there would not be enough firm energy supply to cover the entire demand, and from December 2028, if El Niño or droughts occur, there would be energy rationing.
• According to a report by XM, reservoirs reached critical levels in April (below 30%), and there is a risk of hydroelectric energy shortages between December 2024 and January 2025.
• As of today, the system’s usable reservoir level, according to XM, is at 50.19%, a figure below historical averages for this period and 1.1 percentage points below the shortage path.
• Regulatory uncertainty, slow project rollouts, and growing energy consumption demand immediate actions to avoid future energy crises.

Situation in the Gas Sector

• Natural gas is a key contributor to the quality of life for Colombians, with 36 million Colombians having natural gas in their homes today, 84% of whom are families from social strata 1, 2, and 3 (low-to moderate income households).
• Natural gas vehicles (NGV) not only reduce pollutant gas emissions but also lower costs for the transport sector: 87,000 taxi drivers and 1,400 transport operators switched to NGV, as well as public mass transit systems that run on this energy source (100% of the fleet in Cartagena and Valledupar and 30% of the SITP-public feeder buses-in Bogotá). These users depend on the availability of natural gas in their daily lives.
• The most widely used energy source by industries is natural gas, representing 32% of the total energy used by this sector. It is essential in the production of food, glass, oxygen, cement, paper, fats, chemicals, salt, packaging, ceramics, appliances, and more. The lack of natural gas will lead many industries to revert to consuming higher-emission fuels, to plant closures like those producing fertilizers—strategic for the country’s food security—or to the elimination of high-value-added product lines, resulting in employment and inflation consequences.
• The electricity market operator XM identified a significant need for thermal generation, especially natural gas, due to low hydroelectric potential in its latest analysis of the energy landscape.

In a recent statement made by Ecopetrol, the company reached the Cenit-Promigas agreement to ensure gas supply in Colombia.

Above photo: Gas well Orca Norte -1. provided by Ecopetrol

Gisela Cardozo: Good afternoon, I am Gisela Guijarro Cardozo. I am currently the coordinator of the Medio Magdalena group of the National Environmental Licensing Authority (ANLA). I am a chemist specializing in laboratory management, financial management, and organizational development. I have a master’s degree in leadership design and project management.

Finance Colombia: And Mr César.

César Zárate: Good afternoon. My name is César Zárate, and I am vice president of development for Wattle Petroleum. I thank you for the time you are giving me here. I am a business administrator with an emphasis in marketing management and a master’s degree in senior management from the University of Disney. I am a project structure for commodities. Whether it is oil, gas, or any mineral. We are now focused on natural gas in Colombia.

Finance Colombia: Thank you, and we must give thanks to the support of the Ministry of Mines and Energy, the National Agency for Hydrocarbons (ANH), as well as the gold sponsor in the event, OCP Ecuador. Well, then I think we have, if I am not wrong, in the presentations. No? Well, then let’s get started. Ah, yes, okay. Okay, to make it more interesting, we are going to make it more interactive, so with our speakers and also with you guys, with questions about the talks. So I want to start with César. And my question is, what do you think can be done in the short term to improve the charging factor in the gas fields here in Colombia?

César Zárate: Well, basically, it is to allow access to marginal fields or minor fields that companies like Ecopetrol have, which are not operating because they have them there without putting them into production. It is no secret that the operating cost of large companies can, not can, but it does impact the management of small fields. So, what the big companies do is simply: “Oh, it’s a small little field, leave it there.” For a small or medium-sized company, it may already be interesting. So, allowing access to those fields. But in the short term means the short term. What for? So that we can access and be able to manage any form of business that is interesting to the owner of the field too, to access and be able to start working those fields to generate not large quantities of natural gas, but it can impact production if there are plenty of them.

“We are talking about a very good quality crude. But in both places, something very important happens. The communities open the door to the companies.” – César Zárate

Finance Colombia: Gisela, is environmental management an investment or an expense for hydrocarbon projects?

Gisela Cardozo: That is a question where I have the ideal audience here to answer it, but well, I would like to give a general outline in this sense: How do we, as the National Environmental Licensing Authority, see the investment made in environmental management? Everyone here has talked about many very interesting lines, about clean production, about reducing CO2 emissions. All this is excellent for the environment. But why? Companies do it because it is beneficial for their accounting and financial balance, right? Of course, tax regulations benefit them, excellent, and then the company says, “Yes, we are going to make cleaner production”, but because it is profitable for the business. But they do not see environmental management that way. They see environmental management as “Oh, that’s what we have to do to comply with the authorities. That thing we have to do because it is an obligation.”

And it’s a nuisance. “Oh, they’re coming to follow up on us again this year. What a drag.” No. Environmental management has to be seen by the companies… and well, please help your CEO, your executives see it; it is an investment. An investment because every peso that you put into your environmental management, if you look at it carefully, is a peso that you are going to avoid spending on socio-environmental events that will bring you much more serious consequences in terms of investment. Every peso that you invest in knowing your environment and your context and managing it is a saving for the company in all its operations.

But sometimes it is not comprehensible to us why it is not seen that way within the companies. It is seen as if the operation is completely disconnected, environmental investment is something, and complying with environmental regulations is a nuisance. No. If you look at it, all your licenses and all your environmental control and monitoring tools give you the guidelines to be more and more operationally efficient. They give you the guidelines to avoid social conflicts and environmental conflicts. That can stop a project, and it can make you lose an investment.

It has happened with many projects. For example, you sometimes, when you are going to do a workover in your wells you say, you deceive yourselves, I think, you say, “Oh, no, this is going to be a very short-term thing. So we are not going to temporarily relocate a community that lives very close, or it is not necessary to have the equipment in case there is a spill. No, no, that’s all under control.” It should not be like that. You have some management and control measures that tell you that you have to follow them; however, you ignore them, sometimes because of costs, I think. But the worst saving that a company can make is the saving in its environmental management, that’s the wake-up call we make to you.

Finance Colombia: It’s true. It makes me think of Deepwater Horizon. Right? So if you do it, it’s cheaper to do it correctly. It’s cheaper to do it right, okay, and if not, you’ll pay.

Gisela Cardozo: Twice, thrice, and much more.

Finance Colombia: Yes, right, it’s true. Well, César, what medium-term policy do you think the government should implement?

