Ecopetrol's Strategic Evaluation for Gas Project Continuity in the Southern Caribbean

Introduction

In a significant move for Colombia's energy sector, Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) has announced the initiation of a strategic evaluation aimed at ensuring the continuity of gas projects in the Southern Caribbean. This evaluation comes on the heels of Shell's decision to withdraw from its offshore assets in the region, a move that has raised questions about the future prospects of several critical gas discoveries and projects previously operated by Shell.

The Situation After Shell's Exit

Shell's withdrawal primarily stems from its broader global portfolio strategy and management decisions. This decision affects several key gas discoveries located in the Col 5, Purple Angel, and Fuerte Sur blocks, specifically the Kronos-1, Purple Angel 1, Gorgon 1 and 2, and Glaucus 1 wells. Despite these challenges, Ecopetrol remains committed to these projects, recognizing their technical and economic viability as being vital not only for the company but also for the national interest.

Ecopetrol's Response

In light of these developments, Ecopetrol is proactively evaluating various options to ensure that these projects continue to progress. The company's leadership describes these gas projects as a key priority, and steps are being taken to secure their long-term viability. The government understands that natural gas is an essential component of Colombia's energy transition, and thus, maintaining a robust supply of this resource is critical for meeting national energy demands.

Future Plans for Gorgon Development

Ecopetrol aims to complete the maturation of the Gorgon development project by the first half of 2029, with production expected to commence between 2031 and 2032. To facilitate the commercialization of gas from Gorgon and meet domestic demand, the company is currently assessing connectivity options with the National Transportation System. These efforts are seen as critical to ensuring a steady and reliable gas supply for the medium term.

Continuing Partnerships

Despite the changes in project management, Ecopetrol remains steadfast in its collaborative approach, as it continues to partner with Shell and Total Energies to advance the development of the Gato Do Mato field in Brazil. Significant resources are earmarked for investment in 2025, highlighting the ongoing commitment to energy development across the continent.

Ecopetrol's Role in Energy Transition

As Colombia's largest company, Ecopetrol plays a pivotal role in the country’s energy landscape, responsible for over 60% of hydrocarbon production. The company is not only involved in producing and refining hydrocarbons but is also scaling up efforts in energy transmission and management, thanks to its acquisition of 51.4% of ISA's shares. Additionally, Ecopetrol maintains a strong presence in the energy markets of the Americas, conducting drilling and exploration activities in the United States, Brazil, and Mexico. The company also holds leading positions in power transmission and telecommunications across several Latin American countries.

Conclusion

The evaluations being conducted by Ecopetrol in response to Shell's exit underscore the dynamic nature of the energy sector and the company's commitment to navigating these challenges effectively. By ensuring the continuity of vital gas projects in the Southern Caribbean, Ecopetrol not only aims to secure its own operational interests but also contribute to Colombia's energy transition efforts, solidifying its place as a key player in the regional energy landscape.

This announcement signals a proactive approach by Ecopetrol to adapt to market changes while ensuring a stable and reliable supply of energy resources for the future.

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