Energy & Utilities
From The Report: Colombia 2013
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The energy sector reached a milestone in 2012 as crude oil production surpassed 1m barrels per day. Colombia’s current generation capacity of 14,420 MW is supplied primarily by hydroelectric power, which accounts for just over two-thirds of the total, with the remainder coming primarily from natural gas- and coal-fired thermoelectric plants. Since 2008 natural gas production has seen private sector output grow at 22.9% year-on-year. The sector has also seen the emergence of a biofuels industry as legislation mandating the use of biofuel mixes created domestic demand for the alternative energy source. Deficient infrastructure and security concerns continue to pose a challenge to the sector.
This chapter includes interviews with Frederico Renjifo Vélez, Minister of Mines and Energy; Juan Esteban Calle, Empresas Públicas de Medellín; and Germán Arce Zapata, President, National Hydrocarbons Agency.

Articles from this Chapter

Overview

In the black: Despite limited domestic reserves, production of oil and gas has soared in recent years
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A significant milestone was reached in 2012 when Colombia finally surpassed 1m barrels per day (bpd) in crude oil production. However, this achievement masks the fact that at 2012 production levels, the country will run out of oil reserves in less than six years, despite its new status as the third-largest producer of crude in South America. Investment into exploration of hydrocarbons, particularly of non-conventional resources, will be key to sustaining production levels in the medium to long…

Interview

OBG talks to Federico Renjifo Vélez, Minister of Mines and Energy
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Interview:Federico Renjifo Vélez What is being done to facilitate foreign direct investment (FDI) in the energy and mining sectors? FEDERICO RENJIFO VELEZ: In the past few years, the country has proved that it welcomes foreign investment. The mining and energy sectors, in particular, received more than $12.5bn in FDI in 2012, which is indicative of the welcome these investments receive. Fortunately, most legislative efforts involving the provision of platforms for FDI inflows have been viewed…

Interview

Powering up: OBG talks to Juan Esteban Calle, General Manager, Empresas Públicas de Medellín (EPM)
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Interview:Juan Esteban Calle Given that electricity demand is growing at 4% per year, how will future growth be met? JUAN ESTEBAN CALLE: Over 95% of the population is already supplied with electricity, so future projects will primarily be used to meet increasing demand, including for the 5% not currently served and the installation of alternative energy sources for cost-benefit reasons. The constant rise in demand has benefitted the sector. Since regulation stipulates a cap of 25% for total…

Analysis

A river runs through it: Hydroelectric resources provide a vast supply of clean energy
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In Colombia, like its neighbours Brazil and Peru, the use of hydroelectric power as the primary source of electricity has been a crucial aspect in expanding supply capacities to meet rising demand over the past half century. Indeed, in 2012 Colombia derived 68% of its 14,420-MW supply capacity from its vast network of rivers and streams, according to the National Office of Mining and Energy Planning (Unidad de Planeación Minero Energética, UPME). With several notable projects being constructed…

Analysis

Spreading the wealth: Reform reallocating royalty revenues from the mining and energy sectors comes into force
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A combination of an improved investment environment from a security standpoint and rising international commodity prices have been the principal causes of the recent growth in the extractive industries. The booms experienced by the mining and hydrocarbons industries have in turn sparked a rapid increase in royalties collected and distributed to local governments. Having grown by roughly 70% from 2006 to 2011, with royalties from the extractive industries expected to double within the next decade,…

Interview

OBG talks to Germán Arce Zapata, President, National Hydrocarbons Agency (ANH)
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Interview:Germán Arce Zapata What is the significance to the oil industry in reaching the 1m barrels per day (bpd) production mark? GERMAN ARCE ZAPATA: The milestone of exceeding 1m bpd places Colombia among the world’s top- oil producers. Investment levels in Colombia have significantly increased, to the extent that hydrocarbons represented 35% of incoming foreign direct investment by 2012. This is the result of events over the past decade, including Ecopetrol’s initial public offering…

Analysis

The unconventional: Development of previously inaccessible reserves could play a vital role in the long term
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Thanks to the development of new technologies such as fracking and offshore drilling, hydrocarbons reserves previously thought inaccessible are being exploited. Colombia’s experience in developing these resources is limited, though recent auctions of unconventional blocks could open the door to extra reserves of oil and gas. The incorporation of unconventional resources in the energy matrix could play a key role in securing hydrocarbons resources in the long term, as proven reserves are rapidly…

Analysis

A growing fuel source: The cultivation of palm oil and sugarcane drives the development of a nascent biofuels industry
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In recent years rising oil prices and global warming have driven the development of alternative fuel sources as nations look to secure their energy futures while reducing carbon footprints. While Colombia is a serial user of “clean”, renewable energy through its reliance on hydroelectricity, it is also a growing producer of biofuels such as ethanol and biodiesel, thanks in large part to a strong political desire to support and prioritise the industry. Legislation passed in 2001 mandated…

Analysis

Up for shale: The unconventional gas market has introduced new supplies and challenges to the hydrocarbons industry
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Cheap, plentiful energy has long been a precondition of the industrial age. In recent years though, conventional reserves of fossil fuels such as oil and gas have been steadily dwindling. With renewables not yet sufficiently developed to end dependence on these resources, the world faced a stark choice: either return to more hazardous and more polluting sources such as nuclear and coal, or accept dramatically higher energy prices and the constraints on economic activity. In the past five years,…