Page 5 - LatAmOil Week 11 2021

LatAmOil COMMENTARY LatAmOil

He acknowledged most oil companies were not the global energy industry is heading for major
branching out into the power generating sector changes – and that Colombia ought to prepare
in order to promote diversification. But he also for those changes by mounting wide-ranging
pointed out that taking control of ISA would efforts that take some of the focus off oil and gas.
reduce Ecopetrol’s carbon emissions and help However, Mesa’s statements indicate that
the NOC achieve environmental, social and copper mining will play a central role in these
governance (ESG) goals. “The fact that no other efforts. If so, Colombia may be trading one set
oil and gas company has done it doesn’t mean it’s of environmental hazards for another. (After all,
a bad idea,” he asserted. surface mining for metals does pose huge risks
Additionally, he said, acquiring the TSO to nearby ecosystems.)
will give the company a chance to remain sta-
ble in the long term, even as oil and gas fall out Passing the buck
of favour. “All the oil and gas companies are It may also be passing the buck to other parties
going into renewables, and everyone is moving in a manner similar to that suggested by Yonhy
into power generation. That doesn’t mean that Lescano, the leader of Peru’s Popular Action
that’s the only route to energy transition,” he (AP) Party and a candidate in that country’s
remarked. upcoming presidential election.
Lescano, who is leading polls in the run-up
A wider set of concerns to the first round of voting on April 11, has said
But Ecopetrol is not the only entity in Bogota to he believes the economy will improve if Peru
emphasise ESG issues, economic diversification focuses more intensively on the production of
and the energy transition. Its concerns seem to gold, silver and copper. He has also stated his
be shared by the Colombian government – or support for proposals to build a pipeline so Mesa expects
at least by Mines and Energy Minister Diego that Peru can import more natural gas from
Mesa, who talked to Bloomberg last week about neighbouring Bolivia. The link will allow Peru Colombia
his hopes for the copper-mining sector. to import larger amounts of gas at lower prices,
In a separate interview with the news agency, since Bolivia can supply gas very cheaply, he to continue
Mesa said he wanted to see Colombia become said. It will also promote competition in the producing crude
less dependent on oil and gas. country’s domestic gas market, he said.
To this end, he said, the government will “If you allow Bolivian gas [into Peru], prices oil and natural
work to promote investments in the country’s will fall because Bolivia has much cheaper gas,”
reserves of copper and golf, which are sub- he was quoted as saying by Reuters earlier this gas even if it
stantial. By the end of June, he said, Bogota is week.
scheduled to award contracts for five new cop- Certainly, competition is desirable. But in starts focusing
per exploration blocks in the Cordoba and La the event that Colombia took the spotlight off on copper mining
Guajira provinces. oil and gas, it would still need fuel and energy
According to the minister, junior US and – especially if it wanted to ramp up mining activ-
Canadian-based mining firms have already ity, which is resource-intensive. As such, it might
shown interest in these sites, along with several have to follow Peru’s example and seek gas from
local companies. He did not name any poten- another supplier.
tial investors but said that the government If so, it would be passing some of the envi-
had offered bidders a number of incentives, ronmental hazards of oil and gas production and
including a pledge to streamline the permitting consumption on to Bolivia – which is, inciden-
process. tally, facing additional risks because of its own
Mesa said he expected the bidding contest to large lithium reserves. Moreover, it would be
draw strong interest. “Colombia could become doing so after swapping out the risks involved in
one of the main producers of gold and copper,” hydrocarbon exploration and development for
he told Bloomberg. “We know that the copper the risks involved in mining.
belt starts in Chile, continues through Peru Bogota would, of course, be working to miti-
[and] finishes in Panama.” gate some of those risks by promoting renewable
In turn, he said, copper production is likely energy projects. Indeed, Mesa told Bloomberg
to be a good investment for Colombia because last week that the government was slated to hold
electrification and the upcoming shift to renew- auctions for renewable electricity supplies in the
able energies will boost demand for copper, gold second half of 2021. He also mentioned plans
and other metals used in power transmission for raising the country’s generating capacity by
and distribution networks. In 2020 alone, he 7,000 MW through solar, wind and bioenergy
said, this trend led copper prices to double and projects.
reach some of the highest levels posted within Even so, the situation is complex, and Colom-
the last decade. bian authorities should not assume that de-em-
He added that he expected Colombia to phasising oil and gas will resolve all questions.
continue producing oil and gas even if it started This course does have the potential to remove
focusing more intently on copper extraction. or diminish some of the environmental risks
Even so, he said, hydrocarbon output levels are that the country is facing because of the oil and
sure to fall in the long term. gas sector. But it may also involve exchanging
Ecopetrol’s bid for ISA seems to fall in line hydrocarbon risks for mining risks – and these
with the concerns expressed by Mesa. That is, should not be discounted, even if fossil fuels are
both initiatives are based on the assumption that driving climate worries.. ™

Week 11 18•March•2021 www. NEWSBASE .com P5