Ecopetrol pledges to move forward with fracking pilot projects, outgoing minister warns of “legal issue” if fracking banned

Photo: On June 28, PBI-Canada met with a PBI-Colombia accompanied CREDHOS convened meeting of social leaders in Puerto Wilches and heard their determination to stop fracking and to defend life, water and territory.

On July 7, President-elect Gustavo Petro tweeted: “There will be no fracking in Colombia.”

This week, Colombia’s incoming environment minister Susana Muhamad also said: “The door to fracking is closed in Colombia, we believe that going to look for the last remnants of gas generates more harm than good. We believe that fracking is not an alternative for a complex such as Colombian ecosystems. We must accelerate the energy transition.”

Administrative Court ruling

But Reuters now reports: “Colombia’s highest administrative court on Thursday [July 7] ruled against a lawsuit looking to nullify rules that would allow fracking projects in the Andean country, effectively overturning a moratorium on the commercial development of non-conventional oil and gas deposits, it said in a statement.”

Commenting on the ruling, the Alliance for a Colombia Free of Fracking says: “This decision is dangerous in the context of the climate crisis and openly inconsistent with the international commitments acquired by Colombia and increases the risk that the implementation of fracking is generating for defenders. and environmental defenders of Magdalena Medio, a territory that has suffered more than a century of oil exploitation and armed violence.”

Ecopetrol pledges to continue with fracking pilot projects

Furthermore, Bnamericas notes: “Colombian state oil company Ecopetrol has pledged to move forward with its fracking pilot projects despite assurances from President-elect Gustavo Petro that the practice will soon be outlawed.”

Ecopetrol says: “We currently have two contracts signed and in force with the [hydrocarbons agency] ANH for the execution of the pilots … from which legal obligations are derived for the company with which we must comply.”

Semana explains: “In December 2020 Ecopetrol and the National Hydrocarbons Agency (ANH) signed a contract to carry out the Kalé pilot, while in June 2021 the contract for Platero was signed. Additionally, since March of this year Kalé has the environmental license granted by the National Environmental Licensing Authority (ANLA), an entity that is also advancing the respective procedure for the Platero permit.”

On June 4, 2021, the Colombian National Hydrocarbons Agency (ANH) and Texas-based ExxonMobil signed a contract that formally authorizes the Platero fracking pilot project to proceed near Puerto Wilches, Santander.

“Complex legal issue” if fracking banned

The outgoing Minister of Mines and Energy Diego Mesa suggests this means “there would be a complex legal issue to resolve” because “there is a right acquired by companies and we have always said that what stands out most internationally in Colombia is legal certainty and respect for contractual agreements and private property.”

This could refer to the investment protection guarantees in Chapter 10 of the U.S.–Colombia Trade Promotion Agreement (TPA), including the investor-state dispute settlement (ISDS) mechanism that allows a foreign corporation to sue the Government of Colombia through a special court system.

The same provision exists in Chapter 8 of the Canada-Colombia FTA.

Canadian investment in fracking in Colombia

Toronto-based Sintana Energy Inc. has highlighted that it “holds an undivided 30% non-operated participation interest in a Contract for Exploration and Production for Block VMM-37” where the Platero project would be conducted.

In April 2021, the company stated: “Regarding Project Platero, Sintana has been and continues to be in positive communications with both ExxonMobil and the ANH to ensure that the integrity of both the Company’s commercial arrangements with ExxonMobil and the Contract for VMM-37 with the ANH are honored.”

And Calgary-based Canacol Energy Ltd., which holds two nearby “unconventional shale oil blocks”, has previously commented that the Platero and Kalé projects are “positive steps towards realizing the commercial potential of the unconventional shale oil field in Colombia and specifically for the resources prospects that we have through our position in the Middle Magdalena Valley basin.”

Canacol also holds a 20 per cent stake in the VMM-2/Plata and VMM-3/Piranga projects. ConocoPhillips holds the remaining 80 per cent stake.

In April 2021, Canacol CEO Charle Gamba stated: “BGEC’s independent assessment of the prospective unconventional resources reaffirms the materiality and significant potential of Canacol’s unconventional shale oil blocks.”

We continue to follow this situation.