Colombia Risks Gas and Power Rate Surge as Exploration Falls 43%

Colombia faces a potential surge in gas and electricity rates due to a 43% decline in exploration activities, according to a report from energy distributor Promigas. This reduction in exploration leads to a decrease in domestically produced gas, increasing the reliance on imports and heightening the risk of domestic supply shortages.

As thermal plants using gas must absorb the higher costs of operation, these costs will likely be passed on to consumers through increased rates. This shift is particularly concerning for households, as the higher cost of gas will directly impact their bills and also affect electricity generation. The report highlights the 43% drop in investments allocated to oil and gas exploration between 2022 and 2025, emphasizing that the country must now seek external gas sources, which are subject to international prices and transportation costs.

Promigas warns that thermal power plants will face increased fuel costs, potentially raising electricity generation costs and subsequently impacting household electricity bills. The government aims to increase oil production to 1 million barrels per day, but the report stresses the need to diversify Colombia's energy mix while ensuring a reliable supply of gas for households, industry, and electricity generation.

The sector proposes various measures, such as tax reforms, improved coordination among ministries, and updating land maps, to strengthen the competitiveness of the oil and gas industry and mitigate the risks associated with its slow-down.