Colombia: Colombia Energy Profile 2011

 Oil and Gas Report Q4 2010

The latest Oil & Gas Report on Colombia ,  forecasts that the nation will account for 2.62% of Latin American regional oil demand by 2014, while providing 8.37% of supply. Latin American regional oil use will average an estimated 7.76mn barrels per day (b/d) in 2010. It should rise to 7.91mn b/d in 2011 and reach 8.41mn b/d by 2014. Regional oil production in 2010 should average an estimated 10.05mn b/d. It is set to rise to 10.63mn b/d by 2014. Oil exports have been slipping, because demand growth has exceeded the pace of supply expansion. In 2001, the region was exporting an average of 3.37mn b/d. This total falls to an estimated 2.29mn b/d in 2010 and is forecast to slip further to 2.22mn b/d in 2014. The principal exporters will be Mexico, Venezuela, Ecuador and Brazil.

In terms of natural gas, the region in 2010 will have consumed an estimated 209bn cubic metres (bcm), with demand of 252bcm targeted for 2014. Production of an estimated 221bcm in 2010 should reach 247bcm in 2014, and implies 5bcm of net imports at the end of the period. Colombia’s estimated share of gas consumption in 2010 is 4.31%, while its share of production is put at 4.98%.

By 2014, its share of gas consumption is forecast to be 4.02%, with the country accounting for 4.66% of supply. For 2010 as a whole, we continue to assume an average OPEC basket price of US$83.00/bbl (+36.4% yo- y). Risk is now clearly on the downside, thanks to the slow progress made during June. However, a fullyear outturn in excess of US$80 remains a strong possibility, and we see no need to review our assumptions at this point. The 2010 US WTI price is now put at US$87.63/bbl. We are assuming an OPEC basket price of US$85.00/bbl in 2011, with WTI averaging US$89.74. Our central assumption for 2012 and beyond is an OPEC price averaging US$90.00/bbl, delivering WTI at just over US$95.00.

For 2010, the assumption for premium unleaded gasoline is an average global price of US$95.45/bbl. The overall y-o-y rise in 2010 gasoline prices is put at 36%. Gasoil in 2010 is expected to average US$93.23/bbl. The full-year outturn represents a 35% increase from the 2009 level. For 2010, the annual jet price level is forecast to be US$95.90/bbl. This compares with US$70.66/bbl in 2009. The 2010 average naphtha price is put by BMI at US$83.53/bbl, up 41% from the previous year’s level. Colombian real GDP growth in 2010 is forecast at 3.9%, and we are assuming an average annual increase of 3.6% in 2010-2014. The government is working hard to encourage international oil company (IOC) investment and boost near-term domestic oil production, aided by state-owned Ecopetrol.

These efforts have been proving successful, and we are now assuming oil and gas liquids production of 890,000b/d by 2014, with the nation expected to pump 795,000b/d in 2010. Consumption beyond 2009 is forecast to increase by 2-3% per annum to 2014, implying demand of 221,000b/d by this time. The nation’s export capability should therefore reach 669,000b/d by 2014. Gas consumption is forecast to increase from an estimated 9.0bcm in 2010 to 10.1bcm over the period, met by rising domestic production, which will also provide modest exports.

Between 2010 and 2019, we are forecasting an increase in Colombian oil production of 17.0%, with crude volumes peaking at 940,000b/d in 2018, before declining to 930,000b/d by 2019. Oil consumption between 2010 and 2019 is set to increase by 24.9%, with growth averaging an assumed 2.5% per annum towards the end of the period and the country using 250,000 b/d by 2019. Gas production is expected to rise gradually, from an estimated 11bcm in 2009 to 15bcm in 2018 and 2019. With demand growth of 30.5%, this implies peak export potential of 3.6bcm by 2018.

Colombia normally accounts for more than 90%  of the world's annual output of gem emeralds, production of which is a state monopoly. Copper, iron, and nickel are among other minerals produced.

Oil and Gas in Colombia

According to the 2008 BP Statistical Energy Survey, Colombia had proved oil reserves of 1.51 billion barrels at the end of 2007 or 0.12 % of the world's reserves. Colombia also had 2007 proved natural gas reserves of 0.12 trillion cubic metres, 0.07% of the world total. Colombia produced an average of 560.8 thousand barrels of crude oil per day in 2007, and produced 7.7 billion cubic metres of natural gas.

Oil is currently Colombia's leading export and source of foreign income, constituting a third of the country's foreign revenue. Despite the small rise in production in 2007, Colombia's oil production has declined steadily since 1999, when it peaked at 830,000 bbl/d. The principle cause of the decline has been natural declines at its existing oil fields and a lack of sizable new reserve discoveries. The country exports about half of its oil production, with the bulk of those exports going to the United States in 2005. Much of Colombia's crude oil is lighter and sweeter than that of other major Latin American oil producers, with its three export crude oils (Cusiana, Cupiagua and Orito) ranging between 28° and 36°.

All oil production is undertaken by the state owned Empresa Colombiana de Petroleos (ECOPETROL) in contracts of association with foreign companies. ECOPETROL is legally responsible for exploration, extraction, production, transportation, and marketing oil for export. Agencia Nacional de Hidroarburos (ANH) is the national hydrocarbons regulatory agency.

The majority of the Colombian oil industry runs through joint ventures between ECOPETROL and foreigns companies, some of which have heavily financed the construction of these pipelines. Investment from these multinational corporations has led to the creation of the oil infrastructure that exists in Colombia today. BP-Amoco and Occidental Petroleum are among the largest foreign companies in the Colombian oil sector. The bulk of Colombia's crude oil production occurs in the Andes foothills and the eastern Amazonian jungles. The largest field in the country is the Cusiana/Cupiagua complex operated by BP.