Can Colombia’s New Government Reverse the Nation’s Oil and Gas Decline?

A Nation at a Crossroads

Colombia's political landscape has been dramatically reshaped following a presidential election marked by fierce division and a nail-biting finish. After an official ballot recount confirmed a narrow win of less than one percent, far-right candidate Abelardo de la Espriella secured the presidency, prompting his left-wing rival, Senator Ivan Cepeda, to concede. The campaign ignited considerable controversy and highlighted deep societal rifts across the nation. As the dust settles on this contentious race, the focus now shifts to the economic realities confronting the new administration, particularly the state of the nation's vital, yet struggling, energy sector.

President-elect De la Espriella's platform champions a bold vision for economic revitalization, targeting an ambitious 7% annual GDP growth. This objective is to be pursued alongside a strategy of fiscal discipline aimed at reining in a ballooning deficit, projected to reach between 7% and 8% of GDP. A cornerstone of this economic revival plan involves a concerted effort to rejuvenate Colombia's critically important, but currently beleaguered, oil and gas industry. He is supported in this endeavor by Vice President José Manuel Restrepo Abondano, who brings recent experience as Minister of Finance and Public Credit.

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The Hydrocarbon Hurdle

The backbone of Colombia's recent economic difficulties lies in the stark decline of its once-dominant hydrocarbon sector. Over the past decade, both oil and natural gas output have seen a precipitous fall, fueling concerns about an impending energy crisis, exacerbated by the escalating costs of liquefied natural gas (LNG) imports. By April 2026, daily oil production stood at 724,910 barrels, a significant drop from the 915,087 barrels per day recorded a decade prior for the same period. This production slump, coupled with constraints in refining capacity, compels Colombia to increasingly rely on diesel imports, primarily for its agricultural and transportation needs.

The sharp contraction in natural gas extraction presents a particularly dire threat to economic stability and the integrity of the national electricity grid. In April 2026, Colombia extracted approximately 694 million cubic feet of natural gas per day, a figure hovering near multi-decade lows. This output is substantially less than the 1 billion cubic feet per day produced just a month earlier. This widening chasm between domestic consumption and local supply necessitated Bogota's pivot towards importing liquefied natural gas (LNG) starting in December 2016. The growing reliance on these expensive imports has directly contributed to inflationary pressures, pushing the annualized inflation rate to 5.84% in May 2026, a level not seen since 2024, thereby intensifying a cost-of-living crisis that disproportionately impacts low-income households heavily dependent on natural gas for energy.

Furthermore, the escalating volume of costly LNG and petroleum product imports is creating structural imbalances in Colombia's balance of payments. This situation simultaneously erodes the nation's energy sovereignty at a time when geopolitical tensions in the Middle East are already disrupting global LNG supply chains. The Andean nation already procures nearly one-third of its consumed natural gas from external sources. The surge in natural gas imports has consequently driven prices up by an estimated 25% to 36% in many Colombian regions. This presents a significant risk to affordable electricity generation, especially during periods of severe El Niño-driven droughts that deplete hydroelectric reservoir levels, forcing a greater reliance on gas-fired power plants to compensate for reduced hydropower output. The resultant increase in natural gas and electricity expenses will further strain Colombia's already fragile, fiscally challenged economy.

Policy Prescription and Potential

De la Espriella's policy agenda is specifically designed to counteract these economic vulnerabilities. A central tenet involves stimulating investment in the nation's flagging oil sector to drive increased hydrocarbon production. The administration plans to maintain the state's significant stake in Ecopetrol, the national oil company, while positioning natural gas as a transitional fuel in the broader clean energy strategy. Crucially, the new government intends to re-energize exploration and production activities, a stark contrast to the policies of former President Gustavo Petro, who halted the issuance of new drilling contracts upon taking office in August 2022.

A key, and controversial, element of the president-elect's strategy is the proposed reintroduction of hydraulic fracturing, or fracking, for oil extraction. This technique, previously subject to significant debate, would be initially confined to carefully regulated pilot projects. Strict conditions are mandated, requiring operations on geologically stable terrain devoid of seismic risks and ensuring no harm to water sources, the local environment, or indigenous communities. Operators will need to secure a social license, gaining explicit consent from local populations before commencing pilot fracking activities. These stringent stipulations echo those previously set by the Council of State, Colombia's highest administrative court, which permitted fracking pilots under the previous Duque administration.

Colombia is widely believed to harbor substantial untapped unconventional oil and gas reserves. The National Hydrocarbons Agency (ANH) estimates the country possesses approximately 3 billion recoverable barrels of shale oil and 34 trillion cubic feet of shale gas. If these estimates prove accurate, the implementation of fracking could significantly bolster Colombia's diminishing proven reserves, which continued to decline in 2025. Enhanced oil and gas output is expected to mitigate the economic risks stemming from current supply shortages. Furthermore, De la Espriella's proposed security enhancements, including military operations targeting illegal mining structures, are anticipated to improve the operating environment and foster renewed confidence in the revival of the nation's economically indispensable oil industry.