Petro-Politics

In his bid to transform Colombia into a global leader of the green transition, President Gustavo Petro announced in 2023 that the country would stop signing new contracts for oil and gas exploration. Though celebrated by environmental advocates, the announcement was met with skepticism from various political actors, who have pointed to Colombia’s dependence on oil for its domestic energy needs and government revenues, as well as voiced concerns on behalf of those employed at Ecopetrol, the nation’s largest oil company.

While the Unión Sindical Obrera (USO, or Worker’s Trade Union), which represents Ecopetrol employees, strongly supported Petro’s presidential campaign, the union now confronts new tensions with the government. Ecopetrol—whose majority stake is owned by the state—is a key asset for the Colombian economy,  and USO is one of the oldest and most persecuted unions in the country: nearly 900 of its members have been victims of homicide, threats, and exile over the past several years.

USO today finds itself at a critical juncture, as the union pushes for decarbonization within a company that has been at the forefront of Colombia’s fossil fuel production. Petro seeks to turn Ecopetrol into a leader of clean technologies. In the first two years of Petro’s government,  the central debate between the national government and the 25,000 workers employed in the oil and gas industry has hinged on how this transition will be carried out.

A recent decision by Ecopetrol’s Board of Directors to halt approximately $3.6 billion of investments in the Permian Basin—a field that straddles Texas and New Mexico—has put the relationship between the government and industry workers to the test. Ecopetrol had studied the fracking site for more than a year and a half, and the deal aimed to generate more profits for the company, stimulating an estimated 9 percent increase in its barrel production. But the Board, which is aligned with Petro, rejected the project, citing environmental and economic concerns. The decision has sparked controversy among fossil fuel workers, who believe that decarbonization should not require halting new projects that would increase crude oil production.

Phenomenal World interviewed César Loza, president of USO, to discuss the history of unionism in the fossil fuel industry, the Petro government’s plans to promote Ecopetrol’s decarbonization, and the vision for a just green transition.

An interview with César Loza, President of USO

camilo garzón: What has Petro’s rise to power meant for Ecopetrol?

césar loza: We agree with the government on the need for an energy transition, one that provides a mix of clean energy sources and gradually weakens our dependence on fossil fuels. But we also have strong disagreements. For a sustainable energy transition, we believe three fundamental elements are necessary. The first is political will. Various actors need to have the political will for an energy transition to take place. Today, workers, local communities, unions, businesses, local governments, and the national government all seem to share this desire, so there are few disagreements here. The second element has to do with our energy sources: wind, solar, and geothermal. We are also aligned on this point, as Colombia has strong potential to develop these sectors. However, there is a third element without which an energy transition cannot happen, and that is economic resources. We’ve stated this before: the financing required for the energy transition must come from the oil and gas industry itself. Unfortunately, the government has not understood this. President Petro constantly talks about an energy transition, but where will the money come from? Any left or right government that proposes a tax reform —as Gustavo Petro’s government has already done in its first year—to increase tax revenues to obtain resources for an energy transition risks popular discontent. It won’t happen.¹

We told the President, the Finance Minister, the head of the National Hydrocarbons Agency (Agencia Nacional de Hidrocarburos), and the president of Ecopetrol that we support a basic curve with technical rigor for a production cap on barrels—for example, a cap of 750,000 or 800,000 barrels per day. Everything produced beyond that cap should be invested into the energy transition. This compromise clearly requires a strong and robust industry. But instead, we’ve noticed disinvestment in different oil fields—this is obviously a profound disagreement we have with the government. An example of this disinvestment is Ecopetrol’s decision to cut the investment budget this year from $4.5 billion to $2.5 billion. The decision will impact both the exploration and production of oil and gas. It also goes against the medium-term fiscal framework projected for 2026, since it was expected that the company would increase its production to 850,000 barrels of crude oil per day. At the current pace, however, it is unlikely that this target will be met.

