‘We want to continue to contribute to Colombia’s energy security’: Andres Ocampo, GeoPark CEO

GeoPark CEO Andres Ocampo talks about why the company is doubling down on its commitment to Colombia when other industry players are withdrawing.

By: Ricardo Avíla
Senior Analyst
Special report for El Tiempo

The oil and gas sector in Colombia recently heard about an agreement between Spain’s Repsol and GeoPark, the NYSE-listed second-largest operator in Colombia, for the sale of two Repsol exploration and production assets in Colombia for $530 million. The deal includes 45% of the CPO-9 Block in Meta, operated by Ecopetrol, and a 25% non-operated interest in four blocks managed by SierraCol in Arauca. Total combined output as of September was about 16,000 barrels of crude per day.

The transaction is subject to the right of first refusal that Ecopetrol and SierraCol have on the assets. Ecopetrol president Ricardo Roa confirmed this week that work to exercise that right over CPO-9, a block with growth potential in the Llanos basin, has started.

EL TIEMPO spoke with GeoPark CEO Andres Ocampo about why the company is doubling down on its commitment to Colombia when other industry players are withdrawing.

GeoPark signed an agreement to buy Repsol oil assets in Colombia for $530 million.

A week ago, the announcement of the sale of Repsol assets in Colombia to GeoPark was made. Who is GeoPark?

We are a Latin American company with more than two decades of experience and a long-term strategy of consolidating an oil and gas portfolio in the main basins of the region. Colombia is central to this strategy. We have been in the country for more than 12 years, we have produced 255 million barrels and invested more than four trillion pesos. In that period, we have drilled 230 wells. In the Llanos 34 block, we made the largest oil discovery in Colombia in the last 20 years, and we grew production from zero to a peak of 70,000 barrels per day.

What does that mean?

This means that our main operation is in Colombia. 87% of our employees are Colombian and in total we generate about 3,700 jobs, mostly in the field. We have paid more than 5.6 trillion pesos in taxes and royalties. We want to continue investing and increasing Colombia’s energy security. Proof of this is our offer of $530 million for Repsol assets.

“Colombia is one of the regions with the greatest potential, where we have made great achievements and where we hope to continue showing that there is a lot of room left to invest and grow,” says GeoPark CEO Andres Ocampo.

What was the process like with Repsol?

A great opportunity for GeoPark. It was a competitive process led by an investment bank in which several companies participated. The transaction’s technical and financial aspects were not straightforward because most of the crude is heavy, with environmental and commercial complexities. But thanks to our experience, market credibility and understanding of Colombia’s country risk, we managed to make the most competitive offer with the necessary financial backing.

Why the interest in these assets?

One of our main motivations has been the possibility of investing in the CPO-9 Block as a partner with Ecopetrol. We know its technical capabilities – the best heavy crude oil operator in the country – and we think that there is great alignment in the long-term vision for CPO-9: increasing production with development investments and increasing reserves with exploration. That alignment would allow both Ecopetrol and GeoPark to diversify risk, ensuring value creation for all those involved in the asset.

So you’re proposing a partnership with Ecopetrol?

We firmly believe that partnerships between public and private companies are key to Colombia’s energy development and increase and facilitate direct investment in the territories. A country’s energy mix needs different types of energy and different types and sizes of companies. Since 2019 we have been partners with Hocol, an Ecopetrol subsidiary, and we have been very successful in exploration projects in Meta with three discoveries in two years and a production that increased from zero to 4,000 barrels per day.

How would it help Ecopetrol if GeoPark wins the asset?

We provide technical expertise, both subsoil and surface. And a great financial capacity, evident in the $2.5 billion dollars we have raised in the market during our history. Such capabilities would allow Ecopetrol to reallocate capital to other priority projects on the national agenda, like the large gas discovery that was recently confirmed.

And how would it help Colombia?

By participating in CPO-9 we hope to be able to contribute more than 2 trillion pesos of capital to acquire the asset and around 7 trillion pesos of additional investment for its development. By way of comparison, the value of the purchase from Repsol plus the future investments, a total of 9 trillion pesos, could be equivalent to about 75% of the amount that the financing law sought to raise.

What has to happen for the transaction to become effective?

The next step is the closing of the period in which Repsol’s current partners can exercise the right of first refusal and for regulatory approvals to be made, including the one related to free competition by the Superintendence of Industry and Commerce.

What’s your argument for convincing Ecopetrol not to exercise its option to acquire the asset?

We respect Ecopetrol’s contractual right over the CPO-9 Block and we are here to contribute constructively. At a time of significant fiscal challenges and when the country wants to accelerate the energy transition, we believe that we are an alternative that’s convenient for the sector and for the economy.

Why do you want to increase your position in Colombia when other companies in the sector have decided to sell their operations?

Colombia is one of the regions with the greatest potential, where we have made great achievements and where we hope to continue showing that there is a lot of room left to invest and grow.

How does GeoPark see the energy sector right now?

The big challenge for everyone is to guarantee Colombia’s energy security and move towards a mix with more low-emission energy sources. Recently and similar to Ecopetrol’s decarbonization strategy, with the electrification of our Llanos 34 Block we have managed to reduce our emissions intensity by 26% and we are one of the oil companies with the lowest carbon intensity in Colombia and Latin America. This challenge requires the Government to join forces with the companies that produce safe, reliable and responsible energy, and that are committed to the future of the country.