Presidential elections Colombia: oil and mining companies concerned about Gustavo Petro’s advance

RIO DE JANEIRO, BRAZIL – Colombia’s leftist presidential candidate, Gustavo Petro, is very close to his rival in the polls to the discomfort of oil and mining companies, fearful that his plans will jeopardize the country’s energy self-sufficiency and economy, said industry executives and unions.

Petro, a senator, told a rally last month that coal and oil are akin to cocaine: “Our three main export products are three poisons.”

The candidate won support by promising profound change, including social and economic reform in Colombia, where about half of the population lives in monetary or extreme poverty.

Gustavo Petro supports an economy that relies on agriculture rather than extractive industries, which has led Colombia’s oil, gas, and mining sectors to back his rival, construction billionaire Rodolfo Hernandez, who came to a surprise second behind the leftist candidate in the first round of the election.

The former guerrilla promises to halt new hydrocarbon exploration and the construction of more large-scale open-pit mines and end fracking research pilots and offshore oil and gas projects, some of which already have signed contracts.

The industry stresses that its revenues are vital to finance any electoral promises.

Rodolfo Hernandez, a former mayor, has provided few details on energy and mining policies but is widely seen as business-friendly.

The businessman has urged investment in renewable energy and efforts to increase oil and gas reserves.

Petro won the first round with 40.3% of the votes but is now a few points behind Hernandez in recent polls heading into the June 19 runoff.

Some in the industry believe that the leftist candidate will not be able to curb his operations in the short term because the government of current President Iván Duque signed 69 exploration and production contracts during the bidding rounds.

Gustavo Petro heralds a marked difference from the policies of Duque, whose term ends in August, and sources in both the oil and coal sectors fear that his eventual government will make it difficult to obtain permits to develop existing operations further.

“This is a resilient sector, but it will inevitably lag in the face of adverse policies or low prices,” said a senior oil and gas industry source.

According to government figures, oil and mining combined provide more than 50% of Colombia’s exports and up to 8% of Gross Domestic Product (GDP).

Industry players in the sector largely refused to be quoted by name or to identify their companies, saying they fear possible reprisals.

One asserted that if Petro wins, he must accept that revenues generated by mining are vital to fund social programs, which he pledged to increase to correct deep inequality.

NO TO FRACKING, MINERS FURIOUS

According to government figures, Colombia closed last year with oil reserves equivalent to 7.6 years of consumption and eight years of gas.

The Colombian Petroleum Association, an industry guild, warned that the end of new oil and gas contracts would jeopardize energy self-sufficiency and portend a more costly future for energy imports. The entity refrained from commenting on the candidates individually.

An oil and gas industry source who declined to be named told Reuters they would prefer Hernandez.

“The first round was encouraging,” the source said and argued that the industry could survive a hostile government.

“A four-year pause in bidding rounds will not be the death of the industry,” he said after noting that everyone has “more than enough (oil and gas) blocks to continue.”

It is unlikely that Gustavo Petro will be able to reverse the contracts already awarded, but oil and mining business people fear he could increase bureaucracy.

Both candidates have announced that they oppose hydrocarbon fracking, but activists against the technique are wary of Hernández, who is a former mayor of Bucaramanga, the capital of the department of Santander, where two pilot research projects that the businessman initially supported are being carried out.

The Colombian Mining Association (ACM) was furious after Gustavo Petro linked coal with cocaine, calling the expression “irresponsible and above all disrespectful”, according to a message its president, Juan Camilo Nariño, shared with journalists.

According to DANE, the government’s statistics agency, Colombia is a major coal exporter and shipped nearly 60 million tons in 2021.

According to the MCL, Colombia would have to increase its agricultural sector sixfold to match the economic contribution of mining.

If Petro wins, mining operations “will suffer serious delays, serious setbacks that scare investors,” said a source who asked to remain anonymous. Hernández, on the contrary, would be “good for the (mining) sector, good for the private sector”, he assured.

With information from Ámbito