Colombia tells Davos it will stop oil and gas exploration contracts

Colombia tells Davos it will stop oil and gas exploration contracts

Energy Minister Irene Vélez of Colombia confirmed Thursday that the South American nation will stop awarding new oil and gas exploration contracts, a decision she described as “absolutely urgent.”

Vélez made his announcement at the meeting of the World Economic Forum in Davos, during a panel entitled “The Different Paths to Energy Transition.” The Colombian minister’s statement follows leftist President Gustavo Petro suggests in the same place to “decarbonise capitalism” to “prevent the extinction of the planet”.

“We decided that we are not going to give new gas and oil exploration contracts,” Minister Vélez said, adding, “importers of coal will no longer import very soon.”

“This has of course been very controversial at the national level, but for us it is a clear sign of our commitment to the fight against climate change,” continued Vélez. “We know that this decision, which is a planetary decision, is absolutely urgent.”

Just days after taking office, Petro’s far-left government – the first in the nation’s history – expressed its intention to halt all new contracts for the exploration and production of natural gas in the name of “environmental justice”, which would effectively end Colombia’s self-sufficiency in the pursuit of “green” energies. At the time, Vélez suggested that if his policies led to a shortage of natural gas, Petro would buy fossil fuels from the neighboring socialist regime in Venezuela.

Despite oil and coal being some of Colombia’s biggest exports, Petro, a former member of the Marxist M19 guerrillas, has continuously waged a fierce campaign against them, going so far as to claim they are “more toxic” than cocaine on several occasions. Petro promoted cocaine, decrying its toxic properties, during his first UN General Assembly speech in September 2022.

Petro’s government has too Narrow Colombia’s oil, coal and gas industries with higher taxes as part of his ambitious tax reform, approved by Colombia’s Congress in November.

Petro stood by Minister Vélez’s statements this week, express in Davos that “part of what we have come here to do specifically has to do with replacing the Colombian export matrix.”

The far-left president also claimed that Colombia will focus on tourism to fill the void in revenue that the suspension of oil and gas contracts would generate.

“Basically, it has to do with tourism and exporting clean energy,” Petro said. “We are convinced that a strong investment in tourism, given the country’s beauty, and in the capacity and potential that the country has in clean energy production can perfectly, in the short term or in a transition, fill the gaps that the fossil economy can leave, which we depended on of.”

Upon his arrival in France, Petro secured that currently active oil and gas contracts will remain active.

The energy minister’s statements immediately drew a barrage of criticism from Colombia’s politicians. Petro’s predecessor, Iván Duque, reacted to the announcement by describing it as “economic suicide”.

Former Colombian President Ivan Duque delivers a speech during the inauguration of the congressional session in Bogota, Colombia, Wednesday, July 20, 2022. (AP Photo/Ivan Valencia)

“It simply means a kind of economic and social suicide,” Duque said. He noted that oil and gas represent 40 percent of Colombia’s exports and 30 percent of foreign investment.

“They are one of the main sources of market value in our stock market, and it is one of the main sources of foreign exchange for our economy, and there are no products that can replace such weight in the short and medium term,” Duque explained.

“If the exploration stops, the message we give to investors around the world is that Colombia’s main source of income is going to disappear, and it is going to generate uncertainty, concern and a large outflow of capital from our country. It is necessary to prevent these messages from being granted, because they are wrong messages and have nothing to do with the energy transition,” concluded the former president.

The Colombian Association for Oil and Gas (ACP) also reacted to the minister’s statements by warning that Colombia may become poor without new oil extraction contracts.

“The hydrocarbon industry is essential for the economic stability of the country, national financing and the departments and municipalities,” stated Francisco Lloreda, ACP president. “About 40 percent of exports depend on this sector, 20 percent of the country’s tax revenue and 76 percent of royalties.”

Lloreda, through his Twitter account, noted that while Vélez and Petro condemned oil and gas, Felipe Bayón, the president of Colombia’s state-owned Ecopetrol oil company, stood in defense of the use of hydrocarbons in Davos. Bayón contradicted Vélez, affirming that Colombia should continue to explore and produce oil and gas.

“Who understands the government? While the president of Ecopetrol confirmed in Davos, Switzerland, that the country must continue to explore and produce oil and gas, in line with the Ministry of Finance, the Ministry of Energy says that there will be no new exploration contracts. So finally, what?” he wrote.

Federico Gutiérrez, a conservative candidate who lost to Petro in the first round of the 2022 presidential election, described both Petro and Vélez as “irresponsible”.

“The irresponsibility of the Petro government and its mining and energy minister knows no bounds,” Gutiérrez wrote on Twitter. “They condemn Colombia to have to import gas from Venezuela. They condemn the poorest to pay more for gas and fuel. Energy transition yes, but in a responsible way.”

Christian K. Caruzo is a Venezuelan writer and documents life under socialism. You can follow him on Twitter here.

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