Ecuador’s government, under President Daniel Novoa, declared on Monday a hefty 900 percent increase in tariffs for Colombian crude oil transported via its pipeline system. This move adds fuel to the ongoing trade dispute.
Energy Minister Inés Manzano stated in a local radio interview that Ecuador will now impose a charge of $30 for each barrel of Colombian oil transiting through the Trans-Ecuadorian Pipeline System (SOTE), a significant jump from the previous $3 per barrel.
“We’ve gone from paying around $3 for SOTE transit to $30. This pricing, I think, really reflects factors like availability and market opportunity… Our decision was based on resolutions from the Hydrocarbons Regulation and Control Agency, which were grounded in technical and legal considerations,” Manzano explained. She also mentioned that this sends a serious message to Colombia. Currently, around 12,000 barrels daily from Colombia’s Ecopetrol traverse the SOTE.
Colombian Energy Minister Edwin Palma promptly criticized the tariff increase during a press briefing, calling the changes “unilateral and disproportionate” and arguing that they fall short of technical and economic justifications, potentially jeopardizing oil output in southern Colombia.
“This move by the Ecuadorian government is another hit on its citizens. By raising transportation costs through the pipeline, they’re disregarding past agreements, like the one from February 13, 2011. This primarily impacts smaller oil producers,” Palma remarked.
Ecuador and Colombia have been experiencing rising tension since Ecuador opted to apply a 30 percent “security tariff” on Colombian imports starting February 1, citing a trade deficit and insufficient cooperation from President Gustavo Petro’s administration in battling drug trafficking and illegal mining.
“This action will remain until we see a genuine commitment from them to work together against drug trafficking and illegal mining, addressing these issues along our border with the seriousness that Ecuador is demonstrating,” Novoa shared on social media.
Colombia’s government quickly denounced the new tariffs and countered Novoa’s claims regarding cooperation in drug enforcement. They urged Ecuador to cease implementing tariff hikes, asserting that cocaine seizures in Colombia had risen during Petro’s presidency. Bogotá flagged a 36.7 percent rise in cocaine interceptions in the areas adjacent to Ecuador.
Shortly thereafter, Colombia’s Commerce Minister, Diana Morales, stated that Colombia plans to introduce reciprocal tariffs on 20 Ecuadorian products. Concurrently, the Ministry of Energy announced a halt to electricity exports to Ecuador, which depends on electricity imported from Colombia for about 9 percent of its energy needs.
Manzano further clarified these measures, emphasizing in an interview that they were a response to security challenges in Colombia that also affect Ecuador. She noted the presence of criminal groups in areas where oil pipelines operate, indicating that Ecuador is striving to assist Colombia with its oil production.
“I need to make them understand that I’m providing a vital service to Ecopetrol and Colombian enterprises,” she added, highlighting that oil access is constrained in parts of Colombia due to illegal activities.
Colombia, the leading global cocaine producer, has witnessed a significant increase in cocaine output following lenient anti-drug policies implemented under President Gustavo Petro, who has been an advocate for drug policy reform. In October, former President Donald Trump labeled Petro an “illegal drug dealer” after a U.S. drug operation, leading to sanctions against him and his relatives for their roles in fostering conditions conducive to illegal drug activities.
Following a U.S. law enforcement effort aimed at arresting Venezuelan leader Nicolás Maduro, Trump cautioned Petro, advising him to be cautious.
Not long after, Trump and Petro had a telephone conversation right before Petro’s planned anti-Trump address in Bogotá. Petro admitted that he adjusted his speech after engaging with Trump to soften its aggressive tone. He is anticipated to meet with Trump at the White House on February 3rd.
