In Colombia the petrol supply sector lags well behind other sectors such as electricity supply, ports, and motorways, in undertaking an open policy. However, freeing the petrol supply market is considered necessary in order to release the state from the economic burden that it would otherwise have. This situation is particularly true in the oil industry, which is one of the most capital-intensive businesses. This thesis assesses the petrol supply chain in Colombia identifying the key driving factors, the companies involved and the challenges they are facing in the light of world and regional trends. In this way, a comparative assessment of the Colombian Oil Company (Ecopetrol) is undertaken looking at how other state-owned companies such as the Venezuelan, Brazilian, Mexican and the Argentinian are tackling similar problems. In addition, the thesis will assess what is the best trade off between importing and/or refining for supplying petrol to Colombia regarding three different schemes under three different scenarios of demand. The analysis considers environmental, institutional, technical and economic issues; the latter is assessed using a Linear Programming (LP) model. The paper concludes that the Colombian government should elaborate a white paper to restructure Ecopetrol. Administratively, the chairman should be appointed for a fixed period of time with the provide it with autonomy for selecting its most convenient business strategy. Ecopetrol should be opened up to both international competition and foreign partnership in order to compete in the global market. This would involve improving its competitiveness, pursuing international standards of efficiency and using benchmarking targets for its planning and development. In addition, the government and Ecopetrol should separate their accountancy; thus, subsidies for middle distillates consumed by low income groups should be funded through the national budget and not charged to Ecopetrol. Similarly, the government must commit to a policy of not withdrawing economic resources from Ecopetrol to finance independent projects. After undertaking this first series of measures, the next step should be setting a legal and stable framework for the capitalization and opening of Ecopetrol. In this way Ecopetrol should be listed in the stock exchange market both in the country and abroad initially offering a minority stake of its shares in the search for fresh capital, should reduce its political dependency and form strategic alliances to scale up its businesses and improve its efficiency.