The Extractive Industry and Peace in Colombia

By Carl Vosloh Zea

Since the 2008 global economic crisis, oil prices have consistently vacillated, creating an evermore volatile economic landscape directly affecting producers and consumers in the extractive industry globally, especially the hydrocarbon sector. The sharp fall in oil prices has led to a decrease in universal investment in oil, with investment in production and exploration dropping from $700 billion in 2014 to $550 billion in 2015.

As a major exporter in the hydrocarbon sector in Latin America and in particularly oil, Colombia competes for investment to prevent returning to a net oil importer status.

According to Carlos Fernando Eraso, Colombia’s Viceminister of Mines and Energy, drilling and exploration operations have significantly dropped. He makes a direct reference to the fact that the number of oil and gas exploratory wells fell from 56 in April 2014 to 5 in April 2016.

Likewise, investment has also dropped in Colombia because of the legal and security uncertainties regarding state and guerrilla warfare, community opposition for drilling, environmental concerns, and the high cost of crude oil transport.

In light of this, as the Colombian government approaches to sign a final peace accord with the Revolutionary Armed Forces of Colombia (FARC), what is to be of the future and development of the hydrocarbon sector in the country and it’s influence in the implementation of peace?

The end of the conflict with the FARC should increase security and incentivize foreign direct investment to open up exploration in conflictive extraction areas such as Caquetá, Arauca, and Putumayo, previously occupied by the FARC.

However, there is still concern regarding the illegal extraction activities of the FARC and how the government will introduce this into the peace negotiations and guarantee other guerrilla groups and criminals don’t continue exploiting these practices.

Moreover, a key aim of the peace process is also to empower and protect such neglected communities in these conflictive extraction areas, which are distant from any capital or urban center and have been left for years at the hands of the guerrillas and other illegal armed groups with little or no state presence.

Both the government and the private sector must play a major role to respond and be held accountable to the civilians who live and work in these communities. Most importantly, extractive industry practices should also address their social and environmental needs.

This can only be possible through state, regional, and local politics and institutions that improve governance, improve relations, and facilitate communities and local leaders to be a part of the political process.

The reality is that Colombia must reach consensus on policies that safeguard and impulse the hydrocarbon sector, while simultaneously improving relations with current and future conflictive extraction communities, while upholding environmental protections and practices’.

All in all, the key here is to notice the significance of all of this, as the extractive industry composes a great part of the country’s GDP, and in a near future, will likely need such investments and revenues to fund the implementation of peace.

Carl Vosloh Zea is the Editor in Chief of Latin American Affairs for Latino Giant (Washington, DC).