Ecopetrol’s Permian Dilemma: A $5.5 Billion Bet on Colombia’s Energy Future
A potential $5.5 billion sale of Ecopetrol’s stake in the Permian Basin is sending shockwaves through the Colombian economy, threatening a 30% drop in the oil company’s stock price. This isn’t simply a financial transaction; it’s a pivotal moment that exposes the widening gap between the profitability of US shale production and Colombia’s comparatively expensive oilfields, and forces a reckoning with the nation’s energy transition strategy.
The Permian’s Outsized Importance to Ecopetrol
The Permian Basin, located in Texas and New Mexico, has become the lifeline of Ecopetrol’s production. In the first half of 2025, the partnership with Occidental Petroleum (WeAreOxy) saw a 15.8% increase in output, now contributing 15% of the entire Ecopetrol Group’s production. This growth is particularly striking considering a 0.5% overall decline in the group’s production due to falling natural gas yields. Sergio Cabrales, a professor and researcher, highlights that losing the Permian would immediately reduce Ecopetrol’s total output by 15%, eliminating 115,000 equivalent barrels per day.
A Stark Cost Comparison: Permian vs. Colombia
The core of the issue lies in economics. Lifting costs – the expense of extracting oil – in the Permian are a remarkably low $5-$6 per barrel. In contrast, Colombian operations average $12-$14 per barrel. This dramatic difference isn’t just about geology; it reflects the operational efficiency and technological advancements driving US shale production. This cost disparity makes the Permian a uniquely valuable asset, generating an EBITDA margin of 76% compared to the 35-40% average in Colombia. The Permian currently accounts for 14% of Ecopetrol’s total upstream EBITDA.
The Financial and Strategic Risks of a Sale
Beyond the immediate impact on stock price, selling the Permian carries significant long-term risks. Ecopetrol stands to lose approximately 189 million barrels equivalent, representing 10% of its total reserves. This reduction in reserves directly impacts the company’s future stability and its ability to fund new projects and maintain dividend payments to the Colombian state – a crucial source of revenue, having received over $130 billion from Ecopetrol in recent years. Former Minister of Finance José Manuel Restrepo bluntly calls the sale a “bad decision,” questioning the fiduciary duty of board members if the asset is sold at a loss.
Union Concerns and Potential for Disruption
The Workers Union Union (USO) echoes these concerns, warning of a potential “bankruptcy” of a key national financing source. They emphasize the Permian’s profitability and the strategic importance of maintaining a low-cost production base. The USO has threatened mobilization and protests should the sale proceed, highlighting the potential for significant social and political unrest.
Government Rationale and the Energy Transition
The Petro administration, however, frames the potential sale as a necessary step in the country’s energy transition. Minister of Mines and Energy Edwin Palma Egea argues that companies routinely buy and sell assets, and that proceeds from the sale could be reinvested in new energy businesses. This aligns with President Petro’s stated goal of reducing Colombia’s reliance on fossil fuels and promoting renewable energy sources. However, critics argue that this transition requires a carefully planned strategy, and selling a profitable asset without a clear reinvestment plan is reckless.
The Fracking Factor: A Complicated Landscape
The debate is further complicated by President Petro’s opposition to fracking, despite it currently representing 13% of Ecopetrol’s production. This stance creates a paradox: while seeking to move away from fossil fuels, the administration is considering selling a highly profitable oil asset in the US, potentially prolonging the life of shale production elsewhere. The US Energy Information Administration provides a detailed overview of fracking technology and its impact.
Looking Ahead: A Critical Juncture for Colombia
The decision regarding Ecopetrol’s Permian stake represents a critical juncture for Colombia. While the desire for an energy transition is understandable, a hasty sale without a robust plan for reinvestment could severely damage the company’s financial health, reduce state revenues, and potentially destabilize the Colombian economy. The key question isn’t simply whether to sell, but how to navigate this transition in a way that secures Colombia’s energy future and protects its economic interests. The coming months will be crucial in determining whether this move proves to be a strategic masterstroke or a costly misstep. What are your predictions for Ecopetrol’s future in light of these developments? Share your thoughts in the comments below!