Exclusive: As Colombia moves to ban fracking, Exxon seeks to recover investment

Two sources told Reuters that Exxon Mobil Corp (XOM.N) is in talks with Colombia’s government to recoup its investment in a fracking pilot project as the U.S. oil major prepares to leave upstream operations in the Andean country, where the government is pushing a fracking ban.

Exxon holds eight Colombian exploration and production contracts, including the fracking pilot. Colombia’s National Hydrocarbon Agency (ANH) notified Reuters that all had ended, stopped, or liquidated.

Under a two-year contract, the business intended to invest $53 million in the Platero fracking pilot project.

After nearly nine months in power, leftist President Gustavo Petro has been pushing for a fracking moratorium in Colombia’s congress.

The law would ban non-conventional energy operations like fracking. It passed the Senate and is anticipated to pass Congress in the following months.

According to the proposal, the rule would limit firms’ ability to recuperate investments, including the ability to transfer assets or receive rights over other conventional blocks.

An Exxon Colombia source told Reuters that the company is “reviewing the mechanisms to reach a solution regarding the investments for exploring unconventional” energy resources.

“We will continue to have constructive dialogue with the Colombian government on a comprehensive assessment of our unconventional investments,” Exxon spokesperson Michelle Gray told Reuters.

The ANH claimed “compensation” is not in its technical or legal terms, but Exxon is pushing a “accreditation” procedure for the Platero pilot project.

“The procedure is currently being studied,” the ANH added. It didn’t answer queries concerning accreditation.

Colombian non-conventional proponents think it will ensure energy sovereignty. Environmental damage is criticized.

Exxon and Colombia’s majority state-owned oil giant Ecopetrol (ECO.CN) announced a partnership to operate two fracking experimental projects in Santander region after receiving separate licences.

The state-run corporation asked the ANH to provisionally suspend both licenses last year, citing uncertainty over their future. An Ecopetrol representative confirmed this week that the two firms mutually ended their alliance in November.

This week, Ecopetrol’s new CEO Ricardo Roa said he will examine its fracking contracts “with a magnifying glass.”

Exxon told Reuters this week that it would withdraw from its 70% stake in the VMM-37 block in Colombia’s Medio Magdalena area.

Exxon said it examines and prioritizes investments, including Colombia.

People said the company’s petrochemicals and marketing operations will stay in the country.