Refining margin surge cushions revenue drop amid leadership void

Ecopetrol S.A. (NYSE: EC, BVC: ECOPETROL) reported first-quarter 2026 consolidated revenues of 28.6 trillion COP, a decline of 8.7% from 31.4 trillion COP in the year-earlier period, as lower crude oil prices and reduced hydrocarbon production compressed the top line for Colombia’s state-controlled oil and gas company. Against that backdrop, a marked recovery in refining margins and disciplined cost management lifted EBITDA by 1.5% to 13.5 trillion COP, yielding a 47% EBITDA margin and partially offsetting the revenue headwind. At the Q1 2026 average exchange rate of approximately 3,700 COP per USD, the quarter’s revenues translate to roughly $7.73 billion USD and EBITDA to approximately $3.65 billion USD.

Embattled Ecopetrol CEO Ricardo Roa was appointed to the position by Colombian President Gustavo Petro after managing his political campaign. (photo: Ecopetrol)

Net income for the quarter reached 2.9 trillion COP (approximately $784 million USD), down 7.7% year-over-year, reflecting the combined drag of lower revenues, a sharply elevated effective tax rate of 37.1%, and a one-time charge of 1.2 trillion COP for the impuesto al patrimonio — Colombia’s government-mandated wealth levy on large corporations established to fund post-disaster reconstruction measures. The company is also subject to a 10% income tax surcharge applicable for fiscal year 2026, which is embedded in the reported effective rate. The aggregate tax burden absorbed a disproportionate share of operating improvement relative to prior periods, limiting the flow-through of refining gains to the net income line.

Total hydrocarbon production averaged 725.2 thousand barrels of oil equivalent per day (kboed) in Q1 2026, below the 745 kboed recorded in the 2025 annual average cited by management during the March 2026 general shareholders’ meeting. Domestic crude output represented the largest component at approximately 520 thousand barrels per day (kbd). Ecopetrol’s Permian Basin operations in the United States contributed 91.8 kbd, underscoring the continued strategic importance of the international segment. Gas production continued a multi-year declining trend that poses a medium-term domestic supply challenge; management has sought to address this partially through regasification capacity additions at Puerto Bahía and on the Pacific coast, expected to come online in the second half of 2026 with a combined contribution of up to 430 billion BTU per day.

The refining segment delivered the quarter’s most pronounced operational outperformance. Ecopetrol’s domestic refineries, led by Refinería de Cartagena, processed 417.5 kbd of crude throughput. The integrated refining margin rose to $17.3 USD per barrel, a 60% improvement over the same quarter of 2025, driven by favorable differential pricing between domestic crude benchmarks and refined product values alongside ongoing operational efficiency improvements. The Comisión de Regulación de Energía y Gas (CREG) and the Ministerio de Minas y Energía remain central to the regulatory framework governing downstream margins over the medium term.

The balance sheet carries significant structural and contingent risk items of direct relevance to institutional credit and equity holders. Gross debt stood at 108.1 trillion COP (approximately $29.2 billion USD), representing a leverage ratio of 2.3 times trailing EBITDA — a level that leaves limited room for further deterioration before debt covenants or rating agency thresholds become binding. Ecopetrol holds a receivable of 4.2 trillion COP (approximately $1.14 billion USD) from the Fondo de Estabilización de Precios de los Combustibles (FEPC), a government fuel price stabilization mechanism that represents a claim on the Colombian treasury with timing and recovery risk. A dispute with the Dirección de Impuestos y Aduanas Nacionales (DIAN) over value-added tax assessments totals 12.26 trillion COP (approximately $3.31 billion USD) in aggregate, of which 10.22 trillion COP relates to Ecopetrol’s consolidated operations and 2.04 trillion COP to Refinería de Cartagena. Both cases are under administrative and judicial review; no provisions have been recognized in the financial statements pending resolution, but the potential liability represents a material contingency relative to the company’s quarterly net income.

