A contract extension had already been signed by both parties in February, but the government decided to re-examine the contract after a Colombian court said the contract should have allowed for the government to receive more in royalties.
ChevronTexaco had reportedly threatened to withdraw its investment in Colombia over the dispute.
The statement sent late Tuesday from the president's office said the contract extension will allow the Colombia government to reap $499 million in profits, even under the worst scenario, while the government would have to spend $175 million if it had control of the field.
ChevronTexaco has been exploring for energy in Colombia since the 1920s and the project in La Guajira has existed since 1974.
The gas comes from Chuchupa, the country's only offshore field, and Ballena, an onshore field in Guajira state. Together these fields produce on average 500 million cubic feet of gas a day.
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