Shell has announced its withdrawal from three offshore natural gas projects in Colombia’s Caribbean region, citing a strategic realignment of its global portfolio. The decision affects the Col 5, Purple Angel, and Fuerte Sur blocks, jointly operated with Colombia’s state-owned oil company, Ecopetrol. Ecopetrol remains committed to these projects, emphasizing their technical and economic viability for the country’s medium-term energy supply.
Shell has confirmed it will pull out of three major offshore gas projects in the Colombian Caribbean, marking a significant shift in its portfolio and a jolt to Colombia’s energy ambitions. The company held a 50% operating stake in the COL-5, Purple Angel, and Fuerte Sur deepwater blocks – areas where several natural gas discoveries were made over the past decade. Now, Shell has decided these projects “no longer fit our strategic ambitions,” according to a spokesperson, and will relinquish its stake. Instead, Shell says it will refocus its efforts in Colombia on providing “flexible energy products and solutions,” such as liquefied natural gas (LNG) supply and high-quality fuels and lubricants.
The announcement, made in late April 2025, means Colombia’s state-owned Ecopetrol – Shell’s partner in the blocks – is left to chart a path forward for the gas developments. Shell’s exit is particularly striking because the blocks in question contain several gas discoveries, including Kronos-1, Purple Angel-1, Gorgon-1 and -2, and Glaucus-1. These finds, made in deep waters of the southern Caribbean’s Sinú basin, had positioned Colombia for a potential offshore gas boom. Shell’s involvement since 2020 brought technical expertise to these frontier projects, and initial results were promising. In fact, Shell only recently confirmed a new gas find at the Glaucus-1 well in late 2023, adding to earlier discoveries like Kronos and Gorgon. All told, the region was being heralded as a new gas province for Colombia.
With Shell stepping back, the immediate question is what happens next for COL-5, Purple Angel and Fuerte Sur. Ecopetrol, which owns the remaining 50%, insists the discoveries are “technically and economically viable” and remain strategic priorities for both the company and Colombia. The two firms are working on a joint plan to ensure continuity of the projects despite Shell’s withdrawal. In an official statement, Ecopetrol affirmed it is evaluating actions to “maintain their continuity over time and develop the resources to ensure [gas] supply in the medium term”. This suggests Ecopetrol may seek new partners or financing to carry the developments forward, aiming not to leave the gas resources untapped. The Colombian government, for its part, will be keen to see these discoveries developed to bolster domestic energy security.
Shell’s Global Strategy and Portfolio Realignment
Shell’s move in Colombia cannot be viewed in isolation – it aligns with a broader realignment of the oil major’s global portfolio and strategy. Under Chief Executive Wael Sawan, who took the helm in 2023, Shell has been “high-grading” its portfolio, focusing on assets that best fit its long-term strategy and divesting from those that do not. The company has not shied away from exiting even long-held positions if they are deemed non-core. In recent years Shell has sold assets or withdrawn from projects in various parts of the world as it sharpens its focus on value and the energy transition. The Colombian gas blocks, with development timelines stretching into the 2030s, fell victim to this strategic pruning. As Shell’s spokesperson put it, the projects “no longer fit our strategic ambitions” – a clear signal that the company sees better opportunities elsewhere or lower strategic value in these particular fields.
A key factor is Shell’s emphasis on LNG and integrated gas as growth pillars. At a capital markets day in March 2025, Sawan underscored that Shell is “absolutely convinced LNG is going to grow” globally. The company aspires to be the world’s leading integrated gas and LNG business, capitalising on rising demand for cleaner-burning fuel in Asia, Europe and beyond. In this context, developing relatively modest gas fields off Colombia – primarily aimed at supplying the local market – may not offer the scale or synergy Shell seeks. The discoveries in COL-5 and adjacent blocks, while significant for Colombia, are thought to be insufficient in volume to justify the “massive investment required for full-scale development” by a supermajor. Shell reportedly determined that the confirmed reserves, though technically recoverable, were not large enough to meet its investment thresholds when considering the high costs of deepwater development. Those costs would include expensive subsea infrastructure – “subsea pipelines and new processing plants” – needed to bring Caribbean gas to shore.
Shell’s global strategy also reflects a cautious approach to long lead-time projects. Major deepwater developments can take a decade or more to come onstream – in this case, Ecopetrol projects first gas from the Gorgon area around 2031 or 2032. Such timelines carry political and market risks. In Colombia, regulatory delays and uncertainty have been an added deterrent. Company officials in Bogotá reportedly pointed to “regulatory barriers and persistent delays” as obstacles, noting that each year of delay can erode a project’s value by 10–15%. Colombia’s permitting and consultation processes for offshore projects have been time-consuming, and the country’s shifting energy policies add another layer of risk. By withdrawing now, Shell avoids committing further capital to a complex project that might not deliver returns until the next decade.
