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<p align="justify">Ecopetrol is a state-owned Colombian petroleum company based in Bogota, Colombia. It was founded in 1951. The company is linked to the Ministry of Mines and Energy (Ecopetrol, 2021). Its activities include prospecting, exploration, and operation of oil fields, manufacturing and marketing of petroleum and petrochemical products, crude oil refining and associated petroleum gas processing, production of different types of petroleum and petrochemical products, wholesale and retail sales of fuel, and related goods and services. Ecopetrol explores oil and gas across Colombia and is expanding internationally through exploration partnerships in Brazil, Peru, and the US Gulf of Mexico (DNB, 2021). The company is a leading and primary company based in Colombia. Porter&#8217;s five forces model is a valuable tool to identify threats and opportunities faced by Ecopetrol in the oil and gas industry.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">South America is enriched with mineral resources. Venezuela, Brazil, Mexico, Ecuador, and Colombia are the biggest oil producer on the continent. Brazil and Venezuela control is the major exporter of oil and gas export in the region. Ecopetrol has to face companies from these countries. Ecopetrol is ranked 22nd in S&;P Top 250 Global Energy Company (S&;P Global Platts, 2021). Locally Ecopetrol main rivals are Terpel and Equion Energia Limited. As of 2020, it earned a revenue of $19.902 Billion with a profile of $3.732 Billion. Considering the current state of the petrochemical, oil and gas exploration, and energy sector in Colombia, Ecopetrol is not facing any competition locally. In contrast, in the region, it needs to compete with the industry front runner.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The term rivalry describes the competition between companies that provide similar products, while substitution refers to products, not in direct competition. (Strategy, Business Information and Analysis, 2009) Substitutes affect the industry by limiting its anticipated profit by placing a ceiling on price. The demand for reducing carbon emission to stop climate change is increased in the last decade. Energy production, transportation and industry depend on it. It has severely damaged the earth’s ecosystem. Solar and wind energy is growing at an unprecedented pace. Electric cars technology is taking over traditional cars. Tesla, Toyota, Mercedes are all competing for it. Countries are figuring out ways to do compliance with Paris Climate Agreement. The developing countries are moving toward renewable resources for energy production. In the next decade, significant change will occur. The threat level against the industry is high.<br />
The threat of new entrants</p>
<p align="justify">The oil and gas industry worldwide is concentrated. Few companies rule the sector; many of those belongs to significant oil-producing countries. The oil and gas industry has a different type of entry barriers. The industry is highly costly and technical. The firms to enter into this industry need to have a solid ability to raise funds, which becomes rather complicated in the presence of substantial sunk costs and high assets (Worthington, 1995). The industry runner keeps on investing in research and development to reduce the production cost and increase efficiency. World oil demand will plateau in the late 2030s and could by then have begun to decline (Reuters, 2020). The prospect is bleak. So, for new entrants to take any share of the market seems complicated. Considering the facts mentioned above, the threat of new entrants remains low.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">The bargaining power depends upon the availability of the product and the purchasing capacity of the buyers (Porter, 1979). The primary buyer of hydrocarbons are the powerful countries; There&#8217;s consumption level are higher than most of the world. It provides them with some sort of power in negotiating the deal. The product&#8217;s availability plays a crucial part because if product quality is good, it is readily available (Distribution Cost, etc.), or there is no other product available. The buyer will need to settle for it. States can exert their power to bring the cost down, get the better quality product or get a product on a priority basis. Colombia exports the majority of its hydrocarbon products to the United States. Considering the available facts, buyers have no or low bargaining power.</p>
<h2 align="justify">Bargaining Power of Supplier</h2>
<p align="justify">Vertical integration reduces risk and maximizes profitability at every stage of the chain from wellhead to gasoline station. It helps the oil companies balance their operations and protect themselves from markets instability. For instance, when the crude oil price goes down, the refining and marketing margins would generally be expected to be positive (Al Moneef, 1998). The majority of oil and gas companies are vertically integrated. It keeps them afloat and decreases their dependency on the supplier. It protects itself to deal with any consequences of political disturbance. The human resource and equipment supplier can exert some power. The availability of technical staff is an issue, and it can damage the company&#8217;s operational capacities. The equipment supplier can exercise some sort of power due to the importance of equipment. In this case, overall, the supplier holds low to moderate power</p>
<h2 align="justify">References</h2>
<p style="text-align: left;" align="justify">Al-Moneef, M. A. (1998). Vertical integration strategies of the national oil companies. Available at: The development economics 36(2):203-222<br />
DNB. (2021). ECOPETROL S A. Available at: https://www.dnb.com/business-directory/company-profiles.ecopetrol_s_a.2355e361cced7e889881f13e8469b359.html<br />
Ecopetrol. (2021). About Ecopetrol. Available at: https://www.ecopetrol.com.co/wps/portal/Home/en/Ourcompany/about-us/about-ecopetrol<br />
Porter., E. M (1979) How Competitive Forces Shape Strategy. Available at: https://hbr.org/1979/03/how-competitive-forces-shape-strategy<br />
Reuters. (2020). OPEC, in major shift, says oil demand to plateau in late 2030s. Available at: https://www.reuters.com/article/us-oil-opec-outlook-idUSKBN26T24C<br />
S&;P Global Platts. (2021). Top 250 global energy companies. Available at: https://www.spglobal.com/platts/top250/company-rank/22<br />
Strategy, Business Information and Analysis (2009). Master of business administration, Strategy, Business Information and Analysis &#8211; Great Britain: 292 High St, Cheltenham GL50 3HQ<br />
Worthington, P. (1995). Investment, Cash Flow, and Sunk Costs. Available at: The Journal of Industrial Economics 43(1) PP 49-61.</p>
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