On the corporate development front, Ecopetrol disclosed three significant transactions during or following the quarter. The company agreed to acquire producing assets from Gran Tierra Energy (NYSE: GTE, TSX: GTE) for $92.4 million USD, adding Colombian upstream production inventory in basins where both companies have operated. In Brazil, Ecopetrol launched a tender offer for shares of Brava Energia (BVMF: BRAV3) at 23 BRL per share, seeking to expand its footprint in that country’s oil and gas sector. And in a transaction that would reshape the mid-size independent landscape in Colombia, the company reached an agreement to acquire Parex Resources (TSX: PXT) for $250 million USD; Parex is a Colombia-focused producer with a complementary asset base across the Llanos and other producing basins. Collectively, the three transactions signal that Ecopetrol’s capital allocation strategy under the current government continues to favor upstream consolidation despite the elevated leverage profile.

The exploration portfolio generated positive news announcements. The Copoazú-1 exploratory well, drilled in Colombia’s Llanos foothills region, was confirmed as a commercial discovery, adding to the domestic reserve base. The Sirius offshore project advanced through the Consulta Previa process — a legally mandated prior consultation with indigenous and Afro-Colombian communities required before development of projects in or near their territories — reaching a milestone in community engagement that brings the project closer to formal development sanction. The Agencia Nacional de Hidrocarburos (ANH) oversees the licensing framework within which both projects operate.

“Ecopetrol is listed on the New York Stock Exchange; we are governed by the strict regulations of US federal agencies. Agencies like OFAC and the SEC could intervene in the company and could even accelerate the payment of financial obligations, which would be extremely grave for Ecopetrol.” — Martín Ravelo, President, Unión Sindical Obrera (USO)

The ISA transmission segment, managed through Ecopetrol’s majority stake in ISA — Interconexión Eléctrica S.A., contributed stable regulated cash flows during the quarter. ISA completed 46 transmission reinforcement works across its Latin American concession portfolio. The segment also completed the acquisition of 100% of IE Madeira in Brazil, consolidating its position in that country’s power grid interconnection infrastructure. ISA further submitted a competitive bid for the Río Bueno–Puerto Montt high-voltage transmission line concession in Chile, demonstrating the group’s appetite for long-duration, inflation-linked infrastructure assets across the Andes region. For institutional investors evaluating Ecopetrol as a blended hydrocarbons-and-infrastructure holding, ISA’s consistent cash generation provides partial diversification from crude price volatility, though it does not insulate the consolidated entity from headline governance risk.

The most consequential variable for the investment thesis over the near term is Ecopetrol’s prolonged governance crisis. At the company’s general shareholders’ meeting on March 27, 2026, held at the Corferias convention center in Bogotá, minority shareholders loudly heckled president Ricardo Roa — with audible shouts of “¡Fuera, fuera!” reverberating through the hall — as debate over his leadership erupted into open confrontation. The meeting approved a dividend of 121 COP per share for minority holders and a 4 trillion COP distribution to the Colombian government as majority shareholder, payable in two installments by June 30, 2026. Despite the financial business conducted, governance overshadowed the proceedings.

Roa faces two separate judicial proceedings. The Fiscalía General de la Nación formally charged him in connection with alleged influence peddling related to the purchase of an apartment in northern Bogotá — charges he has denied. Separately, the Consejo Nacional Electoral (CNE) is examining whether campaign spending limits were violated during President Gustavo Petro’s 2022 presidential campaign, which Roa managed — an investigation that Finance Colombia has covered in detail. Angela Maria Robledo, Chair of the Board of Directors, defended the board’s decision to retain Roa at the March assembly, citing the constitutional presumption of innocence. However, four of the nine board members had already formally recorded their support for his removal at that point, exposing a divided governance structure at a time when strategic and operational decisions require unified leadership.

The Unión Sindical Obrera (USO), which represents approximately one-third of Ecopetrol’s workforce, issued a production strike ultimatum timed to a March 30 board meeting. Martín Ravelo, president of the USO, framed the leadership crisis explicitly in terms of US regulatory risk: “Ecopetrol is listed on the New York Stock Exchange; we are governed by the strict regulations of US federal agencies. Agencies like OFAC and the SEC could intervene in the company and could even accelerate the payment of financial obligations, which would be extremely grave for Ecopetrol.” Ravelo further warned that the company’s outstanding international debt — which he placed at approximately $30 billion USD and which is exacerbated by elevated interest rates — left Ecopetrol exposed to potential covenant triggers or early repayment demands in a scenario where the Securities and Exchange Commission (SEC) or the Office of Foreign Assets Control were to take enforcement action.

