(Bloomberg) -- Colombia’s oil production is set to fall below 1 million barrels a day next year as exploration collapses and major fields age, the head of the country’s oil association said.
Producers drilled 19 exploratory wells during the first nine months of 2015, down from 80 in the same period last year, said Francisco Lloreda, president of the association. The decline threatens a government target of 1 million barrels a day through 2022 as it seeks to maintain royalty payments.
“It will start to be below 1 million barrels” next year, Lloreda said in an interview in his Bogota office. “Exactly when, we can’t say.”
Producers in Colombia including state-controlled Ecopetrol SA and Pacific Exploration & Production Corp. have cut exploratory spending this year amid the slump in global oil prices. The potential implications of reduced exploratory activity in Colombia are significant, given the Andean nation’s reserve life of 6.4 years at the end of 2014.
“We have a larger challenge than other countries because we have limited reserves,” Lloreda said. “We need to incorporate more barrels and this is done with intelligent exploratory activity.”
A series of government measures this year has helped companies overcome the initial impact of the fall in oil prices, although more will be needed if Colombia is to attract continued foreign investment, according to the association.
“We believe that the government take is very high at the moment,” Lloreda said of the portion of oil revenue the government takes from concessions. “It isn’t that competitive compared to other countries. It’s a government take that varies between 70 and 75 percent, and it needs to be reduced.”
The Colombian government will present a structural tax reform to Congress in March, Finance Minister Mauricio Cardenas said Monday.
To contact the reporter on this story: Andrew Willis in Bogota at firstname.lastname@example.org To contact the editors responsible for this story: James Attwood at email@example.com; David Marino at firstname.lastname@example.org Carlos Caminada, Richard Stubbe.
Copyright 2016 Bloomberg News.
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