Colombia was the fourth-largest crude oil producer in Latin America last year, only behind Brazil, Venezuela, and Mexico. However, Argentina’s growing shale output so far in 2025 is propelling it ahead of the production-declining Colombia. Crude oil output in Colombia averaged almost 750,000 barrels per day (bpd), with condensate averaging just 16,000 bpd in 2024. The country primarily produces heavy crude, with the heavy sour grades making up 50% of the total production last year, followed by heavy regular and heavy sweet grades. Colombia often seems to be overshadowed by other Latin American producers – Brazil, Guyana, and Argentina – that, unlike Colombia, are growing domestic production rapidly. On the other hand, Colombian production has been on a declining slope since 2015, when crude and condensate output peaked at 1 million bpd, falling by 23% in 2024.

Heavy sour demand and Colombia’s declining production
Colombia primarily produces heavy crude with up to 52% (396,000 bpd) of the total crude produced last year, heavy sour. This makes Colombian crude a highly desirable grade in the relatively tight medium and heavy sour market. This is shown by the strengthening of the Latin American crude grades amidst talks of tariffs on Canadian crude and sanctions on Venezuela, which threatened a drop in heavy sour supply to the US system and, in turn, made Colombian and Ecuadorian viable replacement options. The Castilla blend saw a steep rise of around $5 per barrel, from $65 on 19 March to almost $71 at the start of this month, driven by high competition between crudes of this quality.

While Colombia’s crude oil is particularly desirable at present, its steadily sliding output projected for the short and medium term harms the nation’s ability to capitalize on a market short on heavy and medium grades. The decline rate has been relatively modest, projected to fall by only 3% from 2023 to 2025, but the decline is expected to be much more rapid going forward, falling by 16% between 2025 and 2028. We project 2028 crude output from Colombia to average only 640,000 bpd, compared to 750,000 bpd this year.

The decline in output in Colombia is driven by the aging producing portfolio, with many fields in the late stages of production, and a lack of new projects and discoveries that could stem falling output. Over 80% of last year’s total production came from fields that have exhausted over 50% of their initial reserves, which highlights the extent of field maturity in the country. Only 3% of the total production this year is projected to come from fields in their early stages. This number only goes up to 4.5% next year, as the country struggles to discover new barrels.

Colombian President Gustavo Petro's government has banned new hydrocarbon exploration contracts, aiming to transition the country away from fossil fuels towards a net-zero future. This has forced operators to continue exploring within existing and mostly exhausted acreages, and while Colombia leads onshore exploration within Latin America, any discovered volumes have not proved substantial enough to quell declining production levels.

In the short term, no significant contributions are anticipated from newly discovered fields or projects that have started in the past five years. Therefore, it is crucial for the country to either reduce the decline rate from mature fields - something energy companies in Colombia are actively pursuing through secondary and tertiary recovery techniques - or target reservoirs with higher discovered volumes.

Ecopetrol has intensified its efforts to enhance oil recovery. The company has prioritized secondary techniques such as water injection and gas injection for pressure maintenance and immiscible displacement, as well as tertiary techniques like chemical enhanced oil recovery to improve fluid/rock properties and oil displacement.

Even regional independents are effectively employing various oil recovery techniques to boost production, reduce decline rates, and enhance recovery rates. For instance, Gran Tierra Energy utilizes waterflood oil recovery techniques in key fields like Acordionero and Costayaco. Parex Resources and Geopark are implementing waterflood programs and polymer injection techniques to improve recovery rates.

The estimated ultimate recovery (EUR) per well in the Latin American offshore oil sector is booming, particularly in Guyana and Brazil. However, the situation is quite different for the continent’s onshore oil sector, where the average EUR per well is just 0.6 million barrels of oil equivalent (boe), significantly lower than in other parts of the world. Colombia's onshore oil fields have an even lower EUR per well, at just 0.5 million boe, for wells drilled during the 2018-2024 period. This figure is lower than most other Latin American countries. Additionally, the depth of the wells in Colombia is greater, with an average true vertical depth of 1,800 meters, leading to higher capital investments. Consequently, continuous drilling means capital injections are necessary to enhance or maintain production flow rates in the limited acreage offered by the government.

In sum, the Colombian upstream sector needs a shake-up if it is to fully capitalize on its market edge amid the current global requirement for heavy grades. With Venezuela under heavy sanctions and a faltering outlook expected in the immediate future, Colombia has a great opportunity to establish itself in the region. The potential the country holds is, of course, subject to a shift in the country’s policies concerning upstream licensing and exploration, capital investment, and management of downstream infrastructure, which have been under some pressure recently. 

Authors: 

Priya Walia

Vice President, Upstream Research
priya.walia@rystadenergy.com

Vadranam Sai Krishna

Analyst, Upstream Research
vadranam.krishna@rystadenergy.com

Aditya Rath

Analyst, Oil Markets Research
aditya.rath@rystadenergy.com

(The data and/or forecasts in this column are Rystad Energy's, and the opinions are of the authors.)