Following sustained pressure from the USO, minority shareholders, and opposition political figures, Ecopetrol’s board approved an extended leave of absence for Roa beginning April 7, 2026. Under the arrangement, Roa used accrued vacation through May 27, followed by 30 calendar days of unpaid leave beginning May 28, extending his absence through the end of June — a period encompassing Colombia’s presidential first round on May 31 and a potential runoff on June 21. Juan Carlos Hurtado Parra, the company’s executive vice president of hydrocarbons and designated first alternate to the presidency since November 2025, was appointed acting president. Hurtado Parra holds an MBA in International Oil and Gas and brings more than 28 years of energy sector experience to the acting role, having previously served as vice president of exploration, development, and production.

The political calendar creates a structural transition risk that sits above the operational and financial results as the primary concern for long-duration investors. Colombia’s incoming government, to be inaugurated August 7, 2026, is widely expected to appoint a new Ecopetrol board and select a new company president. That transition may bring material shifts in strategic priorities — including the pace of upstream investment, the approach to the FEPC receivable recovery, the trajectory of energy transition spending, and the capital allocation balance between the hydrocarbons segment and the ISA infrastructure platform. The Ministerio de Hacienda y Crédito Público and the Ministerio de Minas y Energía will both play key roles in establishing the post-election policy framework under which Ecopetrol operates. Institutional investors holding exposure to Ecopetrol via NYSE: EC or BVC: ECOPETROL must weigh Q1’s genuine operational improvement — most visibly in refining margins and EBITDA stability — against a governance and policy transition risk profile that is unlikely to be resolved before the August handover.

Ecopetrol’s Cartagena refinery (photo courtesy Ecopetrol)

As Colombia nears its presidential vote, two candidates have endorsed Iván Cepeda and eight others remain below 3.5% in polls

With less than two weeks remaining before Colombia’s presidential election, whose first round is scheduled for May 31, three candidates are concentrating most voter support and competing for access to the presidential palace, Casa de Nariño: ruling coalition senator Iván Cepeda, candidate of the left-wing Pacto Histórico party; senator Paloma Valencia, representing the right-wing Centro Democrático party; and lawyer and businessman Abelardo de la Espriella, a figure of Colombia’s far right.

Although 13 candidates will appear on the ballot, two contenders: Clara López and Luis Gilberto Murillo, withdrew their campaigns to support Cepeda, while the remaining candidates have failed to surpass 3.5% voter support in pre-elections polls, a figure close to the statistical margin of error.

If polling trends hold, no candidate is expected to secure the 50% plus one vote needed to win outright in the first round, making a runoff election on June 21, 2026, highly likely.

Cepeda has remained relatively stable in polls, with voter support ranging between 35% and 43%, effectively securing his place in a second round if trends continue.

The key question: Who will face Cepeda in a runoff?

The main electoral uncertainty centers on who will finish second and challenge the ruling coalition in a likely runoff.

Under Colombia’s electoral system, only the two candidates receiving the highest vote totals advance to the second round. The fragmentation of the political right has complicated efforts to consolidate support behind either Valencia or De la Espriella.

Polls suggest a competitive scenario. Valencia has registered between 14% and 21% voter support, while De la Espriella fluctuates between 16% and 24%, depending on the poll and methodology used.

The lack of unity between the two camps stems from both ideological differences and their political structures. Valencia is a member of the political party founded by former President Álvaro Uribe, while De la Espriella entered the race through an independent signature campaign, marking the first time Colombia’s far right has emerged as a viable contender for the presidency.

A campaign shaped by the absence of public debates

The presidential campaign has been marked by an unusual lack of debates among the leading candidates.

Cepeda has refused to participate in events organized by media outlets, arguing that proposed formats do not offer guarantees of neutrality or what he describes as “fair rules” established by news organizations.

As a result, part of the political confrontation has shifted to Congress, where both Cepeda and Valencia currently serve in the Senate.

Critics, however, have challenged Cepeda’s decision. Former Bogotá Mayor and presidential candidate Claudia López argued that his absence from debates reflects that “Cepeda does not want to take responsibility for the failures of Total Peace (Paz Total),” the negotiation policy with armed groups promoted by President Gustavo Petro, in which Cepeda played a key role as a lawmaker.

Instead of regular debates, the campaign has been dominated by disputes over media formats, digital presence, social media strategies and public controversies aimed at amplifying candidates’ visibility.