It’s worth noting that Shell’s retreat does not mean it is abandoning Colombia entirely – rather, it is refocusing on other lines of business. The company highlighted it will continue supplying LNG to Colombia, likely through imports. Shell’s trading arm is a major player in global LNG markets, and Colombia’s growing need for imported gas could make it a customer. Shell also mentioned continuing to provide fuels and lubricants, which are part of its downstream and marketing portfolio. In essence, Shell is pivoting from gas producer to gas seller in Colombia, aligning with its global strategy of delivering energy through its integrated value chain while minimising exposure to upstream projects that don’t meet its size and return criteria.
Implications for Colombia’s Offshore Gas Ambitions
Shell’s exit is a setback for Colombia’s ambitions to develop a domestic offshore gas industry. The discoveries in the COL-5, Purple Angel and Fuerte Sur blocks were touted as a new frontier that could help offset declining onshore gas fields and reduce dependence on imports. With Shell’s technical expertise and capital now off the table, Ecopetrol faces the challenge of advancing these projects largely on its own or finding alternative partners. The company has made clear that it considers the offshore gas finds a national priority. They are “a priority for Ecopetrol and the country,” the firm stressed, emphasizing that the resources are viable and needed for Colombia’s energy supply.
In practical terms, Ecopetrol will likely seek one or more partners to replace Shell. Developing deepwater gas requires significant investment and know-how – areas where a single mid-sized national oil company may prefer to share the load. Potential suitors could include other international oil companies or state-backed firms from countries interested in Latin American energy. However, the broader context may make recruitment difficult: Shell is not the only major to scale back in Colombia. Over the past decade, a number of oil majors have reduced or ended upstream operations in the country. BP, for instance, sold its Colombian oil fields years ago; ExxonMobil and ConocoPhillips have pulled back after exploration efforts (notably in unconventional shale prospects) stalled; Chevron has been looking to divest its stake in a decades-old gas producing joint venture. This trend of exits by international oil companies has cast a cloud over Colombia’s upstream investment climate. Shell’s move only reinforces the perception that Colombia has become less attractive for big energy investors.
The reasons are twofold: resource scale and policy environment. On one hand, Colombia’s recent discoveries, while valuable domestically, may not be “giant” by global standards. The fields in question are estimated in the low trillions of cubic feet of gas. By comparison, energy companies have prospects elsewhere – from Qatar’s massive North Field expansions to East African LNG developments – that dwarf Colombia’s volumes. If an oil major must prioritise capital, it will lean toward the biggest and most certain payouts. On the other hand, Colombia’s policy environment has introduced uncertainty. A new government took office in 2022 under President Gustavo Petro with a mandate to accelerate the energy transition. This administration announced it would “not approve any new oil and gas exploration projects” as part of a shift toward a greener economy. While contracts signed before that policy remain valid (hence Shell and Ecopetrol were free to appraise their existing blocks), the moratorium on new licenses dampens the long-term outlook for the sector. Investors worry about regulatory hurdles and whether future development permits will be forthcoming. Indeed, Shell’s withdrawal “highlights two hard realities: regulatory uncertainty and commercial viability” in Colombia’s upstream.
For Colombia’s offshore gas sector, Shell’s exit could mean delays in bringing the new fields online. Ecopetrol has already indicated that production from the largest discovery (Gorgon) wouldn’t begin until 2031-2032. Without Shell, sticking to that timeline might be challenging – unless Ecopetrol accelerates efforts with a new partner or a major government push. The company has initiated studies on connecting the offshore gas to the mainland via pipeline and integrating it into the domestic gas network. These engineering and environmental efforts will continue. But financing and executing a multi-billion dollar development and infrastructure project will test Ecopetrol’s capabilities, especially as its capital must also support other areas (the firm is involved in oil projects, refining, renewables, and now even importing gas). In the near term, Colombia might see slower progress in offshore gas development until the partnership structure is resolved.
Ecopetrol’s Response: From Partner to Lead Developer
Ecopetrol’s response to Shell’s withdrawal has been one of resolve. The state-run oil company has emphasised that it expected these projects to move forward and is taking steps to ensure that happens. Immediately after Shell’s announcement, Ecopetrol’s management stated it was evaluating the best alternatives to continue the offshore developments. The company has formed a task force – a “joint plan” with Shell during the transition – to guarantee continuity on the COL-5, Purple Angel, and Fuerte Sur blocks. In practice, Shell’s technical data and expertise will likely be handed over, and Shell has said it will work with Ecopetrol on an orderly transfer. This suggests a degree of cooperation despite Shell’s exit decision, giving Ecopetrol a fighting chance to carry on without a gap in operational knowledge.