César Zárate: The government could help the industry from a tax point of view and improve conditions, especially in the area of recovery. Why? Because that discovery has already been made, it has already been produced, it has already been paid for, right? And if an additional investment is made, more crude can be produced, more gas, without the need for having such high additional investments in exploration, in environmental licenses, in general, in the costs of an initial project. If there is a recovery, I, as a government, encourage the recovery of that crude and gas from the tax point of view or the point of view of return on investment. We are going to struggle with these years of natural gas shortage that we are experiencing. Because there is no shortage of crude oil, but with natural gas, the price is already showing a shortage.

We see that the Henry Hub in Alabama is at $2.15 USD, $2.20 USD, and has gone down to $1.80 USD. Here we have gas contracts of $8, $9, and $10 USD. That impacts the country’s finances and impacts the families because of the high costs. But if there are a series of tax benefits in the medium term by the government, many companies will be interested in working on recovery and production will increase.

Gisela Cardozo: Loren, if I may? César had said something in the previous question that I found very interesting, regarding the small fields, and that this could be an economy. And I was thinking about it from ANLA’s point of view; there are many of those small fields where we’ve asked the owners 5 years after they obtained the environmental license, and they have not started operations.

We ask them because the regulation says that the license may expire in a certain sense, right? And we ask the companies and we say to the owner, “Well, let us know if you want to continue if you are interested,” and most of them say, “Yes, but I am raising investment, I am doing something else.” Look, they are fields that already have an advanced process, an environmental knowledge of the territory, and they have already invested. It seems to me that the way to encourage, precisely, to increase this hydrocarbon production would be that. It would be very good. But bear in mind that after several years, the information must be updated, right?

Finance Colombia: Speaking of which, how to optimize. Or did you want to answer?

César Zárate: No, what Gisela says is something that would complement this process. We are wasting a lot of resources in the country, as you said yourself, there are many minor fields that the companies have abandoned. Now, are they economically viable for small companies? We have to evaluate it, but now is not the time to think, “Are they economically viable? Are they not economically viable?” No, we have to encourage that increment in production.

Finance Colombia: You talk about something very interesting. I’m from Ohio, and in the United States, the oil industry started in Pennsylvania, where the oil is very much like.

Gisela Cardozo: Shallow.

Finance Colombia: Yes, yes, and well, and also Ohio and Pennsylvania are neighbors. Standard Oil and the Rockefellers that was all in Ohio and Pennsylvania. And when they discovered oil in Oklahoma and Texas, which was like much better quality because we have a lot of sulfur, and it’s also a bit heavy. And when they had that light crude there, everybody left and left Ohio with corn and cows. But the industry almost died in its birthplace, where it was born, in Ohio and Pennsylvania. But something interesting happened, using technology and mostly small producers.

The structure is a little different here; the State owns the subsoil resources. In the United States, for example, it’s like Mom and Dad who have two avocados and two wells. Not avocados, but basically, you own the oil, and so then there are many producers, micro-producers. Like I have a friend who has an estate and they have four wells there, and every two weeks the tank truck comes, and it’s like it is here with the cows. I live in Antioquia, and there, those Colanta trucks always pass by.

Gisela Cardozo: Instead of milk, they take oil.

Finance Colombia: I understand that the legal structure is different here, but basically, I understand that in the short term, there is not going to be fracking here in Colombia. I understand that there is no desire from the government for that. But basically, what happened there? It was reborn by using that technology, and now that it has the technology that removes sulfur, the oil sector has been reborn in states such as Ohio, Pennsylvania, and West Virginia.

But not with Chevron, but with small producers. And so adapting to those things. Okay, if there is no fracking in the short term, there is no fracking, but there are many things that can be learned to make the small fields viable, not micro fields, but small fields here in Colombia. It is interesting and it’s worth looking into, not only the mega fields, right?

César Zárate: Correct. Because in the American case, and allow me to go a bit deeper, it’s the type of formations. The Utica Formation, which is the one in Pennsylvania, is a formation of heavy crude oil with sulfides, where not necessarily, but fracking kills, even if they are small producers.

The Eagle Ford formation in Texas is completely different. We are talking about a very good quality crude. But in both places, something very important happens. The communities open the door to the companies. What happens here in Colombia? No matter where you go, the community sees the operator as an enemy, right? Because they go, “Here come these guys, they take, and how does it benefit me?” Over there, it is the opposite, there it’s, “Come over, I welcome you because I am the owner of this farm and this subsoil is mine, and the money is for me, and the company is going to pay taxes.”

Here, the community sees the company as, “What are we going to get out of the company?” And so the company is strangled between, obviously, the taxes, between the royalties that have to be paid to the ANH for factories, that have to be paid to the ANH for the visits, right? All that economic burden is very heavy.

And the risk increases. Besides, when you drill and you make a mistake, 3 or 4 million are thrown away in the wells. Right? And if you hit a well, whatever it may be, a thousand, ten thousand barrels, whatever, then it’s, “Oh no, those bastards, of course they are taking it all.” So the issue is we have to change that paradigm, we have to look at how the communities can benefit more, but all this has to go hand in hand with a series of tax benefits for small companies, those that take the risk, and not all of them. For midstream and downstream, the risk is nothing. I already have something that I transport, or there is already something, so I set up the compression if it is natural gas. But upstream is: find, drill, have that frustration of if it was good, if it was bad, tell a story to the investors. That big factor, I would think that if we want to increase the production of both gas and crude oil, it is necessary to give more opportunities in terms of tax benefits, and opportunities in general, to small companies.

Finance Colombia: You talk about something important, it’s like the importance of safety for drilling technicians, and to do it, taking the environment into account, lowering the risks. And in that aspect, Gisela, how does uncertainty affect the knowledge of the physical, biotic, and social context for an environmental procedure, or in the productive stage of a project?

Gisela Cardozo: Very relevant to what we have been talking about, right? What is uncertainty? It is a lack of knowledge. When I do not know, the less knowledge I have, the more uncertainty I have, and uncertainty is a hidden cost. Uncertainty is error, so how do we remedy that? Uncertainty is always remedied with knowledge. What happens, and why do they fail? Many, or well, not many, fortunately, only some environmental procedures here, from the licenses, from the modifications requested by the sector, fail. Because even though there are some terms of reference that, as the authority we consider, are very clear, and are already well-known by the companies in the sector, they submit the minimum information possible.

