Colombia’s Gas Is Running Out Just as a Drought Threatens Its Power

Energy

For decades Colombia sold its neighbours gas and power. Now its Colombia gas reserves are draining fast, a drought is closing in on a grid that runs on rain, and the country is quietly turning into an energy importer at the worst possible moment.

Colombia spent most of the past three decades as an energy seller, pumping enough oil and gas to meet domestic needs, exporting the rest, and even shipping electricity to Ecuador when its neighbour needed help.

That comfortable position is slipping away.

Two developments this month have made the shift impossible to ignore: the official reserve report showed gas supplies shrinking sharply, while the grid operator warned that a powerful drought could push water levels to historic lows.

Together they describe a country drifting from energy exporter toward energy importer, just as the weather turns against it.

For a reader in London or Munich, the stakes are concrete. Colombia is a major oil exporter, home to the state company Ecopetrol, and a market where international investors hold bonds, shares and infrastructure stakes.

How it handles an energy squeeze shapes its growth, its public finances and the risk premium attached to everything it sells abroad.

How fast Colombia gas reserves are shrinking

Start with the gas, because that is where the trouble is sharpest. The national hydrocarbons agency and the energy ministry released their annual reserve report in late June, and the headline number was stark: proved gas reserves fell by almost seventeen percent in a single year.

In plain terms, the volume of gas the country can count on dropped from about two thousand sixty-four gigacubic feet at the end of 2024 to one thousand seven hundred seventeen a year later. Stretch the lens back further and the picture is worse.

By the count of the newspaper La República, proved gas reserves have fallen by roughly fifty-five percent since 2018, when they stood close to three thousand eight hundred gigacubic feet.

The government chose to frame the result as steady. It pointed out that the reserves-to-production ratio, a measure of how many years current reserves would last at today’s output, held at five point nine years, the same as in 2024.

The official line was that the country keeps a solid base of resources and is reinforcing its energy security.

Independent analysts were quick to question that gloss. The catch, they noted, is why the ratio stayed flat.

It did not hold because reserves were stable; the volume clearly fell. It held largely because production itself is falling, so a shrinking reserve divided by a shrinking output can still look unchanged.

One consultant put it bluntly, arguing the figure looks better only because the country is pumping less.

Oil told a calmer story, but not a reassuring one. Proved crude reserves slipped slightly to about two thousand twenty million barrels, while the years-of-supply measure edged up from seven point two to seven point four.

Here too the improvement owes much to weaker production rather than big new discoveries, and the country replaced only ninety-four barrels for every hundred it produced.

From self-sufficient to dependent on imports

The reserve numbers matter because they have already changed how the country keeps the lights on. For years Colombia produced all the gas it needed and more.

That era is over.

Colombia now imports a meaningful share of the gas it consumes, with estimates this year running between a quarter and a third of demand. The imported supply arrives as liquefied natural gas through a terminal at Cartagena, on the Caribbean coast, and it costs more than the gas the country used to pull from its own fields.

The decline has deep roots in geology and policy alike. The country’s traditional gas fields are old and naturally fading, with falling pressure and more water mixed in with each year’s output.

At the same time, the government of President Gustavo Petro announced in 2022 that it would stop signing new exploration contracts, framing the move as part of an energy-transition agenda.

That decision did not touch existing production, but it removed the pipeline of new acreage that would normally replace ageing fields. The effect is delayed rather than immediate, because a new contract typically takes four to six years to yield first output.

The bill for halting exploration, in other words, comes due years later, and that is roughly now.

There is a glimmer of longer-term hope offshore. The reserve report flags large contingent gas resources, volumes already discovered but not yet commercially producible, concentrated in deep water off the Caribbean coast. The catch is timing: developing offshore gas takes years, by some estimates five to ten, so those barrels cannot relieve the squeeze that is arriving this year and next.

Why a grid that runs on rain is so exposed

To see why falling gas reserves are dangerous, you have to understand how Colombia makes electricity. The country draws roughly two-thirds of its power from hydroelectric dams. The water held behind those dams is, in effect, the national fuel tank.

In a wet year this is cheap and clean. The problem comes in a dry one.

When rainfall falls short, the dams generate less, and the country has to fire up thermal plants that burn gas or coal to fill the gap. Gas, increasingly, is the swing fuel that keeps the system stable when the rivers run low.

That is the trap. The very moment Colombia leans hardest on gas-fired power is a drought, and a drought is exactly when its own gas falls short and imports must rise.

A dry spell squeezes the system from two directions at once: less water to spin the turbines, and a costlier, thinner gas supply to back them up.

The weather is now turning. The country’s meteorological institute puts the probability of an El Niño forming in the second half of 2026 above ninety-five percent, and the chance that it reaches a very strong intensity at around sixty-three percent, comparable to some of the most severe events recorded since 1950.

El Niño, the recurring Pacific pattern, tends to bring drought to Colombia precisely when reservoirs need to be full.

How close the system is to the edge

The grid operator, known as XM, has laid out just how tight the margins have become. In its most recent energy bulletin it warned that, in the harshest drought scenario, the combined level of the country’s reservoirs could fall to around nineteen percent of capacity during the dry peak between December 2026 and April 2027.

