Ecopetrol Drives Offshore Gas Exploration Despite Shell's Withdrawal

Ecopetrol S.A. EC, the Colombian majority state-owned energy company, has announced its plans to continue with the exploration of natural gas in the Caribbean deepwater even after its partner Shell plc SHEL exited Colombia.  The London-listed energy firm confirmed its plans in April 2025 to withdraw from three offshore blocks in Colombia, thus quitting oil and gas exploration in the South American nation. This included the COL-5, Purple Angel, and Fuerte Sur blocks in Colombia, which it jointly operated with Ecopetrol.

Rising Gas Demand & Dwindling Reserves in Colombia

EC will continue exploratory drilling for natural gas in these offshore blocks, as they are believed to hold significant reserves with potential for commercial exploitation. A company spokesperson confirmed that Ecopetrol will proceed with the development of its gas resources, not only due to the heightened demand for gas in the country but also because these gas projects are expected to yield high returns. Notably, EC is banking on the rise in domestic demand for the commodity to increase production.

Ecopetrol is currently focusing on the development of new gas resources, as Colombia’s gas reserves are dwindling and the country is becoming more dependent on energy imports to meet its domestic needs. Despite progressing toward the development of new gas reserves, EC believes that the first output from the offshore wells isn't anticipated before 2029. 

Since taking office in 2022, Colombian president Gustavo Petro’s administration has halted the issuance of new oil and gas exploration contracts. This is a setback for the country, as this means that upstream players will be required to utilize their existing assets to drive production and sustain output.

Petrobras Shows Interest in Colombian Gas

Colombia’s gas projects have also attracted attention from international players. Per a Bloomberg report, Petrobras had been eyeing possible acquisitions in the region, which also included the blocks that Shell had withdrawn from. EC had previously partnered with Petrobras for the exploration of new gas reserves in the country. The partners had made a breakthrough in 2024 with the drilling of the Sirius-2 well in the Gujaira Basin. The Sirius-2 well could significantly increase natural gas production in Colombia if its reserves are deemed economically viable.

Zacks Rank & Key Picks

Both EC and SHEL currently carry a Zacks Rank #4 (Sell).

Some better-ranked stocks from the energy sector are Energy Transfer ET and RPC, Inc. RES, eachcarrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Energy Transfer is a midstream player that owns and operates one of the most diversified portfolios of energy assets in the United States. Boasting a pipeline network extending more than 130,000 miles, its network spans over 44 states. With a presence in all the major U.S. production basins, the company’s outlook seems positive.

RPC generates strong and stable revenues through a diverse range of oilfield services, including pressure pumping, coiled tubing and rental tools. The company is strongly committed to returning value to its shareholders through consistent dividend payments and share buybacks, making it an attractive choice for investors seeking steady returns.

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This article originally published on Zacks Investment Research (zacks.com).

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