The shortest. Careful, if it says scale 1 to 100,000, and we, and I mean, you, have information, you must have much more information at smaller scales, but you are not going to present it. It only says 1 to 100,000, and we are not going to have it ready either. So, what happens? They present insufficient information if we value the impacts of the zones. Understand that the contexts, due to anthropic interventions, especially now, have changed a lot and change very easily.

You may have done an environmental impact study two years ago, and now you submit it, and that context is already changing. We go to the field, we encounter different things, and as a rule, there is a time for the gathering of additional information, you are asked for that additional information, and you do not have time to present it. Why? Because you had planned that it would be easier to spare that environmental cost. For what? So always think about that, that the investment you are making in information in the context of your projects is not only environmental, it is operational, because it is information on geology, hydrogeology, geochemistry, animal habitat context, forestry, etc., where you are going to have to intervene.

A real-life case, as we call it, right? What happens? Well, a company has its environmental license, has its environmental management zoning, and says, “Done, the authority told me that I could put my platform on this site, it is within my permitted zoning.” And they go there and start building it, when the obligation, as you know, is to have a specific EMP when the platform’s intervention is going to be made. What is the objective of that specific EMP? To land on the current context and to a much greater level of detail. It is not a scale of 1 to 100,000 or 1 to 50,000. You already have it, because you should have gone to see where to build, what the land is like, “Is it geotechnically stable? What do I have nearby?” And you didn’t identify that some of the rivers that we have are very meandering.

Especially in the plains, in the valleys, the river moved its course, from when it was assessed, to the time when they were going to build the platform. And before they were outside the river’s course, when they started to build the rails, the platform, they were already drilling the well, with how much it cost to move the drills. All of us understand the high costs of the sector. And we get complaints, environmental complaints, we go to the area, no, the river changed its course, and now they were already in the area, in the protected zone. How can such a crass investment error be possible? All the lost investment, why? Because it cannot be allowed in our environmental regulations, they are resources.

It means continuously exposing yourselves to flooding on that platform, to contamination of a river, of an environment, and to social conflict. So, notice why I told you at the beginning, look at it as an investment. Environmental management is an investment. It saves costs, and all that waste of resources just because someone did not pay attention to something that, well, you could say was obvious, right? But no, look, and we miss it.

Finance Colombia: Right. And César, in the case of security in the areas, what could be improved?

César Zárate: Well. A few years ago, specifically three years ago, in our case and the case of the majority, the operators had agreements with the army for the protection of course of the workers’, of the infrastructure in general. Two years ago, we tried, not tried, it was time to renew that agreement with the army, and the army said, “No, the agreements are over.”

And they put us in a pretty difficult position. Especially the operators that are in areas that. Almost 99% of the operators are in difficult areas, in complex areas such as Catatumbo, it is pretty special because of the type of social conflict as all the outlaw groups are in that area. Having this type of contract with the army is key to being able to protect the investment, protect the workers, and protect the communities themselves.

We had a very sui generis case, where the army was passing through our lot, and there was fighting with the outlaw groups. And these groups decided to put dynamite where the army was going to pass. They did not care. Next to a gas pipeline.

You can imagine the kind of catastrophe that would have occurred if those fights had exploded at any moment. Think of a house, in your house, those who cook with natural gas, I think most of you here, right? You open the natural gas a little bit, and if you take too long to put a match… if it is automatic, well, it’s on, but if you take a little too long to put the match, it goes boom, and it explodes. And we are only at 120 PSI pressure. Do you know what a truck at 3600 PSI is like? Or a gas pipeline at 1200 PSI if you put something in it? So this type of protection in the case of hydrocarbons is key.

The government has to understand that this private investment must be protected, but more so that it is an investment in the life of the communities as well as of the workers. So, in my opinion, these types of agreements have to return; the government must understand that this is a key part of developing the industry. Added to the fact that nobody wants to put their money at risk in an area where the outlaw groups are putting pressure.

Finance Colombia: Wow. I imagine that risk, what that explosion would be like, about 3600 from here to Bogotá.

César Zárate: Exactly. The gas pipeline goes at more or less 1200 PSI. But let’s say, let’s put it at 800, 1000, but in the time the valve closes, that is a catastrophe. We have to solve the issue here in Colombia ourselves as a country, right? Solve this problem. But until that happens, the protection of the state, especially the military forces, is important.

Finance Colombia: Right. Well, another little story. In the same estate of my friend that I told you about, once a friend of mine came, she was Dominican, but well she was born in Manhattan, in New York. Many of you who have visited New York know that there is not a single tree.

César Zárate: Rich girls.

Finance Colombia: Exactly, basically Washington and all that. And there isn’t a single tree in New York. I couldn’t live there because there’s no green, nobody has a garden, or anything like that. So what happened? She won a scholarship or something to study at Ohio State, in my state. And then we went to southern Ohio, where the farms and all that are. And that was all exotic for her, because there like you have to go to a park to see a tree, like going to a zoo for us. And I was showing her, “Look, here that tree is a walnut tree and that’s a maple tree, and so on.” But she was like somebody super-very much an activist, very anti-oil, those people who are always doing shows in front of the bombs and stuff. And she’s like, “No, you have to do away with oil because look, it’s going to damage all of that.” And I set a trap. We are walking on the trail, on the estate, okay? It’s all forest because my friend didn’t plant anything; he only earned it through the oil, and they used the farm to escape from the city. So we are walking. She was telling me all about how if there is oil, we are not going to have any of the forest that we have. And I set up a trap very well.

So, walking and walking, we get to the first well. And that well the problem was that it was flooded by all the like, plants and bushes, and almost nobody came, because the forest was assaulting the well, not vice versa, and there were rabbits, raccoons, and things there. And I said, “Such as this one?” And, if she hadn’t seen a tree, it was her first time seeing an oil well. Okay, so I was like, “Tell me what you were saying?” and well, obviously she went quiet.

But my point is that there is a deficit, that there is a failure in education. You are from the industry, you understand the good and also the bad, the good and also the challenges. But I think, and I have noticed here, well, everywhere, when there is an emotional reaction about oil issues. And very few of the people have any direct experience or understanding of how the industry works. They only see it like once every 10 years, when there’s a big tragedy like Deepwater Horizon, or yesterday, a ship went down in a cyclone that’s happening now in the Philippines. So my question, Gisela, is, talking about education, okay, how to optimize the generation of environmental knowledge in the development of the projects? That doesn’t mean being “Oh, you have to be 100% pro-oil in all cases,” but having a balance and not letting fear and ignorance manage everything. What is the role, the part that education plays in this aspect?

