The Colombian-Canadian Chamber of Commerce (CCCC) hosted the “Oil & gas: Colombia’s outlook” webinar to analyze the panorama of the sector in Colombia and the region during this year. HCC attended the event.
The moderator of the event was Marianna Boza, director of the CCCC’s Energy Mining Committee, and the guests were Pierre Alarie, President of Canada’s ATCO for Latin America, and Campetrol’s German Espinoza.
Boza opened the event by saying that 2020 was expected to be a year of economic recovery for the sector; a panorama that quickly changed by the price war between Russia and Saudi Arabia and the Covid-19 pandemic.
She added that oil is still the most important commodity in the world and tells us how the world’s economy is doing.
“Now, it is telling us that the economy is in trouble. On April 20th, 2020 the WTI went from US$20 to US$-35, and the next day prices recovered. What happened on April 20? Colombia has Brent as a reference, not the WTI, what effect did this have for Colombia?” Boza asked the guests.
According to German Espinoza, the industry had never been in that situation, and everything happened because oil is not attached to a physical market like gas, so it becomes very speculative.
“We must be clear and say that this happened in the US, and WTI is the benchmark for the US, not for Colombia. Prices opened at US$18 and closed the day at –US$35,” he said, explaining that the context of what happened was an oversupply that led to full storages.
“April 20th was the final deadline for traders to sell oil. People rushed to sell fuel because they had nowhere to store it; traders basically paid to sell their oil and avoid losing their investments,” he added.
Boza then asked Alarie how he sees what happened on April 20th, amid the transition towards a cleaner energy matrix in Colombia and in the world.
The expert said that what happened that day “shows the beauty of the market,” because it dictates what is going to happen in the world.
“It was impressive but not important, the important thing is how countries around the world will adapt to a lower oil demand in the next 18 months.”
Alarie even said that oil will take the back seat in 30 to 50 years from now, as the world will be finishing its transition to renewable energies, and “no one is really going to be talking about oil.”
The expert said that the world will need to get used to a roller-coaster when it comes to oil prices, explaining that there are 70 ships full on oil stuck in Mexico, waiting to enter ports to be able to unload fuel.
Espinoza on the other hand, believes that demand “will put everyone in place”, saying that there is indeed a need for an energy transition, especially in Colombia; a country that has to target all sources of energy.
According to him, gas will lead the energy transition process because it is efficient and clean, highlighting that oil and gas are not the problem, but a fundamental part of the solution because they will financially leverage the transition.
“We have to make the transition, but it will take time, I do not think anyone in the audience will see the result of this process. Here we all depend on all the energies, and they are not mutually exclusive.”
Espinoza conclude by saying that Campetrol wants to go from being an Oil and gas chamber to an Oil, gas and renewable energy chamber.
Bottom-line: Making a successful energy transition process happen will be key for an emerging economy like Colombia.
The country just made it as an OECD member after a seven-year accession process, meaning that the government wants to give the best international image possible, and that includes complying with environmental commitments.