In an interview on March 4, Andrés Camacho, the Minister of Mines and Energy, stated that a major challenge for the country was reaching one million barrels of oil production per day. The Finance Minister later echoed the sentiment. Recently, the National Hydrocarbons Agency formed an inter-institutional committee with the aim of reactivating the oil and gas industry. USO requested to be included in that committee, since it benefits us to help shape the surrounding policy to develop the industry. But there are conflicting interests. A key example: the Ministry of the Environment and Sustainable Development opposes strengthening the industry’s production capacity.

cg: To provide some context—what has been the historical role of USO in Ecopetrol?

cl: USO was founded clandestinely in Barrancabermeja on February 10, 1923—the organization celebrated one hundred years last year. The union served to defend the rights of workers employed by the Tropical Oil Company, a North American multinational responsible for exploiting the “Infantas 2” well, discovered in El Centro, Santander. The well had been in operation since 1918 and marks the birthplace of the Colombian oil industry.  

Initially, USO was known for defending workers’ rights and dignifying their conditions with the slogan of the “three eights” (eight hours of work, eight hours of study, and eight hours of rest), which took inspiration from the Haymarket riot in Chicago. The union embarked on a broader political agenda when it led what was known as the “patriotic strike” in Barrancabermeja in 1948, demanding improved labor conditions, the nationalization of oil, and that the conservative government in power withhold the Mares concession—an initiative that dated back to 1909, when president Rafael Reyes granted Roberto de Mares the rights to exploit oil in the Carare Opón jungles in the valley region of the Magdalena Medio.

As a result of that strike, the conservative government limited the Tropical Oil Company’s exploitation of oil in the region until August 25, 1951; it also agreed that the Mares concession would return to the state after that date. This led to the establishment of the Colombian Oil Company (Ecopetrol, or Empresa Colombiana de Petróleos), which came into being in August 1951. This is why we say that, in a sense, USO was responsible for creating Ecopetrol. Since then, USO has defended oil as public property for Colombians. Although the union was initially a grassroots union—tied to a specific company—about twenty-five years ago we transitioned to an industrial union. Today, we represent workers across the entire fossil fuel industry in Colombia, not just Ecopetrol.

We are a left-wing union that defends ideals like public ownership, public assets, and workers’ rights. However, we are also pragmatic: our workers want a union that defends their rights, their company, their source of employment, and their collective bargaining agreement. The union, of course, aligns more easily with the left and progressive governments, but political circumstances change. Despite the fact that Santos was a right-wing candidate, for example, we supported his re-election because of his government’s peacebuilding process with FARC.

Today, the organizational structure of the union consists of a National Board of Directors with twenty members and the president. There are twenty-eight regional boards across the country, and the union’s highest deliberative body is a National Delegates Assembly. In the fossil fuel industry, we are about 25,000 workers, with approximately 16,000 employed by Ecopetrol, although this depends on work cycles. The number of USO members within the Ecopetrol group is around 9,000 workers, and the rest are service workers employed by contractors and other operators. There are other smaller unions, but we are the more militant union that leads most mobilizations and engages in political action.²

cg: What is Ecopetrol’s role in the Colombian economy?

cl: After tax collection, Ecopetrol is the country’s main source of revenue. In 2023, it contributed 58 trillion pesos to the nation; this is equivalent to 4 percent of the country’s GDP and corresponds to the sum of the last three tax reforms over the past five years. In the most recent tax reform, approved by Congress in 2022, the government tried to make mining and oil companies pay more taxes, but the Constitutional Court overturned that provision this year, which would have brought the government nearly 7 trillion pesos in 2023. Now, the government must refund this collection.

Ecopetrol’s contributions have always been significant for Colombian public finances. If Ecopetrol were privatized, the company would pay royalties and taxes, but it would not generate anything for the government in terms of profits, and this difference could only be covered through tax reforms that tax private earnings. That is why it is important to defend contributions that depend significantly on Ecopetrol’s income and profits.

