By Paulo Trevisani
Ecopetrol, the state-controlled energy company of Colombia, has set a clear objective to invest in green fuels while continuing its core hydrocarbon business, according to Chief Executive Ricardo Roa.
Ambitious Goals for a Greener Future
Roa recently met with investors in New York to mark Ecopetrol's 15-year listing on U.S. exchanges and shared the company's vision. He stated that Ecopetrol aims to derive 50% of its earnings from low-emission business by 2040, a significant increase from the current figure of about 20%.
Commitment in the Face of Political Opposition
This commitment comes in the midst of opposition from Colombia's President Gustavo Petro, who took office a year ago and expressed his administration's stance against fossil fuels due to their impact on climate change. Despite this political backdrop, Ecopetrol remains steadfast in its objective to transition towards cleaner alternatives.
Balanced Approach to Energy Investments
Roa emphasized that while a growing portion of Ecopetrol's investments will be dedicated to cleaner alternatives, the company still recognizes the importance of the conventional energy sector. The majority of their investments will continue to support this sector, with a particular focus on natural gas.
"We are tracing a new route," Roa stated confidently. "We are going to have much lower emissions."
Turning Towards Renewable Energy
In addition to their commitment towards low-emission business, Ecopetrol's plans include increasing their renewable energy capacity to meet approximately one-third of Colombia's electricity needs by 2030. This is a significant leap from the near-zero contribution today.
Making a Difference in Emissions Reduction
Roa proudly shared that between 2020 and 2023, Ecopetrol has already achieved a reduction of approximately 1.3 million metric tons of carbon dioxide equivalent in greenhouse gas emissions.
As Ecopetrol looks towards the future, their determination to invest in green fuels while maintaining their core hydrocarbon business sets them apart in the quest for a sustainable energy transition.
Colombia's Finance Ministry has recently given Ecopetrol the green light to borrow up to $1 billion from international lenders. The majority of the funds will be allocated towards debt repayment, while a smaller portion will be used for investments. While there are no immediate plans for additional debt issues, the company remains open to the possibility.
So far this year, Ecopetrol ADRs (American Depository Receipts) have witnessed an 18% increase. In comparison, the state-controlled oil major of neighboring Brazil, Petroleo Brasileiro (Petrobras), has recorded a 37% surge. The S&P Energy Sector Index has also seen positive growth, rising by 5% during this period.
Analysts from JP Morgan predict that Ecopetrol's investment portfolio will witness a shift in the future. They expect the share of hydrocarbons in the company's investments to decrease from 70% in 2023 to 60% in 2040. Meanwhile, low emissions business ventures are projected to increase from 12% in 2023 to 25% in 2040.
Ecopetrol's CEO, Roa, highlights that investors generally support the company's plans to diversify its energy matrix by incorporating clean energy sources. However, he emphasizes that fossil fuels will continue to be a crucial part of the energy mix due to their reliability. As Ecopetrol expands into solar, wind, and renewable fuels, it aims to reduce Colombia's reliance on hydroelectric power.
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