© Reuters. FILE PHOTO: Colombia’s Finance Minister Ricardo Bonilla poses for a photograph during an interview with Reuters in New York City, New York, U.S., June 20, 2023. REUTERS/Rodrigo Campos/File Photo
By Rodrigo Campos and Nelson Bocanegra
NEW YORK (Reuters) – Colombia will continue to extract fossil fuels for “much longer” until it has other exports to replace that revenue, while considering diversifying its financing with carbon credits and green bonds, Finance Minister Ricardo Bonilla said on Tuesday.
Oil and coal are the South American nation’s two main sources of revenue via exports, royalties, and tax collection.
Investors were concerned when President Gustavo Petro came to power in August aiming to decouple the economy from fossil fuels and make way for renewable energy, which drove the local peso to a record low against the dollar in November.
Bonilla said the switch to renewable energy would be a lengthy process.
“The energy transition is going to take 15 to 20 years and we are going to continue exporting oil and coal for much longer,” Bonilla told Reuters.
The minister was fresh off a meeting in New York with investors, whose main concern was assurances around fossil fuel revenues.
“The most important issue is how we closed the discussion on oil exploration and exploitation, which was to show the map of where the exploration fields are in Colombia, (and) the current contracts,” added the official, who was appointed in late April as Petro’s second finance minister in less than eight months.
Bonilla specified that the country currently has 202 hydrocarbon exploration contracts in an area of about 17 million hectares in places where oil or gas has traditionally been found.
He added that Colombia has proven reserves of seven years, “but with some contingencies that oil could go up to 10 years and gas up to 20 years.”
Bonilla, who was also scheduled to meet with credit rating agencies, said the country seeks to diversify its sources of financing by issuing carbon credits focused on combating deforestation, green bonds that help finance projects that restore the environment and recover water sources, as well as social bonds to reduce poverty and inequality.