Another important factor to take into account is the international price of crude oil: if it is high, the nation’s income will tend to be better. For example, prices have remained above $80 dollars per barrel for the past three or four years. This is after the Covid-19 crisis, during which prices plummeted to negative levels. Some companies even lost profits by having to pay $20 per barrel to store crude in ships because there was no transport or distribution. The most recent price drop occurred in 2014, when there was a global crisis in international prices. The crisis had a negative impact on industry workers worldwide, but especially in Colombia, where prices fell dramatically from $118 dollars per barrel of Brent to $37 dollars in 2015.

cg: Can you tell us about USO’s relationships with previous governments?

cl: Although the labor movement is constantly struggling, certain governments have been more harmful to unions. The two right-wing governments of Álvaro Uribe (2002–2010) were particularly counterproductive for the union movement in Colombia and especially for USO. In 2003, while Uribe was in power, we went on strike. At the time, the president of Ecopetrol was Isaac Yanovich, an anti-worker reactionary who hated the union. USO was against the privatization of Ecopetrol. There had been a trend of privatizing public Colombian companies like Telecom, the former state-owned communication company, and the union had reason to believe that they were planning to do the same with Ecopetrol. In the end, the strike came at a high cost for the union, resulting in the dismissal of 253 employees.

Alongside the strikes, Ecopetrol suffered two major blows under Uribe’s presidency. The first was Decree 1760 in 2003, which stripped Ecopetrol of its prominent role in oil contracting, partnerships, and the management of royalties. These responsibilities were transferred to the National Hydrocarbons Agency. The other major blow came with Law 1118 in 2006, which transformed Ecopetrol into a corporation and authorized it to sell up to 20 percent of its shares. This decree transformed Ecopetrol’s economic nature, turning it into a mixed-economy company. It was now majority-owned by the state (88 percent), but it also had private shareholders. Additionally, there were labor and pension reforms that were detrimental to the labor movement. All of this made Uribe’s administration one of the most conflict-ridden for the union movement. Aside from those tensions, the history of the union has been marked by violence and repression.

cg: Could you speak more to this violence and repression?

cl: Our union has been a victim of the dirty war in Colombia. Between the late 1980s and early 2000s, over one hundred USO leaders and activists were assassinated. Violence against USO is part of a broader trend of violence against trade unions within the armed conflict. Trade unions were associated with leftist guerrillas and perceived as threats to business interests, making them targets of paramilitary persecution. There were 1,858 homicides of trade unionists recorded between 1986 and 2010, according to data from the Human Rights Observatory of the Presidency. The Truth Commission documented 865 victimizing acts against members of USO in particular between these years. Individuals have admitted to physical violence against union leaders, and even within Ecopetrol, some used violence against the union.

In one infamous case, Aury Sará Marrugo, the USO president in Cartagena, was assassinated on December 5, 2001. Salvatore Mancuso, one of the top ex-commanders of Colombia’s paramilitary groups, later admitted that union leaders like Marrugo were kidnapped and tortured. Testimonies given under the Justice and Peace Law (a legal framework established to support the demobilization of paramilitary groups during Álvaro Uribe’s administration) also revealed that a security official from Ecopetrol had connections with paramilitaries. As a results, many union leaders avoided speaking out publicly.

cg: Besides the disagreements that USO has had with the government, how is the union’s relationship with Ecopetrol’s Board of Directors and its President Ricardo Roa?

cl: We have a good relationship with the Ecopetrol Board. They’ve allowed us to participate in meetings they’ve held in Barrancabermeja and Bogotá with the vice presidency of organizational talent, but there are also decisions that don’t depend on the board but on the national government. I want to make this clear because while the relationship between USO and Ecopetrol is good, some decisions are made at the national government level.