Gisela Cardozo: Very much about this part you were mentioning, knowledge, and I say that the sector has the responsibility not only to consolidate that knowledge in the three basic components that, well, at least from the authority we handle: the abiotic, biotic, and social components, which are the main identified ones. They have to be reinforced. How can this knowledge also be strengthened? Look, when we talk about science, technology, and innovation, we have always identified three basic pillars to support it, which are the state, the companies, and the academy.

I mean, the academy, well, here it’s you, Loren, let’s say, right? Here are the three pillars that support this knowledge, and the three pillars that can help you reach the communities. Look, if there is a good environmental management group in a company, I insist again that it is an investment; it should not work as that accessory group that they have there, because the norm requires it, and then we must have it. No, it must be a group that must interact permanently with the operational part.

The operational part has to be nourished by what the environmental parts gather from monitoring and making decisions as well. Because investment decisions, as we were saying, if it is not viable environmentally, they stop them in time. But if nobody tells the environmental group, the environmental group is isolated, and so on. If you do not interact with the academy, the academy is an independent actor that the communities believe in.

We see many conflicts in the territory, and we see very responsible companies in the hydrocarbon sector. I would say that it is one of the sectors. Well, ANLA changed it to regions. And we had to take on in each region all the other sectors: infrastructure, energy, and we even manage zoo-breeding. So, if you compare the sectors, the hydrocarbon sector is one of the most organized in mining in general. There are some black sheep, right? But in general, they do a good job, they are responsible for the environment, and with the communities.

But I don’t know, it is as if they aren’t preoccupied with taking this knowledge to the communities. What we talk about, man, partner with the academy, reach out to them, explain to them. The communities, well, we go with you, and they say, “Oh no, right, you are from X company, you are going to defend your company.” Whereas if you take someone from the academy who is independent and objective, and most of them can be environmentalists, let them be objective and reasonable, and convey the reality, the truth. Do that exercise.

I was listening here to some of the previous speakers talking about their corporate social responsibility programs, environmental issues, and so on. But it seems that these communities never speak out. When does one hear this positive news? I don’t know if the sector is lacking, I don’t know if it needs more unity to, well, make a better use of joint resources and tell the communities the reality. Loren is right, someone who is here in Bogota, I remember because we also have a small farm, and once we took the children from my son’s kindergarten. Many years ago, right? And they arrived and saw a cow and those children: “Ah!” They had seen them in photos, but you don’t believe it. I was like, but what? The chickens ran away, scared of seeing the chickens, the chickens were chasing the little boy, and they were all like this.

They had never seen it; they are very much city kids. That’s what happens to us. And where is the public opinion, which carries more weight? Also in the cities. In the rural communities, anyone who comes along gives them false news. Or they think it is true that because you have an oil well next to you, you are going to get sick, you are going to contaminate everything you grow around you. Disprove that. With what? With knowledge, with science, with education. Invest in that, it will be more profitable.

It is something that, many years ago, I visited Panaca for the first time, there in the Coffee Axis, with my daughter, who is now 22 years old, but at that time she was 14 years old, and she spent 2 years here in Colombia. And I loved the purpose that Panaca has, and that is to teach people from the city about the importance of the countryside. And I don’t know if it’s very feasible to put an oil amusement park, that would be something. But that was something. Because it was entertainment, but also didactic.

Finance Colombia: Like okay, families who go to the coffee parks come and also visit Panaca, and people, like your son’s classmate, know nothing about the countryside. I am also from a big city, but I was lucky enough to spend summers working on a farm in the countryside, so it is so important to start with young people.

Gisela Cardozo: Exactly.

Finance Colombia: Okay? To have… my point isn’t one side or the other. I think of myself as an environmentalist, but I am not an extremist. I understand the importance of Colombia having self-sufficiency in its resources. Ok? Yes, we need to preserve, we need to advance, to evolve, but that doesn’t mean that tomorrow we cut everything.

And who is going to suffer the most? The people with fewer resources, if we do that. Yesterday I took a picture and sent it to my wife and about 20 of my best friends here. Because the EPM guy came over, and I am an EPM customer, he told me that the price of natural gas is going up by 100%, okay? And I already pay for EPM, I pay for gas, and I thought, wow. I said to my wife, “Look, we are going to complain and be angry, but either way, we are going to pay the bill.” But there are people in Comuna 13, in Tricentenario, in Santo Domingo, there in Medellín or in Soacha or Usme or here, where it is a struggle, where if they raise the prices 100% because of shortages, okay, for an idea up in the clouds, they are the ones that are going to suffer the most. And what is going to happen? What happened in the Dominican Republic and Haiti? In Haiti, where they do not have natural gas distribution in the tanks like here in the Caribbean, people continue burning firewood, ok? Talking about deforestation, talking about the loss of the Amazon and the forests here, if people don’t have access to natural gas, they are going to go back to burning.

César Zárate: The forests.

Finance Colombia: Exactly, something we are fighting against. So, you have to think about the effects and the consequences beyond the next step. That is one reason why I think education is so key. I understand if, in Colombia, you as a country say, “We don’t want fracking.” Super, that’s fine. But what I don’t agree with is, like, about 3 years ago, this was in the news, in the last administration, and there were protests and such. And I said I’m going to do a survey. I asked five people, my wife and a few others, “Okay, are you for or against fracking?”, “Against.”, “Okay. What is it?”, “Something gringo.” “Well, I’m something gringo, but.” But really, they had no idea what it was. But we’re against that because they heard, I don’t know, over protests, that it’s something bad. And, well, I don’t take a position like should have it or shouldn’t have it. But when you are making decisions from a point of ignorance, from a point of fear of not knowing, at least. Make your decision, be against fracking, but be against fracking because you know what it is. You already know what it is. But with the people who vote, people like the public, it’s important to have democracy; it doesn’t work like that. The people are ignorant. So, talking about the processes, on the environmental aspect, how do those processes influence the development that you do?

