Gustavo Petro and Nicolás Maduro during a meeting in Caracas on 1 November 2022. Miguel Gutiérrez (EFE)
Relations between Colombia and Venezuela have picked up speed since Gustavo Petro and Nicolás Maduro met in Caracas in early November. The countries now want to connect vigorously, which is why Colombia’s state-owned oil company Ecopetrol has asked the US for permission to negotiate with Venezuela’s PDVSA. The Chavista government-controlled public company is under sanctions from Washington that prevent companies and individuals from doing business with it.
The permit will not necessarily be easy to obtain. Months ago it was agreed that Conviasa, the Venezuelan public airline, would cover the Caracas-Bogotá route. The planes were ready to take off when the United States used all its powers of intimidation to stop them. The US embassy sent letters to Colombian officials reminding them that Conviasa is also on the Office of Foreign Assets Control (OFAC) list, known as the Clinton list, and that anyone offering a service to it like Catering or cleaning the ships could be prosecuted by the American judiciary. Colombia gave in and Venezuela was furious. Only one airline, Turpial, currently covers the route.
Countries hope to get better results this time. Ecopetrol, the country’s largest company, has formally applied to OFAC for a license to operate with PDVSA, similar to that obtained by Chevron to import gas. The office gave the US oil company approval to resume limited oil production in Venezuela after Chavismo agreed to return to talks with the opposition in Mexico, from where a proposal for credible presidential elections in 2024 must come.
An employee works at an Ecopetrol refinery in Colombia in 2018. Nicolo Filippo Rosso (Bloomberg)
In 2004, Álvaro Uribe and Hugo Chávez signed a binational energy connection agreement between the two countries. It was then agreed that Ecopetrol and Chevron would sell gas to PDVSA. This deal lasted from 2007 to 2015 and the Venezuelan oil company paid all that was owed. From that date it had to be the other way around: the Venezuelans would sell it to the Colombians. That would last from 2015 to 2027 but failed to come into effect. First because of the phenomenon of warming of the Pacific Ocean, known as El Niño, and later because of the sanctions, to which was added that Colombia found more gas on its territory.
The export problem faces some problems. Colombia already produces 80% of the gas it consumes. There are some producers who cannot sell everything they produce, so there is an oversupply. At the same time, new offers have emerged that make business between the two countries more difficult. Venezuela authorized a private company, Prodata Energy, to export natural gas to Colombia for the first time a month ago. Caracas-based Prodata has received permission to broadcast over a 224-kilometer pipeline that has been dormant.
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According to Bloomberg, this deal will help Venezuela diversify its energy exports, which form the basis of its economy. It bolsters supply from Colombia, where the market expects production to fall due to President Petro’s intention to steer the country toward green energy. In this complex context, Ecopetrol and PDVSA aim to finalize an executable contract in 2023 that will benefit both nations. All that remains is US approval.
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