Andean Equity Strategy Colombia Hydrocarbons: The Bull Case for Policy Regime Change

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Andean Equity Strategy Colombia Hydrocarbons: The Bull Case for Policy Regime Change

.P. Morgan S.A.

company, Ecopetrol (Neutral, Milene Carvalho) stands out as the most direct play

Henrique Cunha, CFA

to get exposure to the binary outcome for the sector in the upcoming second round.

(55 11) 4950 3623

• Sector deterioration is structural, not cyclical: production down ~26% from henrique.r.cunha@jpmorgan.comBanco J.P. Morgan S.A.

peak, oil R/P at 7.2 years, gas R/P at 5.9 years, gas imports now ~25% of

Rodolfo Angele, CFA

demand, and Colombia is the only country in the region without new oil and (55-11) 4950-3888

gas contracts signed between 2023 and March 2025. rodolfo.r.angele@jpmorgan.com

• The June 2026 runoff is a binary catalyst: De la Espriella supports Banco J.P. Morgan S.A.

expanding fossil fuel extraction, including hydraulic fracking, while Cepeda

would continue Petro’s moratorium on new exploration.

• Policy levers under a regime change include: lifting the contracting freeze,

enabling unconventional (YNC) development, restoring fiscal stability

clauses, and accelerating permitting. Production upside is meaningful but

back-end loaded: +50,000 bpd from pilots in 3–5 years, +150,000–200,000

bpd at commercial scale in 7–10 years, up to +450,000 bpd at full development

in 10–15 years. This would allow Colombia to surpass its historical production

record and grow materially in upcomiong years.

• Venezuela optionality is increasingly real: Ecopetrol is seeking OFAC

approval for cross-border deals, the Antonio Ricaurte gas pipeline is being

prepared for reactivation, and majors (BP, Shell, Eni, Repsol) are signing new

agreements with PDVSA under the reformed Venezuelan hydrocarbon law. A

political alignment between the new government and the US is, in our view, a