Helping Colombia achieve the highest standards

Colombia

Ivan Dominguez, president of SGS Colombia, talks to The Energy Year about how critical the extractive industry is for Colombia’s economy, what services the company offers to the industry and how advanced the country’s standards and regulations are. SGS Colombia is a testing, inspection and certification company.

How critical is the extractive industry for Colombia’s economy, and how advanced are regulations in this space?
Regulations and standards in Colombia’s extractive industry have always been firm. This implies a challenge for certain companies, as they are added to other hurdles, such as obtaining licences, consulting with the communities and dealing with social unrest. Moreover, in the last decade, we have seen an increase in the uncertainty of environmental regulations, which has created grey areas and a general lack of clarity.
Despite the obstacles, the reality is that Colombia depends on its hydrocarbons and mineral resources. The exploitation of these resources is essential for the advancement of the economy. What Colombia needs is to actually increase its oil, gas and mineral reserves.
There are areas with huge potential, such as copper and gold, where many companies are starting to invest. The same goes with the latest gas discoveries, which are clear signals that Colombia has potential, and it ought to be exploited.
When it comes to standards, Colombia has higher ones than other countries in the region. This says a lot about the quality of the companies working in the extractive industry in this country. Moreover, this is a consequence of a well-intentioned set of governmental efforts to compensate for negative externalities.
The government has also aligned with what society and the industry expect, especially in terms of carrying out activities in a more environmentally friendly way. The extractive industry ought to be aligned with environmental goals. They are not necessarily two separate worlds.
Communities in La Guajira, Cesar and Antioquia depend on the mining industry, but it has to be done in an environmentally responsible way. It is here where well-defined and established rules and standards come in.

How important are hydrocarbons and mining for SGS Colombia, and what key services do you offer to these key industries?
The oil and gas sector constitutes approximately 50% of our revenue and is the most important sector for us. We provide it with environmental, remediation, inspection and laboratory services, among others. We cover the whole spectrum of the oil and gas industry, from upstream to downstream. Other services we offer include port and pipeline inspections, for instance, as we are very strong in the midstream segment of the industry.
We provide services to Ecopetrol and its subsidiaries, having more than 25 contracts with them. We cover all types of services for them, for example, oil quality and quality analysis from the wellhead and at the ports of shipment and services for the environment where we carry out environmental control and monitoring plans. We also provide services to the main oil and gas producers. We cater our services to 12 operators in Colombia, the most important in the country.
The mining sector is also important, representing 35% of our revenue in Colombia. We provide services such as prefeasibility, feasibility and laboratory services for exploration samples. We carry out all the quality control processes necessary in the operation of a project during the production stage, with onsite laboratories. We also provide these services during transport and at the port when shipping the product to customers.
The mining industry has a lot of potential. Countries in the region need our coal, and we have the cleanest coal on the planet. Colombian coal is the one mixed with others of intermediate quality so that it can meet European standards. Our coke is top quality, and we need to take advantage of this.
Moreover, we work with all the important mining companies in the country, all across the value chain. For example, we are working with Cerrejón and Drummond, as well as smaller mining companies, providing services to the communities and training. In 2022, we also inaugurated our Samacá laboratory, which focuses on the chemical and physical analysis of coals. Thus, for us the extractive sector in Colombia is very important, representing around 85% of our activities.

To what extent has SGS Colombia invested in training related to the extractive industry?
We have important training schemes, including on ISO standards, as well as soft and hard skills for companies. We do everything from certifications – which are training courses for those who want to become auditors or who want to learn about standards – to training courses for the industrial sectors in which we operate and where we provide services.
For example, in mining we have a mining course for non-miners. We teach the importance of good mining processes with high ethical and environmental standards. However, we also teach how actual mining dynamics work and the importance of delivering everything on time. In any mine, a minute’s work is worth millions, and the same goes for the oil industry. It is important to teach these values to workers.
Likewise, it is also essential to make communities understand the importance of carrying out responsible extractive activities, and how these activities can coexist with the environment. It is also important to teach how to evaluate whether companies are being responsible in their activities, given a certain environmental context.

How are you solidifying your service offering in areas such as natural gas and renewables?
Gas prospects in this country are very promising and are being incentivised by public and private bodies. We believe the gas market will continue evolving given its potential. This scenario opens up an array of new opportunities for us in the areas of inspection services, prefeasibility, feasibility, product treatment in laboratories and environmental control.
SGS recently acquired a company in Chile which does environmental modelling of the seabed, which is very important for offshore. Modelling is key for analysing how currents and platforms affect marine life and from there, what plans can be made to mitigate negative impacts.
Another interesting area is renewables. Despite the advances and push given by the government, we have seen a slight slowdown in this sector. However, in Argentina we are one of the largest suppliers of maintenance services for wind structures, which are critical for extending the lifecycle of turbines. We have set up this programme for Brazil, Central America and the Caribbean, and we were setting it up in Colombia.
Unfortunately, due to hurdles experienced in the Colectora project, which transmits green energy from La Guajira to the national grid, all those projects have been on hold. Hopefully it will be sorted soon. Then our services will be key.
In terms of solar, we are doing very well. We offer services in the areas of prefeasibility and feasibility, as well as environmental management, with baseline, remediation, monitoring and even maintenance, because these solar panels are very delicate.
We provide a solar panel inspection service where we detect which ones are no longer working and ones which are not working at full capacity. From there we create maintenance plans for those solar panels. Not only that, we are now looking at how to monitor how much carbon is saved, and thus, how the panels and the turbines are contributing to the environment.

What growth prospects are expected for SGS in Colombia and the LatAm region?
In Colombia we have tripled our growth rate through organic growth. We are growing at a very good pace. In the LatAm region, we are growing at a rate of 12-15% per year, which is one of the highest growth rates for SGS worldwide. The future outlook is to maintain this level of growth. We have a lot of faith in Colombia, and now we have also been given the responsibility of covering Central America and the Caribbean from here.
These two regions have plenty of potential. The GDP of Central America and the Caribbean combined is almost three times that of Colombia, which means they are very attractive markets for us. SGS also sees Brazil and Mexico as focus areas for the next few years, given their stability and the development of their economies and industries.

What are the areas SGS aims to focus on in the next two years?
In the next two years, we want to focus on the energy sector in Colombia, which is one of our main strategies. We are preparing for what Colombia’s needs will be in the next five years. We believe that the country’s industry will grow substantially in the coming years and that investment will pour into the country. This will be so given the quality of human resources in Colombia and because of the country’s possibilities to offer its products to the world.
Our goal is to further position ourselves in the market, to develop environmental products for extractive and energy companies, and to develop control, maintenance, inspection and certification products and services for new energies. We see a great opportunity in the areas of gas, solar, wind and hydrogen.
Lastly, we aim to support the growth and diversification of other sectors, such as pharmaceuticals, cosmetics and consumer products, as well as contribute to improving business standards.

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