De la Espriella embraces confrontation

One of the candidates who has most effectively capitalized on the digital environment is Abelardo de la Espriella, whose political strategy has been compared to right-wing populist leadership styles such as those of Argentine President Javier Milei and US President Donald Trump.

In recent weeks, De la Espriella has faced several media controversies, including an incident involving journalist Laura Rodríguez of Piso 8 FM, for which he later apologized after accusations of inappropriate sexual conduct. He also clashed live on air with television presenter María Lucía Fernández of Caracol Noticias, whom he called “ignorant.”

Questions also emerged following reports by digital outlet La Silla Vacía regarding donations linked to the US Republican Party.

Despite the controversies, the strategy appears to be strengthening his electoral standing. An Atlas Intel poll for Semana magazine, published May 15, showed De la Espriella surpassing Valencia by a two-to-one margin for the first time, with 32.9% support compared with 16.7%.

However, the polling firm is currently under investigation by Colombia’s National Electoral Council (CNE) amid concerns over whether its methodology complies with national standards. If irregularities are confirmed, the firm could face suspension of its operations in Colombia.

Valencia seeks to broaden support toward the political center

Meanwhile, Valencia has sought to expand her electoral base by shifting strategically toward the political center.

As part of that effort, on May 17 she officially introduced her proposal “Mámá No Está Sola (Mom Is Not Alone),” aimed at female heads of household and focused on access to credit, employment and housing property. The proposal also includes a promise to deliver 1 million homes prioritized for women community leaders.

Valencia’s candidacy also marks a historic first for Colombia’s political right: it is the first time a major conservative party has nominated a woman for president.

Her vice presidential running mate, former Bogotá councilman Juan Daniel Oviedo, has openly identified as a member of the LGBTQ+ community, a move that represents a significant shift for the Centro Democrático traditionally conservative electorate.

Colombia appears headed for a runoff

With a highly fragmented field and no signs of consolidation among right-wing candidates, Colombia appears increasingly likely to hold a presidential runoff on June 21, 2026.

Barring a major shift in polling trends, the contest seems set to come down to Iván Cepeda and whichever opposition candidate manages to emerge from an increasingly competitive battle within Colombia’s political right.

Roa had already been administratively sanctioned by Colombia’s electoral authority over campaign spending violations, with the case now advancing in the Attorney General’s Office

Ricardo Roa Barragán, president of Colombia’s state-owned oil and energy company Ecopetrol, has been formally charged by the Attorney General’s Office (FGN) over his alleged responsibility in a case involving violations of campaign spending limits tied to President Gustavo Petro’s 2022 presidential campaign, which Roa managed.

The charging hearing took place Monday, May 11, during which Roa pleaded not guilty. The case will continue through the investigative stage, and no conviction has been issued against him.

This marks the second criminal case facing the executive. On March 11, 2026, prosecutors also charged Roa with alleged influence peddling involving a public official. Both investigations remain ongoing.

Read: The charge adds to a separate investigation over alleged violations of campaign finance limits during President Gustavo Petro’s 2022 presidential campaign.

The latest charges come weeks after Ecopetrol’s board authorized Roa to take vacation leave followed by unpaid leave through June 28, 2026, after Colombia’s presidential elections conclude.

The decision means Roa would return to the company only to participate in the transition process with the team designated by Colombia’s next president, who will take office on August 7, 2026.

Read: Ecopetrol Announces Temporary Leave for President Ricardo Roa Amid Investigations by Colombia’s Attorney General’s Office” by Finance Colombia.

Under Articles 396A and 396B of Colombia’s Criminal Law, individuals found responsible for receiving, administering or allowing prohibited campaign funds may face prison sentences ranging from four to eight years, in addition to fines and disqualification from holding public office if convicted.

Roa, however, retains the presumption of innocence while the judicial process continues.

Investigation into campaign financing

The case stems from the 2022 “Petro Presidente” campaign, which Roa Barragán managed. The matter had already resulted in administrative sanctions from Colombia’s National Electoral Council (CNE), which concluded that the campaign exceeded legal financing limits.

The Attorney General’s Office also said it identified alleged inconsistencies in the campaign’s financial reporting, claiming that first-round expenses were reported during the second round and vice versa.

As a result of that administrative investigation, the CNE referred the case to the Attorney General’s Office, which is responsible for conducting criminal investigations.