Looking ahead, Ecopetrol may need new allies. One possibility is inviting other international partners. TotalEnergies, the French oil major, has been mentioned in related contexts – notably, Ecopetrol and Shell are actually partners alongside Total in a separate Brazilian offshore project (the Gato do Mato field). That shows Ecopetrol’s willingness to collaborate internationally. Whether TotalEnergies or another firm would be interested in the Colombian gas blocks remains uncertain, especially given the current policy climate. Another avenue might be partnerships with other national oil companies. For example, Petrobras, Brazil’s state-controlled firm, is already active in Colombian waters (in fact, Petrobras operates a gas discovery north of Shell’s blocks, as discussed later). Companies from Asia or the Middle East, such as Malaysia’s Petronas or QatarEnergy, could also be potential partners if the terms and strategic fit are right. QatarEnergy, for instance, has taken stakes in international gas projects from Africa to North America and might view Colombia’s offshore gas as a long-term bet aligned with gas demand growth.
Ecopetrol itself is reallocating resources to ensure these projects don’t stall. The company has signalled that natural gas is one of the “pillars” of its energy transition strategy. In its latest investment plan, Ecopetrol earmarked about $1.37 billion for exploration over the next three years – a budget that includes advancing offshore appraisals. It’s a significant sum for exploration at home, at a time when exploration budgets globally are under pressure. This financial commitment underlines that Ecopetrol is doubling down on finding and developing domestic gas as a bridge for Colombia’s energy future. The firm also continues to invest abroad: its partnership with Petrobras yielded a major gas find in 2022-2024 in the Tayrona block (now called the “Sirius” discovery). By balancing domestic focus with strategic international projects, Ecopetrol is trying to secure both the know-how and reserves base needed to navigate an uncertain future.
One challenge for Ecopetrol will be managing these capital-intensive gas projects alongside the company’s other obligations. Ecopetrol is a diversified energy company – it not only explores for oil and gas, but also runs refineries and is venturing into renewables and cleaner technologies. The government also relies on Ecopetrol for dividends to fund public spending. With Shell gone, Ecopetrol might have to shoulder a larger share of the offshore development costs, which could impact its balance sheet. However, the company may seek to mitigate this by phasing the development or securing external financing (for example, through multilateral banks if the projects are framed as critical for energy security and transition). Ecopetrol’s leadership insists the offshore gas resources are strategic for Colombia’s medium-term needsreuters.com, implying they will find a way to push them forward despite the hurdles.
Colombia’s Energy Strategy at a Crossroads
Shell’s withdrawal comes at a delicate time for Colombia’s national energy strategy. President Gustavo Petro’s government has championed an ambitious agenda to pivot away from fossil fuels, aiming for a “just energy transition” that boosts renewables and reduces reliance on oil and gas. A headline policy has been the decision to cease awarding new exploration licenses for oil and gas. In theory, this policy is meant to encourage investment in clean energy and avoid locking in new fossil fuel dependence. In practice, it has complicated the outlook for Colombia’s energy supply, given the country still relies heavily on hydrocarbons for power generation, industry, and as a source of revenue.
Natural gas holds a unique place in this strategy debate. On one hand, gas is a fossil fuel; on the other, it’s seen as a cleaner bridge fuel that can support renewable expansion (by backing up intermittent solar and wind) and replace more polluting coal or oil in the interim. The Petro administration has sent mixed signals on gas: while no new exploration contracts will be issued, officials have at times suggested gas – especially already discovered resources – should be developed to ensure domestic supply. Colombia’s proven gas reserves are relatively small, currently covering just over six years of consumption at current demand. This is a stark figure: if no new reserves are developed, the nation faces a supply crunch before the end of the decade. In fact, Ecopetrol has warned of a natural gas shortfall of 120 billion BTU per day by 2025, widening to 300 billion BTU/day by 2026. That deficit projection is already becoming reality – Colombia has in recent months ramped up imports of LNG to meet domestic needs.
