Page 5 - LatAmOil Week 32 2021

LatAmOil COMMENTARY LatAmOil

The year-on-year rise in profits is good news are not in line with the NOC’s core compe-
for Colombia, given that Ecopetrol is the largest tencies, they will allow for diversification into
company in the country and one of the largest sectors that are likely to gain importance in the
taxpayers. future.
Of course, last year’s second quarter slump If Ecopetrol is able to gain a foothold in these
was a departure from the norm. It was driven areas, it will be “years ahead” with respect to
by the advent of the coronavirus (COVID-19) diversifying its portfolio, he told Bloomberg in
pandemic, which spurred the introduction of an interview in March.
public health policies and travel restrictions The Ecopetrol CEO acknowledged during
that severely curbed global energy demand, and the interview that oil companies did not often
the brief oil price war between Russia and Saudi take this approach. But he also declared that he
Arabia following the expiration of the OPEC+ stood behind the decision to take control of ISA,
group’s production agreement. Even so, the saying it would help the NOC reduce its carbon
improvement in Ecopetrol’s performance will emissions and meet environmental, social and
help the Colombian economy by generating governance (ESG) goals. “The fact that no other Ecopetrol is
more income. oil and gas company has done it doesn’t mean it’s
Finance Minister Jose Manuel Restrepo a bad idea,” he remarked. borrowing $3.6bn
stressed this point, saying at the press conference Additionally, he argued that acquiring the
on August 11 that the government would use TSO would allow Ecopetrol to forge a new path for the purpose of
the proceeds of the sale of the ISA stake to fund forward as oil and gas fall out of favour, owing to
budget expenditures. He noted that the NOC concerns about climate change. “All the oil and ensuring that it is
had agreed to pay for the stake in US currency gas companies are going into renewables, and not left behind by
and said Bogota intended to convert the dollars everyone is moving into power generation. That
into Colombian pesos at a gradual pace in order doesn’t mean that that’s the only route to energy efforts to reduce
to avoid major fluctuations in exchange rates. transition,” he remarked.
dependence on
Energy transition A bet on the future
According to Restrepo, Ecopetrol’s decision to Bayon spoke similarly on August 11, saying that fossil fuels
become the majority shareholder in the TSO the deal would allow the NOC to speed up the
will also have a positive impact in other ways. campaign to transform its development strategy.
The minister declared that the takeover of Ecopetrol expects oil and gas to remain at the
ISA would help ensure that Colombia had the core of its operations, he explained, but it is also
funds and the resources needed to weather the looking to expand into new lines of business,
strains resulting from the pandemic. “The acqui- reduce carbon emissions and invest in renewa-
sition is one of the most important operations ble energy production.
in the country’s recent history, contributing to In other words, the company is making a bet
the energy transformation and the reactivation on the energy transition. That is, it is borrowing
of the economy,” he declared. $3.6bn for the purpose of ensuring that it is not
The finance minister was referring not just to left behind by efforts to reduce dependence on
the economic impact of the deal but to previous fossil fuels.
comments on the reason for pursuing ISA in the It remains to be seen whether this gamble
first place. Bayon has explained that his com- pays off, given that the world’s researchers have
pany is taking this course in order to support its yet to invent fuels and technologies that can
own shift toward renewable energy production. serve as effective replacements for oil and gas.
He has also pointed to the TSO’s involvement Nevertheless, Ecopetrol appears to be confident
in toll roads and fibre optics as well as electricity that it has found a way forward, given that it paid
transmission, arguing that even if such projects for its shares in ISA at above-market rates. ™

(Photo: ISA)

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