Pure Fuel Shortages In Colombia: Is An Vitality Disaster Imminent?

  • Colombia’s leftist president, Gustavo Petro, plans to finish contracting for hydrocarbon exploration.
  • The plan has raised issues about dangers to the nation’s petroleum-dependent economic system and vitality safety.
  • Pure fuel shortages may set off an vitality disaster if Colombia proceeds with the plan to stop issuing new oil exploration contracts.

The strife-torn Latin American nation of Colombia is dealing with appreciable uncertainty after the primary leftist president within the nation’s fashionable historical past Gustavo Petro embarked upon a plan to finish contracting for hydrocarbon exploration. Business tax hikes have already ratcheted-up the extent of worry and there are important issues Petro’s plan won’t solely shock Colombia’s petroleum-dependent economic system however endanger the Andean nation’s vitality safety and even spark a crisis. It’s an ever-growing scarcity of natural gas which would be the more than likely set off of an vitality disaster, with declining home provide and rising demand already having pressured Colombia to considerably improve liquified petroleum fuel imports. The dangers of such a disaster rising are very actual if Petro proceeds together with his plan to stop issuing new oil exploration contracts.

For roughly a decade, Colombia’s nationwide authorities within the capital Bogota has been grappling with rising natural gas supply constraints at a time when demand for the gasoline is rising quickly. The dwindling pure fuel provide could be primarily blamed on insufficient confirmed reserves, a scarcity of exploration and growing old mature fuel fields with rising decline charges. By the tip of 2021, in accordance with Colombia’s vitality ministry, the nation had solely 3.1 trillion cubic toes of confirmed pure fuel reserves, which on the present fee of manufacturing of round 1.1 million cubic toes every day, is simply adequate for one more eight years. This factors to present reserves being incapable of assembly home demand for pure fuel within the close to future. It is because of this that Bogota began bulk imports of liquified petroleum gas in late-2017. 

The Santos and Duque administrations launched insurance policies geared toward garnering higher vitality funding from overseas vitality firms and stimulating hydrocarbon exploration. These measures included introducing a well-head value for pure fuel that was considerably increased than the worldwide market fee and offering tax incentives for pure fuel improvement. By 2021 demand for fossil gasoline had grown so considerably that Colombia was planning to quadruple LPG imports throughout 2022. Even that has confirmed incapable of resolving Colombia’s pure fuel provide crunch. 

A urgent concern is that changing Colombia’s growing old fuel fields and boosting the nation’s meager reserves is proving extremely problematic. There have been no main world-class hydrocarbon discoveries in Colombia for nearly three a long time, and regardless of 100 years of exploration, solely 4 large oil and fuel fields have been found throughout that interval. This means that Colombia doesn’t possess the hydrocarbon potential that earlier governments, the regulatory authority, the Nationwide Hydrocarbon Company (ANH – Spanish initials) and the height business physique, the Colombian Petroleum Affiliation (ACP – Spanish initials) imagine.

One other complication is that a lot of the pure fuel found and produced in Colombia is related to fuel which is contained in oil reservoirs and is a byproduct of petroleum extraction. Drillers in Colombia are using practically all of the pure fuel they produce to be used in enhanced restoration methods, notably fuel injection. That is the place the pure fuel is injected into wells to raise the reservoir stress making it simpler to extract the petroleum, thereby rising the business lifetime of the properly. An absence of main oil discoveries and the truth that most producing oilfields are mature with growing old wells means that there’s a rising necessity to make use of fuel injection to optimize petroleum extraction.

Demand for dry fuel can also be excessive as a result of petroleum business contributors use it as a gasoline for the gas-fired vegetation which energy their operations. This even consists of nationwide oil firm Ecopetrol’s Cartagena and Barrancabermeja refineries. Fuel condensate can also be a vital component utilized in Colombia’s petroleum manufacturing. It’s employed as a vital diluent that’s added to the heavy crude oil, which includes many of the petroleum produced within the Andean nation, to make the bitumen-like oil move in order that it may be simply transported and course of. 

There’s additionally surging demand for pure fuel from Colombian households and business the place it has turn out to be a key low-cost gasoline used for a wide range of functions from heating and cooking to manufacturing purposes. Fuel-fired electrical energy era can also be turning into progressively extra necessary in Colombia. A pointy decline in water ranges on account of an prolonged drought and the El Niño climate phenomena throughout 2015 and 2016 prompted electrical energy output from Colombia’s hydroelectric vegetation to say no sharply. That positioned appreciable stress on a nationwide electrical grid that was already tormented by insufficient infrastructure, faults and frequent outages. To make sure that ample electrical energy is produced, Bogota carried out a method geared toward constructing gas-fired vegetation to supply further electrical energy manufacturing throughout occasions hydroelectric output low. That positioned higher stress on already constrained pure fuel provides.

Analysts worry if Petro proceeds with ending hydrocarbon exploration, then Colombia’s already meagre oil and pure fuel reserves will quickly dissipate, that means the nation will not be vitality self-sufficient and face a possible disaster by as early as 2024. To assuage these fears Colombia’s president introduced towards the tip of 2022 that he had safe a deal by means of a privately held firm for Venezuela’s nationwide oil firm PDVSA to export pure fuel to Colombia. Whereas elements of the plan make sense, notably with Venezuela possessing the world’s largest petroleum reserves, it’s fraught with considerable risk and is probably not a viable answer. Petro’s plan to stop awarding hydrocarbon exploration contracts will exacerbate Colombia’s current pure fuel scarcity, doubtlessly roil the oil dependent economy and set off an vitality disaster.

By Matthew Smith for Oilprice.com

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