Is it too late for a Colombian oil boom?

global risk insightsFollowing the peace agreement with FARC, the Colombian government hopes to develop oil-reach rural areas that were previously fraught with conflict. But is it too late for an oil boom in Colombia?

The peace process with the Revolutionary Armed Forces of Colombia (FARC) finally got underway on 6 December following a new peace agreement, after the previous attempt was dramatically rejected in a referendum in October. As thousands of FARC fighters move to disarmament zones and camps to turn in their weapons and become civilians, Colombia hopes it can quickly seize economic benefits of peace in rural oil-rich areas. However, it may be too late for a new Colombian oil boom.

Background

After the initial expansion of the oil sector in the 1980s and the recent doubling of oil production in 2007 – 2015 to 1,005,000 barrels per day (bpd) the sector stagnated. Production fell to 846,000 bpd by October 2016 and oil exports and oil derivatives have fallen a staggering 46.9% in a month-to-month comparison between January 2015 and 2016. After the oil prices plummeted in 2015, the amount of public revenue the commodity brought fell from 20% to zero. …

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