A specific disagreement with them is that we believe in a green transition that doesn’t halt oil and gas production. We need to keep producing oil and gas. Not only is it Ecopetrol’s traditional business, but it also ensures national energy supply. Halting the exploration of new reserves will risk putting Ecopetrol and the national economy in peril, since our fossil fuel reserves will only last another seven years. Today, we produce 758,000 barrels per day, which includes the production from fracking in the Permian Basin in the United States. That contract extends until 2025. We have 580,000 barrels of crude oil, not including gas. If we subtract the 64,000 barrels contributed by the Permian Basin, then by the end of next year we will have a production of 516,000 barrels of crude oil. If a 10 percent decline factor is applied, in two years, we will have 374,000 barrels. In other words, we will have to import crude oil to supply our own refineries, with the additional problem that we will have nothing to export. This is an issue that concerns us as a union, and it should concern the entire country. We need further oil and gas exploration, no matter what.

If no new discoveries are made within the next two years, we will not have the crude oil needed to supply the two largest refineries in the country, in Cartagena and Barrancabermeja. Today, some barrels of crude oil are imported to meet the demands of the Cartagena refinery, purely for technical reasons, but we also export more than 300,000 barrels of crude oil.

Undoubtedly, Ecopetrol plays the most important role in Colombia’s fossil fuel sector. The company guarantees energy self-sufficiency and refines 440,000 barrels a day, transports over 1,100,000 barrels of crude oil and derivatives, produces seven out of every ten barrels, and generates 80 percent of the country’s gas. In that sense, investments in the traditional business cannot be halted, not only for energy supply reasons but also because of the revenue it provides to the nation.

cg: USO has also been concerned with job creation. What proposals has USO made to Ecopetrol to ensure that the company’s energy transition does not lead to job losses?

cl: At Ecopetrol’s recent assembly, the national government and Board of Directors approved a statutory modification allowing the company to be considered an energy company and not just an oil and gas company. It’s important to note that major oil companies around the world are adopting the same approach, and we think this is a good idea. Equinor—Norway’s state-owned company—underwent an internal administrative transformation in 2018, becoming an energy-generating company.

Although a similar strategy could allow Ecopetrol to lead Colombia’s energy transition, significant resources and regulatory changes are needed. Currently, the oil company cannot sell clean energy; it can only generate it for its own consumption. In general terms, we believe that the energy transition in Colombia should be led by Ecopetrol, so that it remains under state control. Otherwise, the business will go to private or multinational companies, which, of course, will contribute to higher energy prices.

There’s also the labor situation. The jobs generated by the oil and gas industry in Colombia are high quality jobs, thanks to the efforts of USO and its workers. By contrast, jobs generated by alternative energy sources, like solar energy, tend to offer low wages and don’t require as much labor as is needed in the major electricity generation centers. In that sense, the quality of the employment is different, and we need to ensure that jobs in clean energy are also dignified and well-protected. This could be done within Ecopetrol, as it is a company with a track record of providing labor guarantees for its workers.

cg: How do you see yourselves alongside the broader international oil worker movement, such as the unions in companies like Petrobras and Pemex?

cl: Although Lula’s government is left-wing, he hasn’t advocated for stopping oil and gas production in Brazil; on the contrary, Brazil is increasingly encouraging offshore exploitation, with a goal of reaching 6 million barrels. This doesn’t mean they aren’t aligned with the green transition, but that they are simultaneously working on both fronts. Even though the government is committed to the green transition, there is no risk to jobs in the oil industry because they continue to exploit resources.