The offshore gas projects Shell was involved in were supposed to be part of the solution to that looming shortfall. If they come online around 2031, they could significantly bolster domestic supply in the 2030s, potentially offsetting decline elsewhere. But that leaves a gap in the mid-to-late 2020s. To bridge it, Colombia is increasingly turning to imports. The country opened its first LNG import terminal near Cartagena in 2016, and it has been importing LNG cargoes to cover peak demand, especially during dry seasons when hydropower (a major electricity source) is strained. With domestic production likely to dip before new projects kick in, Colombia is expanding import capacity. In March 2025, Ecopetrol awarded a contract to build regasification facilities on the Pacific coast, at Buenaventura, slated to start operation by 2026. This new terminal will enable Colombia to receive LNG on the Pacific side, supplying gas to the populous southwest region. It’s part of a government strategy to diversify supply and avoid an energy crunch in the second half of this decade.
Reliance on LNG imports, however, presents an ironic twist to Petro’s climate goals. Imported LNG can have a higher carbon footprint than domestically produced gas, once you account for the energy used in liquefaction and transport. As one analysis noted, Colombia’s bold push to halt exploration has an unintended trade-off: the nation “must bring in cargoes with a bigger carbon footprint as its own reserves dwindle”. In other words, by restricting domestic upstream activity too quickly, Colombia risks increasing its reliance on foreign gas that is not necessarily cleaner or cheaper. This dynamic has sparked debate within Colombia. The government has maintained that it can manage the transition without shortages, pointing to plans for more renewables and some continued development of already discovered fields. Critics, including many in the industry and opposition, argue that the country needs a more gradual approach – continuing to explore for gas (and oil) in the near term to avoid expensive imports and ensure energy security, even as it builds up renewables.
The crossroads at which Colombia stands is evident. If it pushes forward with developing the offshore gas discoveries (like those Shell left and the separate Petrobras find), it could extend its self-sufficiency in gas for decades, providing a cushion to transition more smoothly. If those projects falter or are abandoned, Colombia may become a significant long-term importer of energy, which could have economic and geopolitical implications. Gas imports mean exposure to volatile global LNG markets and prices, as well as dependency on suppliers abroad. For a country that for years enjoyed self-sufficiency in gas and even modest exports to neighbours, this is a stark change. The government’s national development plan balances these concerns by still supporting key gas projects (within existing contracts) as “transition fuels,” even while no new exploration is authorized. The success of that nuanced stance will be tested by how swiftly and efficiently Colombia can get projects like Kronos/Purple Angel/Gorgon onstream without Shell’s help.
Ripples in Latin America’s Energy Investment Climate
Shell’s withdrawal from Colombia resonates beyond the country’s borders, feeding into a broader narrative about energy investment in Latin America. In recent years, a wave of political shifts in the region – with many countries electing governments focused on resource nationalism or aggressive energy transition policies – has impacted how attractive these markets appear to international oil and gas companies. Colombia is a prime example, where policy uncertainty and a pivot away from fossil fuels have led multiple majors to scale down operations. The trend is not uniform across the region, but it is noticeable. Investors often mention a “risk premium” for Latin America due to regulatory and political swings. When a company like Shell exits projects after only a few years, it underscores those concerns.
However, Latin America’s energy landscape is diverse. While Colombia sees foreign operators pulling back, other countries are witnessing a boom in oil and gas investment. Brazil, for instance, has continued to attract majors to its offshore pre-salt fields, which offer world-class reserves under a relatively stable regulatory regime. Petrobras itself, despite Brazil’s own rhetoric about a greener future under President Lula, is ploughing ahead with large-scale developments and even new exploration rounds are still on the horizon in Brazil’s offshore. Guyana is another magnet for investment: ExxonMobil and partners have made enormous oil finds there and are rapidly developing them, with the government keen on monetising resources. Suriname hopes to follow a similar path. Argentina, while facing economic woes, is pushing development of its Vaca Muerta shale and planning an LNG export terminal – projects in which companies like Shell, Chevron and TotalEnergies are participating, attracted by the geological potential if not the economic volatility.
In contrast, Mexico and Colombia have presented a more challenging face to investors. Mexico’s government rolled back parts of an energy reform and gave more control back to state company Pemex and the power utility, discouraging some private investment (though some foreign firms remain in offshore projects there). Colombia’s stance under Petro, especially the halt to new exploration, has similarly cooled investor appetite. The result is a rebalancing: capital that might have been spread across more countries is now concentrating in the “sure bets” like Brazil or the exciting new plays like Guyana.
For Latin America as a whole, this raises questions about energy security and transition. If countries with significant resources effectively sideline themselves by dissuading investment, the continent’s overall production could lag, even as global demand still needs to be met. That could mean more reliance on energy imports or on production from other regions. On the flip side, the shifting strategies of companies like Shell also reflect their own climate commitments and investor pressures. European oil majors in particular face scrutiny to justify new hydrocarbon projects in a world that is striving (if fitfully) to limit carbon emissions. A project has to be not only profitable but also resilient under climate policies. Many Latin American opportunities – especially smaller-scale or frontier ones – may not pass those stricter tests. Shell’s focus, for example, is on projects and regions where it can generate robust returns and align with a lower-carbon future. Gas is central to Shell’s plans, but primarily large-scale gas linked to LNG exports or integrated value chains. In that lens, a medium-sized domestic gas project in Colombia under a government ambivalent about fossil fuels might simply not have made the cut.
