Colombian President Gustavo Petro ordered the state-run oil company Ecopetrol to withdraw from an approximately $1 billion joint venture with U.S. energy giant Occidental Petroleum (Oxy). The agreement, which was set to produce 90,000 barrels of oil per day, was halted over environmental concerns, as Petro outlined Tuesday during a live televised address.
The Colombian government has long opposed the use of hydraulic fracturing, or fracking, a method of extracting oil that has faced heavy criticism for its potential environmental risks.
“I want that operation to be sold, and the proceeds reinvested in clean energy,” Petro stated during a government meeting broadcast online. “We oppose fracking because it represents the destruction of nature, and ultimately, the destruction of humanity.”
The deal, which had been announced just a day earlier, would have expanded Ecopetrol’s operations in the Permian Basin, a crucial oil-producing region spanning Texas and New Mexico. The project was expected to involve 91 new wells and an investment of over $880 million. Ecopetrol’s operations in the Permian Basin accounted for roughly 12% of its total production in 2023, yielding an average of 95,200 barrels per day.
Initially, Ecopetrol’s shares rose 2% following the announcement. However, after Petro’s intervention, the stock dipped, signaling investor concerns about the shifting political climate in Colombia and its potential impact on future oil deals.
While fracking is banned in Colombia, the government had not previously imposed any restrictions on foreign investments in projects that use the controversial technique. Petro’s decision to block the deal may also be tied to escalating tensions with U.S. President Donald Trump.
Just weeks ago, Petro clashed with the Trump administration over the deportation of Colombian nationals from the U.S. Petro rejected a request to allow the extradition of dozens of illegal Colombian immigrants arrested in the U.S., who were sent back to Colombia under military escort. In response, the Trump administration threatened to impose a 25% tariff on all Colombian exports, which could rise to 50% within a week. Other measures, including travel bans, visa revocations for Colombian officials, and emergency financial sanctions, were also discussed.
After a period of heightened rhetoric, both governments negotiated a temporary truce, with Colombia agreeing to accept the return of its citizens.
