President Petro Blocks Ecopetrol Fracking Deal, Vote Clean Energy

President Petro Blocks Ecopetrol Fracking Deal, Vote Clean Energy \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Colombian President Gustavo Petro has ordered Ecopetrol to cancel its joint venture with U.S.-owned Occidental Petroleum (Oxy), citing environmental concerns over fracking. The deal, valued at $880 million, would have expanded oil extraction in the Permian Basin, but Petro insists on investing in clean energy instead. Ecopetrol shares initially rose but later fell following Petro’s remarks.

Colombia Halts Ecopetrol-Oxy Oil Deal – Quick Looks

• Fracking ban enforced: Petro orders Ecopetrol to cancel U.S. oil deal.
• Environmental concerns: President calls fracking “the death of nature.”
• Impact on production: Ecopetrol planned to extract 90,000+ barrels per day.
• $880 million project canceled: Deal would have developed 91 oil wells in Texas and New Mexico.
• Stock market reaction: Ecopetrol shares rose 2% before falling post-announcement.
• Colombia’s stance: Nation rejects fracking domestically and now abroad.

Deep Look

Colombian President Gustavo Petro has taken a bold step in his administration’s push toward clean energy, ordering the state-run oil company Ecopetrol to cancel its joint venture with U.S.-owned Occidental Petroleum (Oxy). The deal, which had been expected to produce around 90,000 barrels of oil per day, was a major part of Ecopetrol’s international expansion strategy. However, Petro’s stance against fracking—an oil extraction technique that has drawn significant criticism from environmentalists—led him to demand the project’s termination.

In a nationally televised speech on Tuesday, Petro condemned the decision by Ecopetrol’s board to renew its partnership with Oxy in the Permian Basin, a major oil-producing region spanning Texas and New Mexico. The president was unequivocal in his opposition to the deal, stating:

“We are against fracking because fracking is the death of nature, and the death of humanity.”

The cancellation order is a major shift in Colombia’s energy policy, as the country had previously banned fracking within its borders but allowed Ecopetrol to invest in fracking operations overseas. Now, Petro is sending a clear message: Colombia will not support fracking anywhere, even outside its own territory.

This decision has far-reaching consequences, affecting not only Colombia’s relationship with the U.S. energy sector but also Ecopetrol’s financial future, global oil markets, and the broader debate over fossil fuels and climate change.

Ecopetrol’s Expansion Plans Halted as Government Takes a Hardline Stance

Ecopetrol, Colombia’s largest oil company, had been rapidly expanding its international operations to secure new sources of revenue. The joint venture with Oxy in the Permian Basin was a crucial part of that plan.

• In 2023, Ecopetrol’s Permian operations contributed 95,200 barrels per day, accounting for 12% of the company’s total oil production.
• The company had planned to invest $880 million in 91 new wells, further expanding its footprint in the U.S. oil market.
• On Monday, Ecopetrol’s board announced a renewal of its partnership with Oxy, emphasizing the financial benefits and production growth potential of the project.

Just 24 hours later, President Petro called for its cancellation, arguing that Colombia should not be profiting from an extraction method it refuses to allow at home.

This marks a major departure from previous administrations, which prioritized oil production as a key driver of Colombia’s economy. While Petro’s leftist government has repeatedly spoken about transitioning away from fossil fuels, this is the most concrete action yet to curb oil expansion.

The announcement caused Ecopetrol’s stock to fluctuate, with shares initially rising by 2% after the Oxy deal was announced, but later falling slightly following Petro’s remarks. Investors are now uncertain about Ecopetrol’s long-term direction, as its leadership will have to navigate a sharp shift in government policy.

Fracking: Environmental Risks vs. Economic Benefits

Fracking, or hydraulic fracturing, is a technique used to extract oil and gas from shale rock. It has been highly controversial, with environmental groups warning that it:

• Pollutes underground water sources through the use of chemicals in drilling fluids.
• Releases methane gas, a major contributor to climate change.
• Causes small earthquakes due to high-pressure injections deep into the earth.

Despite these risks, fracking has boosted oil and gas production in the U.S., making the Permian Basin one of the most productive oil fields in the world.

For Ecopetrol, the joint venture with Oxy provided access to cutting-edge fracking technology, allowing the company to increase its global output and diversify its revenue streams. However, with Petro now demanding an exit from the deal, Ecopetrol may have to sell its Permian assets and abandon further fracking projects.

Petro’s Green Energy Agenda: A New Era for Colombia’s Economy?

President Petro has made it clear that his ultimate goal is to transition Colombia away from fossil fuels. During his livestreamed Cabinet meeting, he said:

“I want that operation to be sold, and for the money to be invested in clean energies.”

His government has already:

• Halted new oil exploration licenses, reducing future fossil fuel development.
• Increased investments in renewable energy, particularly in solar and wind projects.
• Encouraged a shift toward sustainable industries, such as ecotourism and agriculture.

Petro’s push to end Colombia’s reliance on oil revenues is highly ambitious, given that oil accounts for over 40% of the country’s total exports. His administration faces a delicate balancing act—pursuing green energy without jeopardizing economic stability.

Critics argue that moving too quickly away from oil could lead to:

• Mass job losses in the oil sector.
• Reduced government revenue, affecting social programs.
• Higher energy prices, as renewables take time to scale up.

However, Petro’s supporters argue that Colombia must take decisive action now to ensure a sustainable future. Environmental groups have praised the decision, saying it positions Colombia as a global leader in climate policy.

The U.S. and Colombia: Potential Diplomatic Fallout

The cancellation of Ecopetrol’s deal with Oxy could strain relations between Colombia and the United States, especially in the energy sector.

• Occidental Petroleum (Oxy), one of the largest oil companies in the U.S., had planned long-term collaboration with Ecopetrol.
• The U.S. has been a major trade partner in Colombia’s oil exports, and this decision may signal a shift away from those energy ties.
• The Biden administration has emphasized climate goals, but also supports U.S. energy security—and losing a partner like Ecopetrol in the fracking sector could be seen as a setback.

While it is unlikely that this move will cause a major diplomatic rift, it does highlight the growing divide between Petro’s climate policies and U.S. energy priorities.

What Happens Next?

With Petro publicly calling for the deal’s cancellation, all eyes are now on Ecopetrol’s leadership to see whether they:

1. Comply with the president’s order and sell off their Permian assets.
2. Resist Petro’s pressure, arguing that they operate independently as a publicly traded company.
3. Seek a middle ground, slowing investment in fracking while exploring green alternatives.

Meanwhile, investors, environmentalists, and international partners are all watching closely to see how this decision reshapes Colombia’s economic and energy policies.

This is more than just a business decision—it is a defining moment in Colombia’s transition to a greener economy.

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