Oil companies are already thinking about leaving Colombia due to uncertainty – Sectors – Economy

The combination of the tax reform, the impacts of the Escazú Agreement on the sector, uncertainty about the signing of new exploration and production contractsand the public order problems that are being registered in the regions, have led the oil companies to reconsider their plans to invest in Colombia.

There are companies that, without a doubt, are going to divestunless there is clarity in energy policy and how the Government intends to advance the energy transition,” said the president of the Colombian Oil and Gas Association (ACP), Francisco José Lloreda.

(Also read: Colombia’s GDP grew 7%, but slowed down in the third quarter of 2022)

Yes, there are companies that are considering disinvesting in Colombia and there are others that are thinking of making one last bet.

The union leader also recalled that companies such as Oxy and Chevron have sold their onshore assets to focus their offshore operations, while the American ConocoPhillips is no longer interested in making new investments in the country. as a result of the decision of the government of President Gustavo Petro not to allow fracking to take place.

But, just as there are companies that are considering disinvestment, there are others that, on the contrary, are thinking of making one last bet, but their final decisions will depend on the signals that the national government gives in the coming months. “If you lose the industry, you lose the country. We trust that in the discussions that are taking place, good sense and the general interest of all Colombians prevail ”, he added.

Despite the outlook for the sector, the president of the ACP invited companies to continue allocating resources to Colombia because, once they leave, convincing them to return to the country is more complex. “We must do everything possible to keep them investing.”

Oil companies will contribute in 2022 the three tax reforms

By 2022, it is estimated that the tax contribution of all the companies that are part of the oil industry (exploration, production, refining, and transportation), plus Ecopetrol dividends, will be 61 billion pesos, thanks to the increase in the price of oil this year.

The president of Campetrol, Nelson Castañeda, assured that this It is a record number and is equivalent to three tax reforms like the one that will be approved in the next few days in the Congress of the Republic and through which it is expected to raise some 20 billion pesos. Additionally, exports add up to 13,000 million dollars per month of August (approximately 63 billion pesos), another record figure and more than 50 percent of the country’s total exports.

(Also read: Opa by Nutresa: this is the record of the discord of the board of Sura)

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We look forward to continuing to explore and produce oil and gas that are key to the country’s energy security. and to take advantage of the resources generated by the sector to benefit communities with social and environmental projects and leverage the energy transition,” said the president of the ACP.

For the union, the tax reform, which is pending conciliation to pass to presidential sanction, excessively hit the industrysince it establishes a surcharge of up to 15 percent, which will vary according to the international price of a barrel of oil, in addition to prohibiting the deductibility of royalties in income tax.

For this reason, the companies affiliated with the ACP are still “examining different scenarios” to determine what will be the act against what the tax establishes.
Precisely, in recent days the Minister of Finance, José Antonio Ocampo, sHe referred to the possibility of lawsuits being filed against Colombia for this change in taxation..

(Also: Colombia’s GDP grew 7%, but slowed down in the third quarter of 2022)

“In no Free Trade Agreement (FTA) is the sovereignty of countries in tax matters taken away. When the tax rules are changed for a Colombian company abroad, Colombia cannot sue that country for that reason. LAutonomy in tax matters is not something that is limited to an FTA”, said the minister.

According to industry associations such as Campetrol, Aciem and the ACP, Colombia needs a responsible energy policywhich contributes not only to guaranteeing a secure energy supply, but also to macroeconomic and fiscal stability, and which takes into account the needs of the regions in terms of royalties and productive transformation.

To achieve this, they consider that It is key to continue exploring and producing national oil and gasand exporting hydrocarbons to have fundamental resources for the Nation, all this while making progress in the transition and strengthening the fight against climate change.

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