What Jumps Out: Oil, Gas, and Financial Markets Remain Complicated in Colombia

My chums over at Bloomberg reported over the weekend that Ecopetrol is looking for alternative natural gas sources to import. According to the report, by 2025, Colombia will have a 17% deficit versus demand. Purportedly, this is until Ecopetrol builds the supplies from its own offshore fields. And, unfortunately, that comes with few guarantees — and a lot of “possibles” — whenever the company is asked.

The other issue is price. It would make far more sense, setting aside the geopolitical risk, to import very cheap gas from Venezuela, which is also desperate for the revenues. That option, however, at least for 2024, is under threat due to the urgent need for pipeline repairs.

It’s a complicated situation — and one that needs both a short and long-term solution. Opposition politicians have been taking shots at Ecopetrol CEO Ricardo Roa due to the drop in profits, but that has more to do with prices and the Colombian peso than operations, as production in 2023 was at an eight-year high.

In other news, while we have hardly discussed the equity market this year, it has been performing somewhat better of late — although volumes remain worrisome.

What is more concerning, though, is that amid all the celebratory noises related to the Madrid agreement and the resolution of the Gilinski/GEA situation, Nutresa will forthwith disappear from the COLCAP once the tender is complete. This follows on from Grupo Éxito, which after some positive vibes to the contrary has also suffered the same fate following the Grupo Calleja tender auction.

This is nothing new in Colombia. There has been a gradual reduction of listed names over the years with few new issuers.

It also nothing new that most market actors have lost faith in the Bolsa de Valores de Colombia, Asobolsa, and other entities entrusted with the guardianship of the market — as they have no idea what to do about the situation.

Last week, we had the Superfinanciera Colombia criticizing, rightfully, the banking sector for being too conservative in their lending — while they themselves appear to have completely forgotten what it is to approve and support new products for the capital markets.

That is made worse with the ongoing nuam exchange and the merger with Chile and Peru, which is (1) highly distracting, (2) still in the distant future, and (3) comes with no guarantees of success. Hopefully, the term “Emperor’s New Clothes” doesn’t need to be translated into Spanish.

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