Ecopetrol Aims to Extend Fracking Partnership in Permian Basin Amid Production Gains

Ecopetrol, Colombia’s state-owned oil company, is actively seeking to extend its fracking partnership with Occidental Petroleum (OXY) in the U.S. Permian Basin. This collaboration has been a crucial factor in Ecopetrol’s production levels, with the Permian Basin accounting for 80% to 85% of Ecopetrol Americas’ output, which represents 13.6% of the group’s total production.

The current agreement between Ecopetrol and OXY is set to expire in March 2025, but negotiations are underway to continue the partnership. Ricardo Roa, Ecopetrol’s president, has outlined two potential options: continuing the existing joint venture with OXY or transitioning to a joint operation agreement if certain conditions are met. Roa expressed optimism about the ongoing talks, indicating that negotiations are progressing well.

In the first nine months of 2024, the Permian Basin yielded 95,200 barrels per day, a significant 61.6% increase from the previous year. This growth contributed to Ecopetrol’s overall production reaching 752,000 barrels per day between January and September 2024, marking a 3% increase compared to the same period in 2023.

Experts believe that maintaining the partnership with OXY is vital for Ecopetrol’s future. Julio César Vera, president of Xua Energy Foundation, emphasized that extending the agreement would be beneficial for the company and its shareholders, particularly in supporting future results and Ecopetrol’s energy transition strategy.

The negotiations come at a time when Ecopetrol is navigating other challenges, including its recent withdrawal from the CrownRock acquisition, which would have strengthened its hydraulic fracturing business. Additionally, the government’s stance on fracking may influence the ongoing talks with OXY.