Gustavo Petro: "We are going to develop capitalism in Colombia" 1:49
(CNN Spanish) --
Oil is at the center of the debate in Colombia after the triumph of Gustavo Petro and Francia Márquez.
His proposal for a substantial change in the economic model, which proposes fighting against dependence on hydrocarbons, has the approval of environmentalists but generates uncertainty in the market.
Meanwhile speculations are multiplying.
Here, an explanation of what is at stake (and what is not) with the elected Government.
Colombia: oil country or country with oil?
This is your weight in the economy
Colombia exported US$7.46 billion in crude oil or bituminous minerals in 2020, according to the Observatory of Economic Complexity.
It was the most exported product, and placed Colombia in the 18th position in the ranking of exporters.
The United States and China were the two main markets.
In other words: 55% of the dollars that enter Colombia come from the sale of oil, Guillermo Sinisterra, doctor in Economics and professor at the Javeriana University, explains to CNN en Español.
The next source is foreign exchange.
Does this mean that we should classify Colombia as an "oil country", as some publications in recent days suggest?
For the expert not necessarily.
This is how he explains it: "Oil does play an important role in the Colombian economy, but the Colombian economy has diversified a lot and the Colombian economy of the big cities, which are the ones that generate the most GDP, is specialized in services that do not have to do with oil. So even though oil is important, I do think we fall into the category of a country with oil."
What the Petro program says...
The government program prepared by the Historical Pact for the elections explains its route for what it calls the "gradual de-escalation of the extractivist model" and of dependence on oil and coal.
"In our Government, the exploration and exploitation of Unconventional Deposits will be prohibited, pilot fracking projects and the development of offshore deposits will be stopped. New licenses for hydrocarbon exploration will not be granted, nor will large-scale open-pit mining be allowed. ".
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The document also expands on the fact that they will promote a change in the energy matrix to improve its diversification by betting on clean energy.
He says that the process will be carried out guaranteeing, among other factors, "the sources of employment and the economic resources coming from the sector."
.... and the keyword: new
But what does it mean for oil exploitation?
"It means that no new exploration licenses are going to be assigned in Colombian territory. That does not imply that production will stop or that the exploration licenses that are in force at this time will be reversed," says Sinisterra.
"The president, neither during the campaign nor now, has said that oil production is going to end. He has never said it," he emphasizes in another part of the interview.
Fracking
is another
story
Gustavo Petro, then presidential candidate for the Colombia Humana party, Gustavo Petro after a debate on the environment in Bogotá on February 23, 2022. (Photo by Raúl ARBOLEDA / AFP / Getty Images)
"
Fracking
is over in Colombia".
This is one of the first three actions that Petro said that he would launch if he came to the Government in an interview that CNN did when he was a candidate.
He also explicitly says so in the show.
The policy regarding this hydrocarbon extraction technique, also known as hydraulic fracturing, must be different from the one explained above because, according to Sinisterra, the current government headed by Iván Duque gave a "legal fight" to be able to carry out fracking pilot programs and carried out two without there being a failure.
Those two fracking pilots, who were from Ecopetrol, not from a private company, will end according to what Petro has insisted.
One of the many pronouncements this week was that of the Alianza Colombia Libre de Fracking —made up of approximately 100 organizations and which has met with Petro—, which celebrated the promises of the president-elect regarding unconventional deposits and fracking, at the same time that he recalled that they are "explicitly in his program".
"We hope that the first executive decisions of this new government will be aimed at suspending the pilots," said the organization, adding that they trust there will be support for the bill that they will present for the fourth time, whose objective is to prohibit the exploitation of deposits not conventional.
What happened to Ecopetrol
The day after the elections, which was a holiday in Colombia, the news spread on Twitter like wildfire: the shares of Ecopetrol, the state oil company, fell on the Canadian and United States stock markets.
Titles fell 13%, says Sinisterra.
Why?
Larger falls have been recorded in one day, for example 20%, and there was a special situation, and that is that the barrel of oil registered a "strong fall" of US$ 16 when it came with another trend, but "I also believe that the what the market is asking of the new president is 'hey, tell us what you're going to do and how you're going to do it,'" he says.
Ecopetrol, says the government program, will remain "to guarantee the fuels that the country requires for the next 15 years, make contributions in inputs and derivatives for petrochemicals, fully support research, science and development of technologies for the transition to clean energy and will contribute taxes, royalties and dividends to the State".
This Thursday, on the Colombian Stock Exchange, Ecopetrol registered a drop of about 14% at 03:00 pm local time.
The trend of the week has been downwards.
The official reaction of the union to the triumph of the left
The Colombian Oil and Gas Association congratulated Petro and Márquez after their victory and affirmed that the construction of the "country model" should summon all sectors.
He affirmed that they share the interest of "strengthening the fight against climate change, but at the same time they highlighted the need for a "responsible" energy transition that guarantees four aspects: fiscal stability, the generation of royalties for the regions, security and energy self-sufficiency.
The official statement of the group reviews some numbers: the sector has more than 95,000 employees and 500 companies.
Sinisterra clarifies that it should not be thought that these jobs will "vanish" because, as explained, Petro is not going to suspend existing exploration.
And he says that there are people who are "playing economic panic."
On the other hand, he says, there may also be Petro's fault for not having clarified the proposal.
The big market question
"The biggest question that financial market agents and the private sector are finally asking about all this is where we are going to get a source of dollars similar to oil," explains Sinisterra.
Petro and Márquez's program proposes a radical change in the economic model that promotes agricultural production.
A key in this framework is the implementation of an agrarian reform that attacks inequality in ownership and use of land, guaranteeing the right to land of rural families (with women as a priority) and the formalization of the property, among other measures.
Its objective is to discourage large estates.
How viable is it?
Sinisterra is skeptical, at least as an alternative to the income that the country currently receives from oil exports.
In the campaign there was talk of "putting the field into production" but "the truth is that we have been trying to put the field into production for 25 years without success," he says.
And he adds: "If we don't have alternatives, basically we are going to have a problem of a shortage of the dollar that is going to put pressure on national inflation."
Elections ColombiaGustavo PetroPetroleo