Germán Arce Zapata, a Colombian with extensive experience in the energy and financial sectors, provides us with a broad view of the importance of the ANH for the growth and oversight of the hydrocarbons industry, as well as insights into the Colombian experience since the agency’s creation.
Why is a National Hydrocarbons Agency (ANH) important in an oil-producing country? What justifies its existence?
One of the most important practices Colombia adopted in its oil industry was precisely separating the management of the subsoil from the operating company and assigning it to a competent technical authority. This division detached contracts from the economic interests of a large state-owned company with a presence across the country, thereby preventing it from becoming almost a parallel state in some regions.
Ecopetrol, as a Colombian company competing with other global oil and gas firms, must maximize and reduce its lifting costs to remain competitive internationally. In a sound market economy, this alignment of incentives is essential.
Based on your experience leading such an institution, how can the ANH be protected from partisan political or business interests?
I believe the legal mandate is key. Establishing long-term signals that allow agendas to transcend government cycles is essential, and that requires heavy investment in research and knowledge, with a constant forward-looking agenda. For instance, deciding which basin to develop or explore helps escape the trap of short-term political cycles. Political interests will always be present.
I also think stronger corporate governance—with greater participation from independent members or industry experts—would help. In the case of the ANH, the majority of board members still come from the government: the sector minister and other administration officials. A more balanced structure, with staggered terms for independent members, academics, or experts, would provide continuity beyond government changes. Territorial management is particularly risky. Initially conceived to provide social license to projects, it became a powerful political tool, creating risks that require stronger oversight and control.
Who should make up the ANH? What profile should its members have, especially at the start of regulatory functions?
When the ANH was created, its processes were clear, and experienced professionals helped design its structure—an essential foundation. In Colombia, the agency still benefits from that legacy.
The head of the agency does not necessarily need to be a petroleum expert. For public service, recruiting such professionals can be difficult. I believe there is a strong economic function at the core, associated with managing incentives. What the agency administers are resources and contracts that send market signals. Thus, the role requires an economic perspective to design the right incentives that allow the country to compete with its resources and costs while ensuring long-term commitments and obligations that drive investment.
In technical teams, deep expertise is essential: in studies, production units, and in managing environmental and social surface risks. The ANH has had a solid structure, but risks of politicization are always present. Maintaining technical rigor, market awareness, and a contractual perspective is crucial to ensure competitiveness and adaptability to new challenges.
In your experience, what have been the achievements and shortcomings of the ANH in Colombia?
In my view, it started very strongly. The ANH was created during a boom period, then later faced stagnation. Attracting investors during high oil prices is relatively easy. The real challenge came during the price collapse in the mid-2010s, when contracts negotiated in the early 2000s became economically unviable. This required financial restructuring—extending terms, revising obligations and guarantees—to maintain investment commitments, which are the only guarantee of exploration and production activity in the long term.
Flexibility demands both industry and market knowledge. Prices and competition are not static, and the agency must adapt to changing conditions while maintaining its long-term development mission.
A clear misstep, in my opinion, has been the handling of territorial management, which became politicized. It turned into a system of well-paid regional positions, losing the original aim of securing genuine social license for companies to develop projects. Still, important policy initiatives have emerged, such as “works for taxes” and “works for royalties,” mechanisms that allow communities to benefit directly from resource revenues. But significant challenges remain.
Ultimately, the ideal is an independent, autonomous, technically robust agency operating under strong corporate governance. Yet it must never forget its public service mandate. Like a central bank, which we all want independent and autonomous, managing public resources implies a duty to balance decisions with social benefit. Agencies sometimes forget this, acting more like oil companies than public resource managers. That is part of their institutional learning curve.
Are you familiar with the experience of ANHs in other Latin American countries? How would you evaluate them?
I followed the Mexican case during Peña Nieto’s reforms—we even participated in some debates—but I do not think it has worked out well. Argentina has progressed somewhat better, though I lack details of recent developments.
I have a high opinion of the British system, and the Norwegians’ alignment of long-term incentives is extraordinary. However, the market changes constantly, so it is difficult to assess current performance comparatively, especially across Latin America.
The draft Hydrocarbons Law to be introduced in Venezuela’s National Assembly, once democracy is restored, contemplates creating an ANH. What would you recommend for a strong start?
There is much to do in Venezuela. The country possesses extraordinary resources yet to be developed, but its infrastructure is in precarious condition. It will require billions of dollars in investment. After such a complex period, long-term signals that guarantee legal certainty for investors will be essential to develop Venezuela’s resources and rebuild infrastructure for transportation, refining, and production.
Recovering lost technical capacity will be fundamental. Many professionals left the country, and others benefited from their expertise abroad, as we did in Colombia. Incentives to bring back part of this lost human capital are crucial. Similarly, understanding tax incentives will matter greatly. Given Venezuela’s severe social problems, a much greater effort will be needed on environmental and social dimensions. Securing genuine social license, addressing poverty, and closing gaps in basic services will be critical.
The oil industry must ensure that new development brings tangible progress to communities—not just to PDVSA’s balance sheets or public coffers. Communities must feel that resource development translates into benefits for them. In Colombia, we have struggled to achieve this. Venezuela has historically had less conflict, but embedding this principle into the core of discussions will be essential.
The views expressed by Dr. Arce are of his pesonal ownership and responsibility, and do not necessarily reflect the position of PDVSA Ad Hoc.
