The president of the Colombian Association of Oil and Gas (ACP), Francisco José Lloreda, assured that before the difficult panorama that companies are seeing To invest in Colombia, the investments could go to other countries in the region, such as Ecuador.

According to the president of the ACP, Colombia’s main competitors, in terms of investment, are USA because it has different conditions on subsoil ownership and a more competitive environmental regime for the private sector.

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It should not surprise us that the investment, both for exploration and production, that would be expected to come out of Colombia, will migrate to Ecuador.

In the region, it stands out Ecuador because «it has sought to learn from the good practices of countries like Colombia to seek to have very competitive contractual conditions in others and is attracting investment,» he added.

In addition, this country has a great interest in gradually increasing its production, which currently stands at approximately 500,000 barrels and in May a new round of oil will be held nextwhile in Colombia the door to new contracts was closed, for now.

«It should not surprise us that the investment, both to explore and to produce, that would be expected to come out of Colombia, will migrate to Ecuador, which opens up as a great possibility for companies that have a presence in the countryLloreda said.

It also weighs that in Ecuador the tax burden for oil companies is lower Colombian-style, they have very competitive contracts in order to be a very attractive country in the region, and companies have longer periods of time without interruption in operations, when in Colombia every day there are challenges for the activities of the sector.

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Companies are also seeing valuable opportunities in other countries such as Mexico, Brazil, Guyana and Venezuela.

Due to the effects of the tax reform, which established a surtax for oil producers and prohibited the deductibility of royalties from income tax, in 2023 the oil companies will stop investing 200 million dollars in production, while in exploration they will stop investing 170 million dollars.

Difficult investment environment in Colombia

According to the oil companies consulted by the ACP, Colombia’s main strengths to invest in 2022 was the respect of the government of President Gustavo Petro for the contracts that have been signed in previous years; the potential of undiscovered resources and available areas; favorable expectations for natural gas supply and a developed Industry that has infrastructure, regulations and good practices.

On the contrary, the weaknesses that companies identify are the excessive tax burden (prohibition of the deductibility of royalties, surtax and taxes on dividends); the uncertainty in the medium term due to the non-subscription of new contracts and the ban on fracking; and the modification in procedures and licenses, implementation of the Escazú Agreement, and the complexity of operations in the regions.

Additionally, 100 percent of the oil companies interviewed stated that fiscal conditions deteriorated and 79 percent happily that regulatory and institutional security and political stability worsened, as did political stability. Social and community aspects have also deteriorated, according to 54 percent of companies.

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In the 11 evaluative aspects, none was qualified mainly as an improvement. Most companies considering business as usual regarding environmental aspects, geological prospectivity, safety in operations, contractual conditions, competitiveness in the local goods and services industry, prior consultation processes and infrastructure availability.

«About 10 years ago, the main attractions of Colombia to attract investment are those that are now in the red: fiscal conditions, political stability and regulatory and institutional security. These three were fundamental from the competitive point of view of Colombia and in 2022 great concern was expressed and there is a deterioration in these aspects”222, highlighted the president of the ACP.