Page 5 - LatAmOil Week 37 2019.pdf

LatAmOil COMMENTARY LatAmOil
 At first glance, this clarification seems to leave the door open for Ecopetrol to move for- ward with its pilot projects. Indeed, the NOC responded to the court’s statement by saying that it was moving forward with community consul- tations and basic preparatory work.
Not surprisingly, the Alliance for a Colombia Free of Fracking took a different stance. On Sep- tember 17 the group asserted that the practice was still off-limits, since the government had yet to establish laws governing its use.
In short, Colombia does not appear to be any closer to a resolution of the debate over frack- ing than it was a week ago. Instead, the status quo persists. The government, along with oil and gas operators and their supporters, is still at odds with public interest groups and other non-governmental organisations (NGOs). Meanwhile, Ecopetrol is doing what it can, lay- ing the groundwork for the launch of pilot pro- jects while stopping short of actually making preparations for fracking.
High stakes
The stakes are high for the oil industry and for the government. According to the Energy Min- istry, opening up unconventional resources could triple Colombia’s oil and gas reserves, thereby creating the conditions for attracting billions of dollars in new investments (thereby benefitting upstream operators) and generating
billions of dollars in new revenues (thereby ben- efitting the Treasury).
For its part, the Colombia Petroleum Asso- ciation, an industry group, says that the issue is even more far-reaching. It claims that imposing a permanent ban on fracking could undermine investors’ confidence in the country – not just in the oil and gas sector, but in the country as a whole, meaning that Colombia’s fiscal sustaina- bility hinges on the outcome of the debate.
Meanwhile, activist groups remain staunchly opposed, citing concerns about environmental damage and safety hazards. They have drawn so much support from the public that the gov- ernment has tried to stake out a middle course, agreeing that the country needs a regulatory regime to govern fracking but trying to leave room for projects that could promote economic growth. Likewise, the Council of State has tried to balance competing interests, extending the temporary moratorium while also giving a green light to “comprehensive investigative pilot projects.”
As a result, Colombia is still in limbo, at least with respect to fracking. It will have to wait a few more months to learn whether the administra- tive court will prohibit or permit the practice in any way. And even if it does side with the oil industry and the government, upstream oper- ators will still need time before they reach the point of starting to drill. ™
Colombia will “
have to wait a few more months to learn whether the court will prohibit or permit any type of fracking
CLIMATE ISSUES
TPI urges fossil fuel industry to face up to climate change
The Transition Pathway Initiative (TPI), backed by investors managing $15tn in assets, has called on the world’s oil and gas majors to step up efforts to tackle their emissions.
The initiative, which aims to help asset own- ers assess how companies are addressing climate change, published its most detailed evaluation of the energy sector to date on September 18. It found that only 31 of the 109 energy firms it assessed had strategies aligned with govern- ments’ commitments under the 2015 Paris cli- mate agreement.
A mere two of these were oil and gas com- panies – Spain’s Repsol and Royal Dutch Shell – while the remaining 29 were electric utilities, TPI said in a statement. None of the fossil fuel firms were in line with the goal of restricting global warming to 2°C.
Rating managements’ response to climate change, it said that 31 oil and gas companies were not releasing data on the indirect emissions from the products they sold, while 23 had not fixed quantitative targets for curbing pollution. Since its previously assessment last year, TPI said 26 companies had not made any progress
in the managerial area, while 15 had, five had gone backwards and four did not have trend data available.
In contrast, TPI said that not only were 29 electric utilities on track with Paris pledges, but 12 were even aligned with the climate accord’s most ambitious goal of keeping warming at below 2°C.
A number of energy companies in developed nations, particularly in Europe, have sought to divest from coal power in recent years and focus more on renewables. Some oil and gas com- panies have also made significant inroads into clean energy, including Norway’s Equinor and France’s Total, but these cases are far rarer.
“Despite a climate emergency being declared across multiple countries, this new research shows the energy sector is inching rather than accelerating towards a low-carbon future,” Adam Matthews, TPI’s co-chair and director of ethics and engagement at the Church of Eng- land pensions’ board, commented. “In particu- lar, too many fossil fuel companies are dragging their feet both on governance and actual carbon performance.”
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