Colombia is considering the need for more exploration contracts after a report showed a drop in oil and gas reserves, according to a senior minister.
The government wants to lead a transition away from fossil fuels while limiting any negative impact on the economy, Trade Minister German Umaña said in a telephone interview on Thursday.
“We will certainly take measures to ensure environmental sustainability, but also economic sustainability,” Umaña said, speaking from Washington, where he was meeting US officials to discuss the trend toward growing global protectionism.
Gustavo Petro won the presidency last year promising to phase out oil and coal. His administration has so far refused to issue new exploration licenses, although some of his ministers have hinted that this policy could be changed.
Colombia must take into account the importance that oil and gas still have for the balance of payments and fiscal accounts, Umaña said. Oil and coal accounted for roughly half of Colombian exports in 2022.
The government must also consider how sectors such as tourism are performing, to gauge how quickly Colombia can manage the transition, he added.
Period of hostility
Trade with Venezuela is expected to increase to $1.2 billion this year from about $700 million in 2022, Umaña said. Business between the two neighbors is growing rapidly after Petro restored diplomatic relations as soon as he took office last year, ending a long period of hostility between Bogota and Caracas.
Venezuela was once a major export market for Colombian goods, receiving about $6 billion worth of goods in 2008. But bilateral trade collapsed as relations soured. Umaña says the trade could gradually increase to about $4.2 billion by 2026.
“The biggest obstacle to export growth is Venezuela’s demand capacity,” he said.
As long as Venezuela’s economy continues to grow, Colombia could boost exports to the pharmaceutical, agricultural, automotive, as well as metalworking and steel sectors, which are vital to recovering Venezuela’s oil sector, he said.
Import tariffs
Colombia needs to protect some sectors against anti-competitive practices in developed countries, such as production subsidies, which make it difficult for Colombian products to compete, Umaña said.
He did not say which sectors needed protection, although Petro has often advocated measures to protect Colombian agriculture. In December, the nation imposed a 40% import tariff on clothing to protect its textile industry.
