Expansion of the Amazon’s Extractive Frontier

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By: Karla Díaz and Laura Montaño

While we experience a historic drop in crude oil prices and, consequently, that of future economic compensation from oil operations, there has also been an increase in the rate at which oil concessions are being awarded in the country. The third cycle of what is called the Proceso Permanente de Asignación de Áreas (PPAA or Permanent Process to Assign Areas) began on May 20th, 2020, to auction off 39 oil blocks. Of these, five are in the Amazon: CAG-7 and CAG-8, in the department of Caquetá and PUT 20, PUT 35, and PUT 37, in the department of Putumayo. This situation is contrary to the declaration that the jungle is a carbon sink, in accordance with climate change commitments to fight deforestation.

Between 2015 and 2019, 45 oil blocks were awarded in Colombia. Of these, 30 were awarded in 2019, and among those, three are in the Amazon. Between December 20 and 23, 2019, oil blocks PUT-21, PUT-33 and PUT-36 were awarded. They are located in the amazon counties of Mocoa, Puerto Caicedo, Puerto Guzmán, Villagarzón, and Puerto Asís, in Putumayo.

Since early August 2018, the current government has prioritized a reactivation of the mining and energy sector. To do this, the National Development Plan laid out several strategies that facilitate the awarding of areas and oil exploration and production activities. One strategy is the Permanent Process to Assign Areas (PPAA), a new mechanism that makes it possible to award them permanently, as indicated by the name, corresponding to requests made by the companies or based on the incorporation processes that are ordinarily performed by the National Hydrocarbon Agency (ANH, in Spanish). In 2019, there were two rounds to assign areas: the first, offered 20 blocks and the second 59 blocks. This process concluded with the awarding of 30 oil blocks.

Before oil blocks are auctioned there is a coordination and concurrence process, as was ordered by the Constitutional Court in ruling SU-095 of 2018. The principles of coordination and concurrencey seek to distribute jurisdictions between national and territorial entities, in this case in relation to the awarding of oil blocks and strategies to preserve a healthy environment. The Court ruling indicated that the national government was not fulfilling these principles, given that the perspective of municipal authorities was not taken into account in the awarding of blocks.

To resolve the dispute between the national government and counties, generated by an increase in local referendums (consultas populares), the Court ordered that Congress create a law to define the coordination and concurrence mechanism between counties and the national government when awarding oil blocks. This law is still a pending task for Congress.

The Court determined that it was necessary to annul the Permanent Competitive Process[1], which began in 2018, and to adopt measures that fulfill two requirements: i) citizen and pluralistic participation and ii) national-territorial coordination and concurrencey. The ANH then established a coordinated and concurrent procedure (ANH-GSA-PR-04) by means of which it seeks to fulfill the ruling. This procedure contemplates the following 12 stages or activities:

Graphic: Procedures for coordination and concurrencey with territorial entities to define and establish areas of hydrocarbon interest

[1] Mechanism to assign areas prior to the PPAA

Source: ANH (2019)

With respect to the procedure, in the fifth point of the resolution from ruling SU-095 of 2018, the Court established the following:

ORDER the National Hydrocarbon Agency to implement a procedure that allows for coordination and concurrencey with the territorial entities to define and establish the areas for hydrocarbon exploration and extraction.

Thus, the procedure’s objective must be territorial entities’ participation to define areas that can be awarded and those to be excluded. However, in reality the aim of the procedure created by the ANH to make the awarding process more agile is an exchange of information, mainly, using a vertical model: from the ANH to municipal governments, to finally encroach upon the land use jurisdiction of territorial entities, adhering to the mining-energy variable for planning instruments. In the ANH model, the counties don’t have a voice or vote in defining the areas that will be awarded. They become passive and submissive receptors of information and directives.

Studying the social-environmental report for block VSM 25, located in the Piedras county -Tolima, is sufficient to demonstrate this.  The report ratifies that, according to Agreement 011 of 2013 and Agreement 005 of 2018, mining and hydrocarbon activities are prohibited in the county. Regardless, the block was auctioned and awarded on July 19, 2019.

The 2020 global context, in particular, the appearance of the Covid-19 pandemic, has led to a slow down of hydrocarbon production internationally and, of course, has had national and territorial impacts in Colombia. The oil dynamics have been altered, but, simultaneously, a future trend has been demonstrated. There has been an expansion of the country’s extraction-based economic model in response to the crisis. According to national government estimates, for each dollar that the price per barrel drops the annual income will be reduced by 400 billion pesos, reducing the income generated by ECOPETROL and the royalties that support regional budgets. It is anticipated that this trend could continue during 2020 and 2021.

The drop in oil prices shows the fragility and volatility of national finances sustained by exporting this natural resource. Paradoxically, the national government insists on promoting a development model based on the extraction of oil and other natural resources, which do not compensate, even financially, as was anticipated. Additionally, this model continues to put the Amazon biome in danger and it undermines the regional autonomy and principles of coordination and concurrencey of a Unitary State.

The national government will continue granting itself power until the Congress of the Republic fulfills its role by issuing a law that defines the mechanism ordered by the Constitutional Court. This is the only way for the counties to once and for all play an effective role in decision making on issues that are also under their jurisdiction, such as the administration of subsoil natural resources.