César Zárate: Well, the environmental issue it’s as far as it is wide. But usually, the people who are involved in making the environmental laws are well prepared, while others we consider lack a little bit of knowledge to be able to make this regulation.
The topic of fracking, for example, is something that the country needs. And the decision is very simple. How do we want the gallon of gasoline? Do we want it at 40 or 50 thousand pesos? And I don’t know any environmentalist who doesn’t love to fly in an airplane. They all love to fly in an airplane. Everybody loves to travel, don’t they? From what the price of JP54 is, 80 or 90 dollars a barrel, to how we want it? Do we want it at 200 a barrel? So that the ticket to Medellin costs (unintelligible) pesos? The decision is in our hands.

The issue that Loren and Gisela brought up, we just have to teach them. You have to take the children and show them the reality. Of course. Hydrocarbons produce CO2, the molecule. well, I have the best solution of all. Nature itself invented the most beautiful machine to capture CO2. They are called trees. It is simple. We are going to compensate for the emissions with trees until a definitive solution comes out.

Everyone has their own opinion, but on my part, if you are in an electric car, you pollute more. Hydrogen is the way. I think that the countries that are as advanced as Japan and Germany, with the hydrogen issue, will reach a solution very quickly; the United States, too, and that is the final solution. Because hydrogen is the most abundant element in the universe. So, I know that there will come a point when hydrogen will replace hydrocarbons, little by little. Because hydrogen cannot make plastics. The hydrocarbon part is the plastics and many industrial processes. But yes, with hydrogen in 20, 30 years, we are going to get to the point where we’ll say, “Okay, no more exploitation.” In the meantime, we have to be realistic. For one, we have to control climate change, and governments have to commit to a minimum amount of tree planting. We are wiping out our rainforests. What is the biggest polluter? The Chocó mafias take all the trees.

Let me tell you about a specific case. In the Andoas base, in Peru, where one of the largest oil fields in Peru is, the most shocking ecological crimes imaginable were committed. The first one: the operating company at that time would take the contaminated water and dump it into the jungle. We have 500,000 hectares; if we dump 2000, 3000, nobody notices. After a solution was found and the Peruvian government noticed and stopped this type of thing, the communities appeared. It is the communities themselves that pollute. When they were told the same thing, “We are not going to give you a contract,” The contract for the oil pipeline that goes from here, from the jungle to Talara. What happened? They put a pump on the pipeline every two months, every month, why? Because it was the communities who went, cleaned, fixed up, whose business it was. They would put it in a pump.

Then, when the government figured it out, they took it away. But today, a field of 180,000 barrels from here could solve the energy issue in Peru. It produces 8000. The infrastructure is completely disarticulated, and the communities are destroying the jungle. If an operator comes and cuts down a tree, they all go, “You are destroying the jungle”. But they, the communities, cut down the trees, they sell them, they don’t reforest. The operator tells them, “Here I have plastic bricks; let’s use the plastic that has been collected to make houses.” No.

All this is the result of ignorance. I think it is the only way. Education with children from a young age, showing them that it is a resource, that we need the energy, we need to move the ships, so that the global supply chain doesn’t collapse. We saw it with COVID-19. It more or less stopped, and the world collapsed. We need the plastics, we need to live; we need the gasoline; we need the jet fuel; we need that energy. And that comes from oil and gas. The rest is lies. The rest is demagoguery.

Tell me, when have solar panels replaced power generation? They replace a part of it, but look at the problem in Chile, they are stuck with thousands of meters of unusable solar panels. What do they do with that? They pollute. How do you think the electric car works? It works with the worst stabilizer of all. You have to remember when these mobile phones came out in the ’90s, when everyone would say, “Ah, it explodes!” And it was true. You plugged in the phone, and it was a lottery whether it exploded or not. Because lithium vibrates at very high frequencies. Then they figured out, you know what, there are stabilizers, like cobalt. “Ah, cobalt is the solution, yes.” Who takes the cobalt ores? They are this small. I invite you; you can go to Africa and see the disaster the companies left there. Children between 5 and 11 years old take the copper ore.

Finance Colombia: In Congo, yes.

César Zárate: In Congo. Digging out the little ores. At 11 years old, with leukemia. So, that whole tale about ethics and this and that, no. It is action. You have to overcome ignorance. We have to do research. We have to advance on hydrogen, but in fast steps, and we have to overcome ignorance. And children have to be educated so they understand we are in a world where electricity is not free. This is being transmitted by copper, isn’t it? We have to find the copper. Or we can bring a nuclear plant here to generate electricity. The decision is ours as a country, but we have to make it with knowledge, not assumptions. The road to hell is full of good intentions. The road to heaven is full of actions. It is to act. To overcome ignorance. That is what we have to do.

Finance Colombia: You’re right. Yesterday I was walking around the exhibitions, and we had some very, very interesting companies. I saw a company that does like geolocations, using the readers of where the oil pipelines are and things like that; there is one that has the high voltage cables that they need, that are resistant to high temperatures and such, like Distribution Plus, SIS MARCO, Promat, and Target Horizon. There’s another one there where they do like mapping, oh, I didn’t understand very well, I wanted to ask them because they do like very advanced things about what seems like mapping, or saying where we are going to map things. Talking to others like you guys, like my friend Slava, who does testing, non-destructive testing, he has to go over all that high-tech stuff. And the good thing about that is that it’s making the industry more efficient.

I think part of what we’re fighting for, of all this anti-oil sentiment, is because of history. In Cleveland, Ohio, where Standard Oil was for many years, in 1970, the river caught fire. Cuyahoga River, which runs through Cleveland, caught fire twice because of so much pollution. And at that time, when Rockefeller and those started, it was senseless, and all the factories, not just oil, but anything, dumped their stuff in whatever river was closest. We still have problems with PCBs. And they are still debating with General Electric about what happened in the Hudson River, which runs through New York. The debate was like, “Should we dredge and remove them, or should we just leave them alone?” General Electric wanted to leave it alone because they didn’t want to pay like 3 billion dollars. And it was for damages that they did, not now, but like 100 years ago in history, when it was a legacy. But even now, we’re still paying the price. We don’t want to, nor can we, eat oysters from the bay or anything like that. And my question then, Gisela, is what role does technology play? How can we take advantage of technology to enhance the environmental management of the sector?

