The highlight in the chairman’s letter from CEO Juan Carlos Echeverry was the best consolidated EBITDA in five quarters, $1,664 million, up 10% sequentially from $1,513 million in 2Q16 and up 5% year-on-year (YOY) from $1,584 million in 3Q15.

OPIS notes that Ecopetrol (NYSE: EC) reports financial results only in Colombian pesos (COP). The peso has strengthened in 2016 compared to 2015. The average exchange rate during 3Q16 was 2,937 COP per dollar, a slight gain in value from 2,990 COP in 2Q16 and 2,965 COP in 3Q15. All financial values in this article are converted to U.S. dollars at the average rate for the applicable quarter.

Echeverry attributes the EBITDA improvement to a sweeping efficiency and cost-reduction program across the company. By end-3rdQtr, realized cost savings of $647 million substantially exceeded the target of $545 million. The biggest source of savings was $192 million from the “heavy crude dilution initiative,” which probably involved streamlining the logistics of getting diluent over the Andes and down to the Rubiales and Castilla heavy oil fields in the eastern plains (los llanos).

The main challenge facing Ecopetrol is declining reserves and (potentially declining) production of both oil and gas. Echeverry tries to put the best face on things by noting a 4.6% gain in crude oil production from 2Q16, up from 573,800 b/d (573.8 kbd) to 600.1 kbd. What’s left unsaid is that 2Q16 production was the lowest in 12 quarters.

The comparisons are a lot less appealing if 3Q16 is compared with 2015 full year averages. Then, crude production of 600 kbd compares with 626.5 kbd for 2015, down 4.2%. When gas is converted to oil equivalent, total 3Q16 production was 722.6 kbd, down 5% from 760.7 kbd for all of 2015.

The near-term challenge facing Ecopetrol, and Colombia, is trying to restore gas production to former levels. The main problem is the irreversible decline of Chevron’s Ballena field complex on the Caribbean coast near Riohacha. Ballena has been Colombia’s baseload gas supply for 25 years, and it can’t carry the load anymore.

Ecopetrol gas volumes are headed in the same direction, averaging 735 MMcfd in 3Q16. That volume is down 8.7% from the 805 MMcfd average in 2015. Ecopetrol gas represents 76% of Colombia’s nationwide total of 968 MMcfd reported for September.

To make up the shortfall, the principal electric generators on Colombia’s coastline joined together in 2013 to create Grupo Termico that would underwrite construction of an LNG regas terminal on Cartagena Bay. Three months ago, the Cartagena regas terminal was nearing completion, and Norway’s Hoegh LNG was preparing to take delivery of the 170,000 cubic meter Hoegh Grace from Hyundai Heavy Industries to serve as the Floating Storage and Regasification Unit (FSRU).

The Hoegh Grace tied up at the Cartagena berth around two weeks ago, and now the first LNG cargo is reported to have just landed yesterday. This is a spot cargo from Trinidad’s Atlantic LNG, and it will be utilized to commission various sections of the FSRU and terminal. If all goes well, terminal operator Sociedad Portuaria El Cayao believes they will be ready to dispatch up to 400 MMcfd of gas to local generators by mid-December.

After several years of spotty gas supply and periodic shutdowns, the coastal generators are clearly betting that Colombia will not be returning to gas self-sufficiency anytime soon.

Still, Colombia’s general orientation in energy matters is to remain self-sufficient across the board, and for the past 60 years, Ecopetrol has generally been able to supply the whole spectrum of fuel requirements. Now they face the quandary of trying to restore production growth in a low price environment that has tested the company’s financial staying power.