Oil and Peace in Colombia: Industry Challenges in the Post-War Period
As a major exporter of oil and petroleum products, Colombia has suffered along with other oil-producing countries from the dramatic decline in oil prices. At the same time, Colombia has faced challenges to its oil industry that are unique in light of decades of internal armed conflict. Since the mid-1980s, guerrillas of the National Liberation Army (ELN), and subsequently the FARC, have relentlessly attacked oil installations and personnel through kidnappings, extortion, and sabotage of oil pipelines. The economic and environmental impact of these attacks is estimated to be in the billions of dollars. As the Colombian government moves closer to signing a final peace agreement with guerrillas of the Revolutionary Armed Forces of Colombia (FARC), what will be the effect on the oil and gas industry? In light of the importance of the oil industry to Colombia’s export revenues, is it reasonable to assume that improved security in the wake of a peace accord will lead to a boom in the hydrocarbons sector? A new report commissioned by the Latin American Program has identified several challenges to post-accord hydrocarbons development:
- The rapid expansion of oil exploration between 2009 and 2014 did not lead to the discovery of any large new fields. Increased oil production was the result of secondary and tertiary recovery and not from the addition of new reserves. The prevailing environment of low oil prices has led to a significant slow-down in investment in exploration.
- The end of guerrilla conflict should open up exploration in new areas and basins that previously had a permanent FARC presence (for example, in parts of Caquetá and Putumayo). However, if negotiations with the ELN do not prosper, security challenges will remain considerable in the majority of regions in which oil companies operate.
- For decades, the presence of and the threat represented by the guerrillas profoundly affected how oil companies operated in different regions and influenced the modes of interaction with local communities. The threat also ingrained a “security-first” mentality. These habits will not change quickly once a peace agreement is signed. It will take time for industry personnel to venture beyond their secured compounds and mingle with the local population in long conflictive oil-producing zones in Arauca, Caquetá, and Putumayo.
- One of the key objectives of peace, as articulated by the government, is to empower communities that have been abandoned by the state and subject to the influence of illegal armed groups. Many communities in oil producing regions are already quite active in expressing their grievances. This situation is unlikely to change; in fact, protests and work stoppages could actually increase as fear recedes.
- The challenge for the industry is not only to find new resources in the ground—a question, ultimately, of geology—but, equally important, to effectively manage the risks above ground.
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Latin American Program
The Wilson Center’s prestigious Latin American Program provides non-partisan expertise to a broad community of decision makers in the United States and Latin America on critical policy issues facing the Hemisphere. The Program provides insightful and actionable research for policymakers, private sector leaders, journalists, and public intellectuals in the United States and Latin America. To bridge the gap between scholarship and policy action, it fosters new inquiry, sponsors high-level public and private meetings among multiple stakeholders, and explores policy options to improve outcomes for citizens throughout the Americas. Drawing on the Wilson Center’s strength as the nation’s key non-partisan forum, the Program serves as a trusted source of analysis and a vital point of contact between the worlds of scholarship and action. Read more