Gisela Cardozo: We go back to this topic of the academy, innovation, science, and technology. We have to implement it. All of you have been talking here in this congress about having developed more clean technology, new systems for exploration, exploitation, refining, etcetera. But technology is also in the environmental part, please do not forget about us. The monitoring that you do is more effective when… Now the equipment, we have equipment that sends transmissions in real-time. They give you the alerts. The alerts, if they are having some kind of failure in the piezometric wells, tell you, “Hey, my concentration changed, I have hydrocarbons, or at least my conductivity changed.” And you go, “Oh, how come the conductivity changed?” Well, there must be some leakage, of what? Of deeper groundwater that is getting there, right?

But this transmission in real-time is fundamental. Look, ANLA is making a very big effort, it has been doing it for a while, 5, 6 years now, in generating a technological monitoring center that we have, where we are going to ask all of you to please go in. Now, report to us in a more, let’s say, standardized way, so we can feed from that data. That data is going to be available to all of you. Note that it’s going to be cost-saving in knowledge. Somebody has to submit an AI, somebody has to submit something from a region that has data. This tracking monitoring is more extensive than what you do for a license; it’s time data, and it’s multi-temporal. You can look at trends. You can get so much information from that in very large territories, all the ones that you report to us. And not only from the hydrocarbon industry, but we also ask that from the rails, well, the ones that we manage, 4G, hydroelectric plants, thermoelectric plants. We have information on air, emissions, and noise in the regions, and that data.

An institutional base is being consolidated, and it will be accessible – you know that all of ANLA’s data is public, and you will nourish from it. Please present us with the complete environmental compliance reports with good traceability. Not, “Yes, the information is in file X,” and file X never appears; it does not even have the name file X somewhere. You are going to be able to nourish yourselves from that. Knowledge is for everyone to reuse. But technology is very important; we all have to advance. The faster the data transmission, the more agile the media; artificial intelligence allows us to make projections, models, hydrogeological models, geological models, and geotechnical models.

We all nourish from that, and it will give us security, especially in an issue that is fundamental for this industry, to avoid events that give a negative impression of the sector. You can work very well, a single event occurs, and you know that’s when there will be national relevance. That single event already brings negative attention, doesn’t it, to the industry? So, be aware that a company speaks for the whole sector. So, please, let’s appropriately use technology, and it is excellent. Let’s apply it. ANLA is committed to that, we want you to learn that you can always go and see our monitoring center, and our databases, always.

You know that we have modernized a lot, we hold our meetings virtually to save you what? Costs. We no longer ask you to come to us from your headquarters. We do the oral meetings and the follow-up administrative acts virtually. But whenever you want any face-to-face meeting, you are welcome to come to our facilities. If we talk to each other, we understand each other. And I wanted to take a minute to come back to something that César said, which I thought was fundamental. And I agree, the best CO2 recycler factory and taster is the trees. That’s the reason for the environmental compensation; that is why it is logical that the compensation starts as it should.

From the moment the environmental license is issued, you are required to have a compensation plan. Look, we now have cases of companies that drilled, did not find oil, or for x or y reason at the time, public order or something like that, they decided to close operations. 10 years, 15 years, and 20 years later, they have not made the environmental compensation. They even closed their trading house and their Colombian branch, and they want to leave that environmental debt with the country. This speaks very badly of the sector. Look, the communities are asking for this.

They often do not know that if you cut down a tree, you have to pay 5 or 10, depending on the species. They don’t know the important biological corridors that are being generated because now we are looking for eco-connectivity, especially for mammals: tiger cats, leopards, jaguars, and pumas; pumas have been seen again in our areas. A video that was sent to us in the Topocoro reservoir, which is the one in Hidrosogamoso, really caught my attention. A puma swimming. So we are seeing fauna again that we hadn’t seen for many years. Why? Because the authority seeks that these compensations are located in the best sector. But please, environmental responsibility is also about that. It is not only about “Oh, I use clean technology, try to recycle.” No, it is a very important environmental commitment.

Finance Colombia: Of course. Here in Colombia, as you well know, you have something special. In this country, one thing that I love is that a person could spend their life here and still not see all the natural wonders. From the Amazon rainforest, to. I went to Nevado del Ruiz, there in Manizales, now it is rough, but before, when you could go up, it was like another planet. And so many things. Or you are in the Tatacoa desert, or I went to the Guajira one. And it is important to protect that. I don’t think there is anyone who doesn’t believe that. Well, yes, some criminals are destroying with mercury, like in illegal mining and those things. But there are also responsible companies.

One thing I have seen in the mining sector is that there are some companies, well, there are some bad ones, but some very responsible companies, not just on the environmental aspects, but also the social ones. When they arrive in a town and before starting anything, they look at what they need there, and they talk to the local NGOs there. And like they do social and educational programs and things like that. I hope we have time for a couple of questions. I don’t want just us to be talking. I hope this can be interactive. Does anybody have any questions for the panel? For them, they’re the experts, not me.

Well, I have a question for you guys, so I want to ask, well, the same issue, but how can the need to increase oil production be balanced with climate and environmental sustainability commitments? It’s broad, but what are some ideas for that balance?

Gisela Cardozo: You start, César.

César Zárate: I agree with Gisela. The environmental issue is critical for the country. It is simple to comply with the requirements. But that increase in production will only happen if a suitable environment is found. The communities, so that they don’t oppose, I don’t know, these are ideas that we all throw in the air, “Plant a seed.” Because the communities don’t like to be scolded. The royalties come from the central government, and we see where they are going. Just open the newspaper, and we know where our money is going. Why not let the communities manage a part of it, the municipalities? So that in the industry,y they see a friend, not an enemy. And that fact alone, that they open the doors for us, in compliance with environmental requirements, makes a much better climate flourish. The oil is there.

If you notice, all the formations from Colombia, from Ecuador, even, we are talking about Northeast 22 degrees. It is there. If we explore, we are going to find it all there. From Putumayo, passing Cali, Magdalena Medio, upwards, Catatumbo, and obviously Venezuela, and this part of Casanare, yes? Everything. Just past Venezuela, that imaginary division we have as a country, it is possible that the largest oil reserve in the world is there. But it passes the line to Colombia, and they disappear.

A little further, Northeast 22 degrees, are the reserves of Guyana. There, they are fighting and killing each other over it. We are talking about unimaginable reserves of crude oil and gas that bring a lot of progress to a country, money that we need to lift 20 million people out of poverty, right? But everythingis  in that balance. Exploration, production, communities, and environmental compliance.

