OPINION: The Covid-19 pandemic has affected the industry in similar ways but it could not have come at a worse time for a country such as Colombia, which was looking to reactivate its upstream sector, particularly its gas-prone waters in the Caribbean Sea.
The Andean country was on its way to start the year on a positive note after taking 2019 to set itself up for success.
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But the pandemic delayed oil and gas auctions that saw little interest as companies struggled to pay the bills after being hit by the downturn.
Colombia also witnessed the exit of one of the country’s long-time players from its onshore sector and was hit by delayed offshore drilling plans.
Licensing rounds were postponed a few months due to the pandemic and when bidding finally began the interest in new blocks was dismal.
Adding insult to injury, Occidental Petroleum in October sold its onshore assets in an $825 million deal in an effort to pay down debt.
Offshore, Colombia had expected drilling to start in 2020, triggered by contracts signed over the past two years, but as the oil price fell so did expectations of any wells being spudded.
In late July, Brazil’s Petrobras put up for sale its interest in the offshore Tayrona block, following Spanish player Repsol’s exit from the acreage last year, leaving Colombian partner Ecopetrol to fend for itself.
Then in November, Noble Energy, earlier acquired by US supermajor Chevron, said it would delay plans to drill an offshore exploration well with partner Shell, although it retained an option to drill next year.
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Perhaps 2021 will be a better year for Colombia to push for more offshore drilling to help boost its natural gas reserves as a three-block drilling campaign for Shell and Ecopetrol is expected to begin.
Occidental still holds a handful of offshore blocks and has until 2021 to decide what it will do with them.
But, as Shell shifts to a greener portfolio, and as Occidental continues to struggle to pay off its debt, only time will tell whether drilling off Colombia will be much of a priority for either company in a post-Covid world.
(This is an Upstream opinion article.)
