Columbia’s Hydrocarbon Promise Threatened by ‘Green’ Foolishness

With mist-shrouded peaks of the Sierra Nevada de Santa Marta and a sun-drenched Caribbean coastline, Colombia’s landscape is as diverse as its people. However, decades of internal conflict and economic uncertainty demonstrated that incredible natural beauty alone are not sufficient for a civilized society.

A transformation from more than 50 years of internal armed conflict began with a 2016 peace agreement between the national government and the Revolutionary Armed Forces of Colombia. But that was not the only change.

In the shadows of the Andes Mountains, coal, oil and natural gas –  along with a mining sector – emerged as key pillars of the nation’s economic development. Long known for its coffee exports and emerald mines, Columbia has become South America’s most promising energy hub. The multi-billion-dollar question is whether the fad of “green” energy will scuttle the country’s promise.

In 2022, the top exports of Colombia were crude petroleum, $16 billion; coal briquettes, $13 billion; coffee, $4 billion; and refined petroleum and gold, each more than $2 billion. 

The fossil fuel sector’s success lies not just in the quality of products but in the efficiency of its production and transportation infrastructure. Modern mining operations, coupled with up-to-date rail lines and ports, have created a seamless supply chain that can respond quickly to the demands of global markets.

The country has the 17^th largest coal reserve in the world. Coal production has seen a gradual increase in recent decades, representing by 2020 nearly 80% of Latin American output and ranking as the world’s fifth largest exporter of coal. 

The Cerrejón mine, the largest open-pit coal mine in Latin America and 10^th largest globally, supports thousands of jobs, especially in La Guajira, a historically underdeveloped region. Royalties and taxes from coal exports have funded infrastructure projects, healthcare and education, becoming a catalyst for regional transformation. 

The mine’s product is a low-ash, low-sulfur bituminous variety that is sought after by customers in Europe and other regions with stringent environmental regulations. Colombian coal’s main destination in 2023 was Europe, followed by energy-hungry economies like China, South Korea, Turkey and India. 

Thermal coal exports have been steadily increasing despite Europe’s increasing aversion to the fuel. This is because of Asia’s ever-increasing demand for it. Analysts believe that “Asian demand is now the sustaining factor for Colombian coal production and likely to remain so” moving forward.

Coal exports to China more than tripled and those to South Korea nearly doubled during January-May 2024 compared to same period the previous year. 

The country has made significant strides in oil and gas exploration, too. Colombia’s current oil production – approximately 777,000 barrels per day – positions it as a key player in regional energy markets. State-owned Ecopetrol, once a modest regional player, is becoming a sophisticated multinational corporation as it collaborates with Petrobras and Shell.

Caribbean Sea discoveries  of natural gas like the Gorgon-2 and Sirius-2 – the largest such finds in Colombia’s history – and the Northeastern oil fields of Llanos Basin promise to bolster reserves. The natural gas reserve is set to triple, and production from new discoveries is expected before the end of this decade. 

However, the economic benefits of fully utilizing available fossil fuel reserves are now at risk due to the current administration’s promotion of so-called green energy. The Colombian government has ended the issuance of new oil and gas permits. A ban on hydrofracturing for oil and gas is threatening power blackouts in the country if imports of liquefied natural gas are not stepped up. 

“In Columbia, the government of Gustavo Petro sees carbon dioxide emissions as a bigger priority than energy security and oil revenues,” reports OilPrice.com. “There, a shift is in progress from oil and gas to wind and solar that the government has estimated would cost some $40 billion.”

Such foolishness has been demonstrated to disastrous effect in places like Germany and England and has been rejected by U.S. president-elect Donald Trump, who declared the supposed climate crisis a “scam.”

If Columbia hopes to continue its recovery from socioeconomic dysfunction, its 50 million citizens must insist on a rational energy policy that capitalizes on the country’s hydrocarbon wealth. Otherwise, high prices for energy and goods and an anemic economy are in its future.