That balance is very complex. Because speaking of NGOs, I’ll steal a minute, the American NGOs, the Norwegian NGOs, and the Nordic European ones come and tell the indigenous people of the area that the oil companies are taking away the blood of the Earth, of the Pachamama, etc.; the indigenous people oppose. But in northern Europe, those same NGOs say nothing about the production of crude oil in the North Sea. So we produce less oil, and they keep prices high. And who wins? That is why we are the ones who must provide the solution as a country. In that delicate balance that must be in place so that everyone in that chain is well off. The investor, the community, and the environmental side. And the money that must flow to continue investing in education and lift poverty.

I think it is that very delicate balance. And put a large part of that money into research of all kinds of alternative energies. That is the priority.

Gisela Cardozo: Yes, and I would also think that, if we consider what we have at the moment, of course, the sector can try to manage with the State this type of changes in taxation, in benefits. But that is something more in the long term, right? Let’s talk about what we have now and what they can do. You said it, Loren said it; at this moment, what is lowering the hydrocarbon production, simply? The social conflict, the social blockades, and all of this is what we have been talking about. I think the companies can manage it with good social relations. We, as an authority, experience it. Sometimes a company arrives and let’s say they are going to open a well that, yes, they already had it authorized, they have the license, they have the permit, it is within their zoning, but they had thought about it in their plans for three years from now. When they went to that community three years ago, they said, “Oh, done, here, such and such.” And the community, “Ah, well, yes, we know,” and so on. In three years, those people who live there will no longer be the same.

Or there are more already, but the company doesn’t put in the work. How hard is it to hire some professionals, please, who know how to manage communities? And before the community sees the drill coming, and sees all the people raising dust, making noise, putting out emissions. Environmental management is not a big investment, but please, the advances should always be on this level. We have seen that the communities are receptive, there are communities and communities, I agree. Some are also manipulated, but that should also be perceived by their relations group. From what side do we approach them?

There are some we can talk to, and there are some we cannot. Let’s reach out to the most reasonable people, have friends there, and listen to them. Sometimes it is simply a matter of having a post or giving them a channel where they can put their requests, petitions, complaints, requests, etcetera, etc., etcetera, etcetera. This social relationship, just from the social conflict in the country, a change in perspective towards the hydrocarbons sector? You are already going to improve production by at least 10%, I tell you.

The second point is that there is a law on science and technology in the country, on innovation, science, and technology, which allows you to be exempt from your taxes 100% of what you invest there. This gives you proximity with the academy and developments, developments that you can use in your operational part, and so on, and it gives you the proximity with the academy, so that the academy gets involved with the sector, feels more involved, and educates the generations it is already educating the way it should be. I don’t know if you know much about science and technology law, but it has some impressive tax benefits. Check them out and see that it is profitable, I would say, from what is available at the moment, right?

Finance Colombia: Yes, and I think, listening to the entire talk, it seems to me that the key is not to be, like, antagonists, like ‘The government versus the private sector.’

Gisela Cardozo: Let’s be synergistic.

Finance Colombia: That, that. And also, it’s very important to involve the town, the people. Like, everyone here is from within the industry, so you already understand what the sector is like and the importance of oil. But some people haven’t thought much about that, and public opinion is very easily swayed by a controversial article or something like that, or when a tragedy or an accident happens. However, it is like in the airlines, that 10,000 days can go by with nothing happening. But when there is a first accident, everybody is afraid to fly, okay? But when they go in their car, where there are crashes, they can’t even leave the house without seeing a crash in Rio Negro. But people are like, I don’t know, it’s fascinating how the mind works.

So, the important thing is that we need to work together. It’s not that we always agree, like there’s always going to be disagreement on issues like what should, I don’t know, the government policy should be, or fracking or no fracking, or more drilling or not… But to not be enemies, but working; “Look, we have the same goal, we work together even when we disagree, we are civil and think more in the long term.” So this has been very fascinating for me to listen to the opinions of you, the experts. And well, so now I invite you to take half an hour, a break, here with coffee and everything. Ah, we have a question. I don’t know if we have time for a few moments. I hope so.

Marielita Miga: Hello, good afternoon. This is Marielita Legardes Miga, an oil and gas lawyer from the Mompos Oil Company. I have a question for the panel. All three of you have an interesting view of the country and outside of it. And it is that, as a lawyer, well, what I notice, which I believe may affect production a lot, at least the investment in the country, is excessive regulation. Of course, it is necessary to regulate this sector, to avoid the tragedies of the past, to be more and more strict in what the best practices of the hydrocarbon sector are, and to bring them to the economy. However, I believe that many times we sin by wanting to replicate models from other places, where perhaps here we do not have sufficient technology, and we have not yet reached a level of progress that allows us to make radical decisions.

For example, in the case of the non-conventional, non-conventional resources. So I would like to ask you to tell us a little bit ab is your vision of this regulation. And I do not mean for you to tell it to us as lawyers, independent of your profession; what do you think can be done about regulating, and regulating with more and more restrictions, a sector that needs wings to fly in innovation? Because we are one of the sectors with the most innovation, with the most resources to be able to, with science, as the doctor said, overcome uncertainties.

So, what strategies do you think can be taken? I mean from a point of view, beyond the legal aspect, if those roundtables could not only be work roundtables with the communities but also with those who make the decisions in the country, with those who generate the regulations. And how willing are they? That is where government policies come in, right? Because the executive is the government. The one who generates the regulation is the government; the laws are from congress, but our regulation comes from the ministries. So I wanted to ask you about that. So sorry if I went on too long.

Gisela Cardozo: Well, yes, indeed, I am not as strong legally as you said, but perhaps from my point of view, it does not seem to me that the current environmental regulation is very complex, or very complicated to comply with. It is clear. It has been updated on some issues where the very knowledge from them has led us to it. Because, especially on the topic of emissions, the regulation has been evolving, and it is restrictive in certain aspects, but it is not so much about that. I don’t know, I insist that the sector should be underpinned much more by the academy.

