Macroeconomic Overview

Colombia is the third largest oil producer in Central and South America, and has the fifth largest proven reserves in the region. In 2011, the country produced over 930,000 barrels per day, accounting for 11.9% of total Latin American production.

The last five years have been a period of fascinating growth for the energy sector in Colombia.

Mauricio Cardenas Santamaria, Minister of Finance, Colombia

Indeed, Colombia’s oil production has grown by 70.5% over the last 5 years and the energy sector is playing an increasingly more important part in the country’s economic development.

The energy sector’s contribution to the GDP of Colombia has been increasing year by year. Last year it reached 12.5% of the total GDP.

Jose Francisco Arata, President, Pacific Rubiales Energy

Overall GDP growth has been steady, with an average annual GDP growth rate of 3.2% over the last 5 years. GDP growth in 2010 and 2011 was particularly strong and the overall economic outlook for the country remains positive going forward.

I think that the Colombian economy is starting a phase of high growth. I think we will be able to maintain growth rates like the ones we have observed over the past two years or so, that’s between 4.5% and 5.5% a year.

Hernando Vargas, Deputy Technical Governor, Central Bank of Colombia

Part of the positive outlook for the overall economy, and the energy sector in particular, is due to the improving security situation in Colombia. Over the last decade, kidnappings and attacks on infrastructure have dropped drastically and major oil producing areas are now safe.

Security in the areas where we are operating has been improving year to year. These improvements started with the policies implemented by President Uribe and followed by the policies of President Santos.

Jose Francisco Arata, President, Pacific Rubiales Energy

With the security hurdle seemingly cleared, the country can direct its focus to making improvements in other areas. Infrastructure remains a challenge and a top priority for both the government and the private sector.

We have limitations on ports, airports, but we are improving. This government has been working on that and they are still working.

Luz Maria Jaramillo, Country Managing Partner – Colombia, Ernst & Young

In addition to infrastructure, much remains to be done in exploration and production. Improved production techniques are required to make the most of the reserves that the country does have and further exploration activity is needed to grow the country’s current reserves.

If we don’t find more oil, then these reserves will last for no more than 6 years.

Jose Francisco Arata, President, Pacific Rubiales Energy

The upcoming 2012 Bid Round, consisting of 109 blocks, both on- and off- shore, will play a significant part in increasing E&P activities in future years.