According to a statement from prosecutors, collected evidence suggests that campaign spending limits “were exceeded by $1.388 billion COP (around $370,000 USD) during the first presidential round and by $276 million COP ($73,000 USD) during the runoff.”

Prosecutors said the allegedly unreported or improperly reported expenses were linked to “hotel press conferences, breakfasts, loans, transportation, logistics, food services, financing for campaign-closing events, advertising materials and union contributions.

The investigation formally began in 2025 after the CNE determined there were possible irregularities involving campaign spending caps.

Petro defends Roa

President Gustavo Petro again defended Roa and questioned the basis of the judicial investigation.

“The Attorney General’s Office is repeating the same thing as the compromised CNE: that expenses incurred after the legal campaign period ended, such as the costs parties incur for election monitors to protect votes (…) are campaign expenses. Their so-called overspending is not overspending,” Petro wrote on X.

The president argued that several of the questioned expenditures took place after election day, when, according to his interpretation, the campaign had already formally concluded.

A tariff dispute between Colombia and Ecuador escalated to 100% duties on Colombian imports after Ecuador cited a lack of cooperation on border security

The Andean Community of Nations (CAN) ordered Colombia and Ecuador to dismantle, within 10 business days, the trade restrictions and tariff measures imposed since late 2025, concluding that they violate the legal framework governing the regional bloc composed of Bolivia, Colombia, Ecuador, and Peru.

The decision was adopted through three resolutions issued May 8, 2026, by the CAN General Secretariat, led by Gonzalo Gutiérrez Reinel, following an assessment of trade disputes that emerged between the two countries amid tensions related to border security and commerce.

The organization concluded that several measures implemented by Quito and Bogotá violate the Cartagena Agreement, the founding treaty of Andean integration, which prohibits restrictions on intraregional trade among member states.

More information about the “security tariff”: Colombia and Ecuador Escalate Trade Tensions with Tariffs Raised to 100%.

Ecuador ordered to lift border restrictions and “security tariff”

The first resolution, No. 2581, ruled in favor of Colombia in a complaint related to Ecuador’s decision to limit bilateral land trade to a single border crossing. The General Secretariat classified the measure as a “restriction on Andean subregional trade” and granted Ecuador 10 business days to withdraw it.

The resolution also urged both countries to strengthen bilateral cooperation on border security matters.

“To urge the Republic of Ecuador and the Republic of Colombia to strengthen bilateral cooperation and coordination mechanisms in border control (…) through joint actions, without affecting the normal development of subregional trade,” the organization stated in Resolution 2581.

Meanwhile, Resolution 2582 ordered Ecuador to eliminate the so-called “security tariff” imposed exclusively on Colombian imports, which initially stood at 30% and later escalated to 100%.

According to CAN, the measure violates the Trade Liberalization Program established under the Cartagena Agreement and constitutes a “disguised tariff.”

The General Secretariat concluded that the so-called Customs Control Service Fee (TSCA) or “security tariff” does not qualify as a legitimate fee because it does not compensate for an individualized service to importers, but instead finances general state functions related to intelligence and strategic security.

Ecuador was given a maximum of 10 business days to dismantle the measure and formally report compliance. So far, the government of President Daniel Noboa has not issued an official response to the resolutions.

CAN also orders Colombia to dismantle countermeasures

“I have no problem removing tariffs on Ecuadorian products in the same manner and timeline in which they were imposed,” Petro wrote on X after the ruling became public.

The third resolution, No. 2583, rejected the trade countermeasures adopted by Colombia in response to Ecuador.

The government of President Gustavo Petro had issued Decree 0170, later tightened through Decree 0455, imposing reciprocal tariffs ranging from 30% to 75% on Ecuadorian products and restricting the entry of rice, potatoes, onions, and fishery products through specific border crossings.

CAN concluded that these measures are also incompatible with Andean community regulations.

Trade dispute rooted in security tensions

The commercial dispute between the two countries intensified beginning in late 2025 and reached its peak in April 2026, when both governments progressively increased tariffs and trade restrictions, citing concerns related to border security and anti-narcotics enforcement.

The tensions particularly affected border regions, where business groups and transport operators warned of disruptions to trade flows and rising logistical costs.

CAN’s resolutions now seek to restore free trade conditions within the Andean bloc and reduce diplomatic tensions between two of its largest economies.