Trade and Resource Efficiency in Colombia

The Colombian – Chinese Investment and Commerce Chamber was created in 2010 within the context of that year’s Universal Expo in Shanghai. Similarly, the creation of this Chamber for Investment and Commerce was a natural step after the substantial increase in economic exchange that Colombia and China has experienced throughout the 21st century, particularly within the realm of extractive industries and trade of natural resources.

Trade and Resource Efficiency in Colombia

Since 1980, Colombia’s petroleum output has increased from 126.000 barrels of crude oil per day (bpd) to little over 1 million bpd in 2013. Meanwhile, Colombia’s energy consumption has gone from 161.000 bpd in 1980 to 324.000 in 2013, which means that the country has transitioned from being a petroleum importer towards being a major petroleum exporter in Latin America. Currently, crude oil output is estimated to be approximately 800.000 bpd, given the fall in international prices and the global energy demand slowdown. Nevertheless, a major problem in Colombia is the insufficient amount of oil refining facilities, which means that refined petroleum products, such as gasoline, must be imported. Simultaneously, large amounts of crude petroleum, some of which could be processed in country for added economic value, are exported as a raw commodity.

During 2016, Colombia exported US$7.8 billion worth of crude petroleum, representing 26% of the country’s total exports. Likewise, that same year, Colombia exported US$2 billion worth of refined petroleum, equating to 6.5% of the country’s total exports. On the other hand, the country imported US$3.5 billion worth of refined petroleum in 2016, accounting for 8.2% of Colombia’s total imports. This means that, on top to the country’s trade deficit and in spite of the fact that it exports refined petroleum, Colombia has a refined petroleum deficit of approximately US$1.5 billion for its domestic market consumption. During 2016, 85% or US$3 billion of Colombia’s total refined petroleum imports came from the United States. Similarly, 47% or US$918 million of Colombia’s refined petroleum exports in 2016 were destined towards the United States.

Today, as a major investor and trade partner in Colombia, China has the possibility to contribute to the South American country’s sustainable development by helping to diversify the economy beyond petroleum and by helping to finance oil refinery projects to increase value added exports. However, China has thus far limited its economic operations in Colombia to the import of high value electronic goods as well as financing oil extracting companies and the massive export of crude petroleum. This is mainly due to the fact that China has large petroleum refining capabilities as well as large energy needs. Therefore, the Asian Giant takes advantage of this situation to import large amounts of crude petroleum from throughout the world, process it domestically, and sell its high-value excess of refined product.

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