Because you know that regulations always go out for public consultation. At this moment, Decree 10-76 is in a revision process. It is made available to all to receive feedback, and such. In the same way, the ANH and the ANM have also recently put forward different regulations for discussion. If you look, what do you see is of deep relevance in the country? The opinion is also of the scientific experts, of the experts from the universities. They move the thinking of our youth, of those who take to the streets to protest or support, they are the ones who convince them even. Their teachers, in the sense of the guru of an environmental issue, are the super-experts in something.

And they are the ones who give the most opinions when regulations are put out and such. Most of the comments come from experts from the universities because they are also the ones who provide the best basis for their comments. I would say that there should be more interaction between the sector and these academic groups. If they understand better… because it is very different to have a professor in the theoretical field at the university than for them to experience the reality with you, to go and get to know what it is, and apply their knowledge there.

I mean, science must be applied to become technology, to become innovation. But I see a lot of this distancing. The Academy is over there at their desks, in their laboratories, but not as a pilot plant, but very isolated. So, when they give their opinion on regulations, they are very theoretical. So we want to have Norwegian regulations, we want to have something that is not in our context, not our environment, and that is why we make mistakes that have been made in the environmental area. As you know, 30, 40 years ago, the very corporations and the nation said, “We are going to reforest with eucalyptus and pine.” Because they are the ones that successfully reproduce the fastest, right?

And what did we see, “Let’s harvest trout in our rivers,” and the intentions were very good, but it is this detachment, let’s say, in the regulations. We contribute from the authority, we have very competent people who have worked with you many times. Sometimes they move from one sector to another, and that is good because they get to know the sector, which lets us work as you said, in synergy. Let’s work together. When those norms go out for consultation, please also speak out, but in a well-founded manner, get your opinion, and give it. I do think that you are being listened to. I believe that society, the Colombian authorities, has usually been very democratic; they have listened. Let’s keep trusting that this will be so, let’s do our part.

Finance Colombia: Thank you. Well, that was very interesting, and thank you for the question. I felt bad, like “Ah, we’re boring people because nobody’s asking anything.” But that was very interesting. Thank you so much. If there’s anything else, we’ll be around to talk more about this. Thank you.

Gisela Cardozo: Thank you.

The company reported an EBITDA margin of 44.8%, which, although robust, indicates the impact of external market pressures. Ecopetrol’s production averaged 698,000 barrels of oil equivalent per day, down from the previous quarter. This decline was influenced by operational challenges and a reduction in international oil prices, which affected the company’s revenue stream.

Internal Disputes Over Oslo Project Approval

In a related matter, controversy arose within the company regarding the approval of Project Oslo, including the CrownRock purchase, with Occidental Petroleum (NYSE: OXY), a key initiative intended to expand Ecopetrol’s portfolio and increase future production. Former board member Andrés Moreno publicly confirmed that the Oslo project had indeed been approved by the board, countering claims by Ricardo Roa (above right), the current Ecopetrol CEO and former campaign manager for Colombian President Gustavo Petro (above left),that suggested otherwise.

Occidental CEO Vicki Hollub In Bogotá, Colombia (photo: Loren Moss)

Moreno’s statements come amid ongoing debates within Ecopetrol about the direction of the company’s investments and its commitment to balancing profitability with environmental stewardship. The former board member emphasized that the decision to proceed with the Oslo project was made following thorough deliberations, considering both the potential benefits and risks involved.

Ecopetrol and Occidental had negotiated details of the deal for months, but in the final phase, Colombian President Gustavo Petro, who is anti-petroleum and especially anti-hydraulic fracturing, intervened to block the deal behind the scenes, leaving Ecopetrol’s board to face investor and public scrutiny.

“We worked on that deal from March until last week, and we thought we were done, but President Petro of Colombia did not approve it,” said Occidental CEO Vicki Hollub said in a conference call with investors. “He (President Petro) has made it very clear to the world that he is anti-oil, anti-gas, anti-fracking and anti-United States . And with those three attacks, he practically took Ecopetrol out of the agreement,” Hollub remarked.

Hollub did not hide her wrath, saying that “Unfortunately, there are others in the world like Petro. And there are some, in fact, in the United States like Petro, who believe that oil and gas should disappear and believe that we should no longer be an industry and that renewable energy will be all that is needed to move forward and help with the climate transition.”

The Oslo project, which would have boosted production and diversify Ecopetrol’s assets, has faced criticism over its potential environmental and financial risks. Some stakeholders have expressed concerns about the project’s alignment with the company’s long-term sustainability goals, especially in light of global shifts towards renewable energy.

Future Outlook

Ecopetrol’s management said that it remains committed to navigating the current market challenges while focusing on operational efficiency and strategic investments. The company plans to continue its exploration and production activities, with an emphasis on maintaining financial stability and enhancing shareholder value.

As Ecopetrol moves forward, it will need to address both the external economic pressures, lack of credibility and internal disagreements that have surfaced, particularly regarding major projects like Oslo. The outcome of these discussions and the company’s ability to adapt to changing market conditions will likely play a crucial role in shaping its future trajectory.

The well, located in the Tayrona block off the northern coast of Colombia, represents a significant exploration effort in deepwater drilling. The project would Colombia’s  offshore oil and gas production, diversify energy sources, and potentially expand reserves in the face of declining onshore production in the face of Colombian President Gustavo Petro’s opposition to expansion of the petroleum sector.

The Komodo-1 well will reach 3,900 meters or almost 2.5 miles under the Caribbean Sea.

Drilling at such depths presents considerable technical challenges, including extreme pressure and temperature conditions. However, the potential rewards are substantial, with the region believed to hold significant untapped hydrocarbon resources. Named Komodo-1, if successful, the well will reach a depth of 3,900 meters, or 12,800 feet. The ultra deepwater well will exceed the depths of Angola’s Block 48 well, which currently holds the world record at 3,628 meters.

Ecopetrol and Occidental have both emphasized the strategic importance of this project. For Ecopetrol, it aligns with the company’s objectives to enhance its offshore capabilities and explore new sources of revenue. Occidental, with its extensive experience in deepwater drilling, brings technical expertise to the project.

The drilling is expected to commence in the fourth quarter of 2024, with results anticipated in 2025. If successful, the well could mark a major milestone in offshore oil exploration, not just for Colombia but for the global oil industry.

The outcome of this drilling could have significant implications for Colombia’s energy sector, potentially leading to increased foreign investment and further exploration in the Caribbean basin. It also positions Colombia as a key player in the Latin American offshore oil landscape.