[Economics] The reasons why oil production would fall in 2023

[Draeno]

 

In the midst of a complex international environment and a panorama of deceleration, added to the strong internal conflict and the two-way signals about the signing of new oil exploration contracts, the prospects for this industry indicate that 2023 will clearly be a year of contraction or decrease, a term coined by the Minister of Mines and Energy, Irene Vélez.

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BY: PORTFOLIO
In the midst of a complex international environment and a panorama of slowdown, added to the strong internal conflict and the two-way signals about the signing of new oil exploration contracts, the prospects for this industry indicate that 2023 will clearly be a year of contraction or decrease, a term coined by the Minister of Mines and Energy, Irene Vélez.

Indeed, yesterday the Chamber of Petroleum Services (Campetrol), a union of firms that are in the areas where oil is sought and produced, projected that the main indicators of the sector will have a year of decline.

Beginning with the price of Brent oil, a reference for Colombia, whose price for which an average oil price of 85.1 dollars a barrel is estimated, which would imply a reduction of 15.6% compared to the price of 2022, due to to factors such as the growing probability of a global economic crisis, but also to factors on the rise such as the reopening of China and production cuts by the Organization of the Petroleum Exporting Countries (Opec).

Meanwhile, regarding the level of crude oil extraction, Campetrol estimated that the current year will close with an average of 735,000 barrels per day as a monthly average, that is, 2.5% less than that registered in 2022, due, in part , to public order situations and the uncertainty of public policy in the country.

And when analyzing the projections on the growth of the GDP of the oil industry in the country during this year, Campetrol emphasizes that "it could enter a downward path during 2023, reaching a growth rate of -3.9%, as a consequence of the decrease in the production of crude oil in the country”.

The figure would imply a significant change with respect to the variation of 2.6% observed in 2022, and could even have a larger gap, since the range for this projection that the union has is between -3.2% and -5.7%

And he adds that, as a consequence of the reduction in production and the downward trend in the price of oil, it is feasible that exports will be reduced by 23% with respect to the value exported in the year 2022, which indicates that their amount would end this year. at about 14.7 billion dollars, that is, 4.4 billion dollars below the 19.1 billion observed in 2022.

"In the year 2022, 19,000 million dollars in exports of oil and its derivatives were sold, but in January 2023, exports showed a 19.2% drop compared to the same period in 2022," said the president of Campetrol, Nelson Castañeda .

And he added that lower levels of investment could mean decreases in active rigs (maintenance and drilling) and, therefore, lower levels of oil exploration and production.

According to the union leader, although the government is betting on the energy transition, it is necessary to continue extracting the natural resource in order to finance the country's social projects.

Castañeda also stressed that this industry, which generates around 650,000 direct and indirect jobs throughout the country, is currently facing a period of both internal and external volatility.

 

https://www.portafolio.co/economia/finanzas/petroleo-se-preve-decrecimiento-en-el-sector-para-2023-580549