Exec Sees Exxon Drilling in Colombia's Caribbean in '08

CARTAGENA, Colombia, May 23, 2005 (Dow Jones Commodities News via Comtex)

Oil major ExxonMobil (XOM) expects to begin offshore drilling in Colombia's Caribbean in 2008 if technical studies indicate the area is commercially viable, said a company executive.

In 2004 Exxon, Brazil's Petrobras (PBR) and Colombia's state oil firm Ecopetrol (ECO.YY) agreed to explore the Tayrona block in the Caribbean, marking Exxon´s first Colombian upstream project in a decade.

"Drilling will most likely start in 2008, that is the plan," said William Drennen, Exxon's vice president for the Americas, speaking to Dow Jones on the sidelines of an oil conference.

He said Exxon will operate the project if natural gas is found, and Petrobras will become the operator if it turns into an oil project. Under the agreement, the partners must choose half of the 11-million-acre area for development in 2006, and return the remaining area back to the government.

In six months the partners should finish compiling geologic data on the block, allowing them to chose an area for further development. If the project begins producing natural gas, Exxon expects to set up a liquefied natural gas project to export the fuel to the U.S. market. Drennen said Exxon is a leader in LNG technology, and is currently seeking permits for regassification terminals in the U.S. Regassification terminals convert LNG back into natural gas for consumption.

Colombia has offered foreign investors favorable contract terms on oil and natural gas projects in recent years to boost investment. "Colombia has become a model for other nations to follow," Drennen said.

(C) 2005 FWN Financial News. All Rights Reserved

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