Here, on the other hand, there is the notion that we must stop depending on fossil fuels as soon as possible. That won’t happen for technical and socio-economic reasons. What will happen in a region like the valley region of the Magdalena Medio, which has historically depended on the oil industry and is a hub for production, exploitation, refining, and transportation? We need a social transformation that allows people not to rely on oil but on other economic opportunities in the region. But that can’t be achieved overnight.

cg: In Colombia, there is an ongoing debate around subsidies for gasoline and diesel. The Petro government, in line with its policy of discouraging fossil fuels, has decided to remove a part of these subsidies, leading to an increase in gasoline prices and now diesel. Transport unions were very upset with this decision. What is USO’s view on the subsidies?

cl: Since August 2022, President Petro has sought to dismantle the so-called Fuel Price Stabilization Fund, created in 2007 with the purpose of avoiding price fluctuations. Its objective was to replenish the fund by charging higher prices when international oil prices were low, and turning that surplus into a gasoline subsidy when oil prices were high. But since its creation, the fund has been in deficit, and the state had to subsidize it. Petro decided to gradually phase out this incentive, starting with gasoline, and now he has announced that this will also apply to diesel. Since July 2022, the price of a gallon of gasoline has increased from 9.046 pesos to 14.564 pesos, a 61 percent increase in nominal terms and about 40 percent in constant prices (adjusting for inflation).

In Colombia, there is a fossil fuel price structure in which 35 percent of the price is made up of taxes. Another factor contributing to our high fuel price is fuel purchased from the Gulf of Mexico—an international benchmark price that we apply here. That’s why it is said that the government subsidizes each gallon of gasoline with a certain amount of money, because in the Gulf of Mexico, a gallon of gasoline is more expensive. The Petro government has now applied a price liberalization policy to align our prices with those in the Gulf of Mexico. They did this with gasoline, and they will do the same with diesel.

Recently, the Minister of Finance said that the diesel price increase would be 6,000 pesos: 2,000 this year and 4,000 next year, in two increments. This will certainly generate social unrest: transporters have made threats to stop production, and they have already began taking action.

At USO, we wish there was more academic and technical rigor around proposing a new price structure in which fewer taxes would be paid, and fuels would be cheaper. Another option is for Ecopetrol to maintain a profit margin for refining crude oil, after it’s processed and delivered to supply points. However, that hasn’t been possible for one very simple reason: if the price structure changes, and taxes are reduced, then revenues for the regions will be lower. There’s a structural issue here, rooted in how fuel prices are determined.

All of this should be a public debate. People are already asking: if 20 percent of the gasoline consumed in the country is imported, but all diesel is produced domestically using our own crude oil, why should gasoline and diesel prices be tied to those of the Gulf of Mexico when much of it is produced locally? This has been a long-standing debate in the country. From the union’s perspective, the price structure in the country should change without causing losses to Ecopetrol or reducing tax revenues as a result.

cg: Finally, how do you see the future of oil and gas exploration?

cl: We can look to the example of the Komodo 1 project, which involves drilling an offshore well 40 kilometers from Santa Marta. This project’s aim is to identify a gas-producing region that could contain the reserves Colombia needs for the coming years. However, the Ministry of Environment and Sustainable Development temporarily suspended the project, after asking the environmental authority to await more information about its impacts. This situation is counterproductive for Ecopetrol, and the energy supply we need to guarantee. There is a request in the Ministry’s office to convert more than eighty stratigraphic wells into production wells, but there has been no progress on that request.

We are calling for government bodies to coordinate and strengthen exploration in Colombia, even among the 300 contracts the country currently has in the works. We’ve mentioned Ecopetrol’s withdrawal from the Permian Basin deal in the United States, which involved purchasing a stake worth $3.6 billion in CrownRock’s assets from Oxy. The deal was projected to increase the company’s production by 9 percent, but Ecopetrol’s Board of Directors rejected it, citing a fiscal concern as well as the government’s opposition to fracking. We’re not saying the decision should have been different, but we’ve suggested to the company’s Board that the $3.6 billion that wasn’t spent should be brought back and invested in the country.

It’s unreasonable to keep all production expansion projects at a standstill, especially in the absence of a defined strategy for the company’s economic growth. And despite repeated requests, we have not been able to secure a meeting about this concern with President Petro.