That figure is alarming in context. During the last El Niño in 2024, reservoirs bottomed near twenty-seven percent, and the country came within about a week of rationing before careful grid management pulled it back.

A drop to nineteen percent would be uncharted territory; one industry leader noted that the system has never operated that low, so no one really knows how it behaves there.

For now there is a cushion. As of mid-June the aggregate reservoir level sat around seventy-four percent, helped by decent rainfall that month.

But XM says the level needs to climb above eighty percent before the dry season begins in order to weather a severe El Niño safely, and the window to get there is closing.

Demand is rising into that tightening supply. Electricity demand on the national grid is growing at close to six percent a year and hitting record highs, lifted by heat, mid-year holidays and a World Cup summer.

Yet new capacity is barely arriving: of roughly four thousand five hundred megawatts of new generation due in 2026, only a few hundred had come online by June. XM says demand already exceeds the firm, reliable supply available by about two percent.

What rationing would cost

The reason all this reaches the business pages is money. Power rationing is not just an inconvenience in Colombia; it is a measurable hit to the economy.

Analysts at Corficolombiana estimate that returning to rationing would cost the economy around five thousand six hundred million pesos an hour, roughly one and a half million dollars, while pushing up electricity tariffs and chilling investment across the sector. A longer, 1990s-style rationing episode would do far deeper damage, the kind that shaves points off growth and destroys jobs.

The 2024 episode showed how the strain transmits to prices. As the dams ran low, thermal plants had to cover a large share of daily demand, and the wholesale electricity price on the spot market jumped by more than two hundred percent, feeding through to the wider economy.

The more the country must lean on imported gas to run those plants, the more expensive that backup becomes.

There is a financial fragility layered on top. Several power distributors are short of cash, and a large Caribbean utility under government control owes roughly two and a half trillion pesos to others in the sector.

If thermal generators cannot be paid, they may struggle to buy the fuel they need, and a regional liquidity problem could harden into a national supply one.

A problem that lands on a new government

The timing is politically loaded. Colombia has just elected a new, market-friendly president, Abelardo De La Espriella, who takes office in August, only months before the most exposed stretch of the dry season.

The energy squeeze helps explain one of his administration’s priorities. The incoming government wants to reopen oil and gas exploration, allow unconventional drilling and lift output, a direct reversal of the moratorium that helped drain the reserve pipeline.

The logic is straightforward, even if the payoff is slow: with the four-to-six-year lead time, contracts signed in 2027 would not produce gas in time for this drought.

Generators are pressing the new team to act early. The industry association Acolgen has urged the president-elect to resolve the sector’s cash crunch, secure fuel supplies and rebuild reservoir levels before the worst of the drought arrives, warning that the risk is no longer a distant hypothesis.

Their message is that the first months of the new term, not 2030, are when the system is most exposed.

There are partial fixes in train. A renewable-energy auction scheduled for late July aims to lock in new wind, solar and battery capacity, though most of that power would not flow until 2030.

A second regasification project on the Pacific coast is due to begin operating from November, widening the country’s capacity to import gas. These help at the margin, but none arrives in time to transform the coming dry season.

What it means for investors

For anyone with money in Colombia, the energy story is not a side issue. It runs straight into the questions that move asset prices: inflation, public finances and the cost of doing business.

The clearest channel is prices. A heavier reliance on costly imported gas to run thermal plants pushes up electricity tariffs and the wholesale power price, feeding inflation at a time when the central bank is already wrestling with stubborn price pressures.

That, in turn, complicates any path to lower interest rates.

There is a fiscal dimension as well. Oil and gas still generate large royalties for the state, and a fading reserve base points to thinner energy revenues over time, just as the country wrestles with a wide budget deficit.

The structural decline narrows the cushion that hydrocarbons have long provided to public finances.

The wider lesson is about a model under strain. Colombia built its energy system on cheap hydropower and ample domestic gas, and both pillars are now weakening at once: less rain on the horizon, and less of its own gas to fall back on.

The country can manage the transition with imports, new contracts and renewables, but each of those costs money and time, and the drought will not wait.

The next nine months will reveal whether this is a managed shift or a disorderly one. If the rains return and reservoirs fill, Colombia muddles through another El Niño.

If they do not, an exporter that long sold energy to its neighbours could find itself buying expensive power to keep its own factories running, and investors will be watching the reservoir gauges as closely as the rate decisions.

Frequently asked questions

What is happening to Colombia gas reserves?

Proved gas reserves fell almost seventeen percent in 2025 and are down roughly fifty-five percent since 2018, according to the national hydrocarbons agency. At current output, the remaining gas would last about five point nine years, and the country already imports a sizeable share of what it uses.

Why does El Niño threaten Colombia’s power supply?

Colombia draws about two-thirds of its electricity from hydroelectric dams. El Niño brings drought, which lowers reservoirs and forces the country to burn more gas in thermal plants, just as its own gas supply is shrinking and imports are costlier.

Could Colombia face power rationing?

It is a real risk if a strong El Niño materialises. The grid operator warns reservoirs could fall to around nineteen percent in a severe scenario, below the level that prompted rationing fears in 2024, and analysts estimate rationing would cost the economy roughly one and a half million dollars an hour.

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