Colombia's state-controlled oil company Ecopetrol risks losing its regional leadership in the transition to renewable energy without better policy support from the government — despite the president's vow to move away from oil, one environmental group said in a new study.
Ecopetrol is one of few national oil companies in Latin America that have taken early measures to reduce risks from climate change and a projected eventual decline in demand for crude, the New York-based environmental group Natural Resource Governance Institute (NRGI) said.
But about 31pc of Ecopetrol's upstream investment portfolio, worth almost $6bn, would still be a risk in the next decade under a scenario in which the transition to renewable energies progresses at a moderate rate, based on countries' announced emissions reduction pledges to the Paris-based IEA, NRGI estimates. The administration of President Gustavo Petro — which has taken steps to try to eventually end hydrocarbon production in Colombia — could better support Ecopetrol in this aim, NRGI said. Colombia's government and its oil company lack a strategic joint strategy towards the energy transition.
"These tensions have structural roots, but they have deepened during the government of Gustavo Petro," NRGI said in the study.
Unstable energy policy, political wavering on the role of Ecopetrol, a lack of alignment between production goals and Colombia's climate commitments and a corporate governance structure vulnerable to political interference have all contributed, NRGI said.
Interference under Petro has included calling on Ecopetrol to end its involvement in a joint venture in the US' Permian basin that involves hydraulic fracturing, former Colombia minister of mines and energy Amylkar Acosta said.
"It is the best business that Ecopetrol has," Acosta said Wednesday during a webinar organized by NRGI during Climate Week in New York.
Petro has also alternated between calling natural gas a "poison" and berating Ecopetrol for not importing more natural gas, Acosta added.
Despite the pressure, Acosta considers that Ecopetrol has continued to mostly follow its corporate position, developed first under past administrations, to move towards an energy transition while remaining profitable.
To support Colombia's energy transition, NRGI recommended better institutional coordination between the government and Ecopetrol over climate-related business risks, stable long-term energy policies and a balance between autonomy and alignment for Ecopetrol. Maintaining Ecopetrol's "technical and operational independence" is key, NRGI said, while also ensuring it aligns with Colombia's climate, social and economic goals.
