An additional million barrels of crude oil will leave him
cracking to the country.
The recent decision of the State Council to revive the rules and contracts for the development of cracking They can bring more than one headache to the country.
The reason: If President-elect Gustavo Petro flatly bans the practice, once he takes office on August 7, Colombia will be hit with massive economic claims before international courts.
Which is that, in the absence of one, there are four multinational oil companies that have signed contracts with the nation for the commercial and experimental development of crude oil and gas in unconventional deposits (YNC) with this technology, and that they will file lawsuits for its breach. of agreements.
On the list is not only the oil company ExxonMobil with which Ecopetrol will implement two Pilot Investigation Project Integrated (PPII) projects, but also Drummond Energy (with four contracts), ConocoPhillips (with two contracts) and Parex Resources (with one contract) recruiting their legal artillery, given the fact that The new government declared a veto.
“If this action is taken, the state is exposed to significant lawsuits for breach of contractual agreements. Each of the seven contracts that have remained in force under the decision of the State Council, as well as the two pilot pilot agreements crackingDiego Mesa, Minister of Mines and Energy, explained that the rights have been granted to the interested companies that are slated to develop them, and by not knowing them, the country will look bad in international courts.
The official reiterated that one of the country’s most important assets, and the Colombian oil and gas sector, is legal stability, respect for contractual agreements and clear rules of the game, “but if these contracts are unilaterally canceled by the government in power, the state will be very weak in its legal defense,” He said.
So far, there are none of the multinational companies with which the Colombian state has contracts to develop YNC with cracking I have talked about it. But oil sector analysts do not hesitate to assert that the economic demands will be in the millions.
“Talking about the exact amount is difficult, because it depends on each project affected, but certainly these are demands that can amount to thousands of millions of dollars in each case and are linked to profits that will not be received for not being able to,” explained Julio Cesar Vera, president of the Xua Energy Foundation. Developing activities and taking into account the important capabilities that the state possesses in this regard.
The analyst added that not only will the state lose, but the administrations and municipalities will also lose because they will stop receiving millionaire resources from royalties, taxes, profits and contractual economic rights.
Data from the Colombian Oil and Gas Association (ACP) indicates that cracking It would represent an opportunity to generate tax revenue of $1.5 billion annually (USD 2.5 billion in royalties only) and a ripple effect on local taxes associated with the chain of goods and services.
“In a situation like the current one, where the financial sustainability of the nation is not guaranteed, the YNCs represent an opportunity for Colombia to generate the resources needed to fund national government programs and social development for Colombians,” said Francisco José Loreda, President of the ACP.
the future with caution
The union leader also stressed the president-elect’s statements that during his government’s term, it was a style crackingthat the most relevant for the country is that the pilots have been developed at least.
“It is your decision and you have the tools to implement it, regardless of whether it is appropriate or not. But at the end of his government, and bar a smart transition, the country will be in a very critical situation of reserves, which could lead the next government to want to use this technology. Therefore, The most responsible thing with the nation is the implementation of the pilots, to see if this technology can be developed reliably.
For her part, Ines Elvira Vesga, partner at Holland & Knight Columbia, noted that although there was a public statement by the designated environment minister indicating that there would be no crackingSo far, it has not indicated the legal mechanism to ban it.
We don’t know if he plans to scrap the regulation, if he will terminate contracts or how he will implement his approach. What actions companies decide to take will depend on that, the analyst said.
He confirmed that there are currently signed contracts for the development of cracking, but if they are not known, there are legal mechanisms in both domestic and international law to discuss the consequences of this decision with the state. He stressed that “it is not wise to expect more without understanding the legal mechanism that the future government will use.”
Along the same lines, Nicholas Arboleda, energy analyst at Baker McKenzie, noted that the wiser thing for the next government would be to honor contracts, particularly in the case of Drummond, ConocoPhillips and Parex, they still have to beat their contracts. Environmental licensing process before the National Environmental Licensing Authority (Anla).
“In the case of the pilots (Kalé and Platero) on Magdalena Medio which will be developed by Ecopetrol and ExxonMobil, the wisest thing for the next government would be to develop them, and to remain alone in analyzing the results, especially when this process can last four years.
Analyst Vera agreed with Arboleda de Baker Mckenzie that the seven decades of commercial development are ongoing and will remain conditional on obtaining environmental licenses for its exploration and production operations.
The commitments and standards at the technical, environmental and social level will certainly be increased for the development of any construction project. cracking The analyst stressed that it could constitute a “obstacle to its progress.”