The geopolitical energy shifts of the past few years also play a role. The war in Ukraine and Europe’s resulting scramble for non-Russian energy elevated LNG to strategic importance. It drove home the point that having flexible LNG supply – something Shell excels at – is a lucrative and vital business. So companies are doubling down on LNG infrastructure and trading. At the same time, high oil and gas prices in 2022 gave state coffers in producing countries a windfall, which in some cases emboldened leaders to push tougher terms on foreign investors or accelerate transition plans. Now as prices stabilise, countries like Colombia must ensure they remain attractive for the partners they do need. Energy transition goals are paramount, but so is energy realism. Latin America’s challenge is to encourage investment in cleaner energy and necessary fossil fuels in parallel, without one completely crowding out the other in the near term.
Colombia’s case is a cautionary tale in this balance. If managed adeptly, the country could still use its existing gas discoveries (developed with help from companies like Ecopetrol and perhaps new partners) to supply its population with relatively low-carbon energy while building a renewable sector – fulfilling both its climate pledges and energy needs. If mismanaged, however, the departure of partners like Shell could presage a wider retreat of expertise and capital, leaving resources untapped and forcing reliance on imports. That outcome would not only be economically costly for Colombia but might also slow its energy transition (since paying for imported LNG could divert funds from renewables, for example). For investors, Shell’s exit underscores that Latin America is not a monolith: each country’s policy choices and project economics will dictate who stays, who goes, and where the money flows.
Weighing the Future of Colombia’s Gas
Shell’s withdrawal from the COL-5, Purple Angel, and Fuerte Sur blocks is a pivotal moment for Colombia’s energy sector. It closes one chapter – the promise of a joint Shell-Ecopetrol offshore gas venture – but opens another in which Colombia must forge ahead on its own terms. Ecopetrol and the government face a delicate task: reassuring the market that these gas projects will proceed and deliver value, even without one of the world’s largest energy companies on board. The stakes are high. Successful development of the offshore gas could bolster Colombia’s energy security, ease its transition by providing domestic gas for decades, and prove that the country can manage a measured shift away from oil and coal. Failure or excessive delay, on the other hand, could deepen an emerging gas supply crisis and undermine confidence in Colombia’s ability to attract investment in any sector, clean or otherwise.
From Shell’s perspective, the decision reflects a disciplined strategy to invest where it sees the most alignment with its global goals – in this case, doubling down on LNG mega-projects and reliable high-return ventures, while stepping back from middling-scale, high-uncertainty undertakings. Shareholders and analysts will likely view the Colombia exit as a prudent trimming of the portfolio, especially if Shell redeploys the capital into projects with quicker or larger paybacks. For Colombia, though, Shell’s reasoning – that the blocks didn’t fit strategic ambitions – is a wake-up call. It must ask how to make its future offerings fit the ambitions of investors, or whether it will shoulder the burden through state entities and alternative financiers.
In the broader Latin American theater, the Shell-Ecopetrol episode will be dissected for lessons. It highlights the complex interplay of global energy trends and local policy. Even as the world hungers for gas amid LNG demand growth, investment will chase the most favorable conditions. Countries that provide stability and reasonable returns will capture that investment, whether for fossil fuels or renewables. Those that send mixed signals may find capital is a fickle friend. Colombia stands at this crossroads, emblematic of a region trying to balance climate responsibility with economic pragmatism.
As of now, Ecopetrol remains determined to carry the torch that Shell has passed back. The coming years will test its resolve and resourcefulness. The company’s engineers are pressing on with development plans – for example, aiming to complete the Gorgon field’s preparation by 2029 and have gas flowing in the early 2030s. At the same time, Colombia is ramping up LNG import infrastructure to avoid short-term crunches. This dual approach, developing domestic reserves while importing stopgap supplies, may well define Colombia’s energy strategy in the late 2020s. If successful, it could become a case study in managing transition: using every tool available to keep the lights on and homes warm while navigating toward a greener future. Shell’s exit, though a setback, might ultimately be the spur for Colombia to take charge of its destiny – ensuring that its energy policies and projects, whether pursued with partners or solo, align with the country’s own strategic ambitions for sustainability and prosperity.
