Colombia to Open Bidding for 5 Oil Blocks Toward Year End

BOGOTA, Jul 13, 2005 (Dow Jones Commodities News via Comtex)

The chief of Colombia's National Hydrocarbon Agency, or ANH, said Tuesday it will open a bidding round toward the end of the year to assign five blocks with heavy crude oil.

Armando Zamora told Dow Jones Newswires in a telephone interview that the goal is to attract world-class companies willing to undertake crucial projects with significant investments.

"We established these special five areas because there is clear evidence of potential heavy crude oil there," Zamora said Tuesday, adding that the licensing rounds modifies the usual "first come, first serve" practice.

The areas are located in the Llanos basin in the states of Arauca and Vichada on the Venezuela border and in the states of Meta and Casanare in the middle of the country.

Zamora said the blocks will be assigned in the second half of next year to "whoever presents the most convenient offer."

He also confirmed that the implementation of the licensing rounds comes at a time when Colombia is attracting more international oil companies.

Several international companies are dusting off exploration projects here after the government enacted attractive regulatory changes. Hard-line policies against leftists rebels are also making it both physically and financially safer for companies to invest in the Andean country.

Meanwhile, ANH said it plans to invest $80 million in exploration studies in little-known areas and then put them on the concessions block. These areas include Choco, a state next to Panama; the Llanos basin bordering Venezuela; the mountainous range of Perija in northeastern Colombia; and the river basin of Sinu-San Jacinto, next to the Caribbean sea.

Finally, it approved two oil exploration and production concessions, ANH said. The two concessions worth $11.8 million were awarded to Brazilian state-oil company Petroleo Brasileiro Petrobras (PBR) and Canadian oil company Nexen (NXY).

ANH has approved a total 17 concessions and 11 technical evaluations since the beginning of 2005.

Vast unexplored and potentially hydrocarbon-rich territories remain in Colombia, which shares many of the same geological features of its oil-endowed neighbors Venezuela and Ecuador. In particular, the Llanos and Magdalena basins are thought to have great potential.

Colombia expects oil production to slip to an average 510,000 barrels a day this year, down from an all-time high of 830,000 b/d reached in 1999. If Colombia fails to increase output at existing fields or to find new development areas, it will have to begin importing oil in 2011, officials have said.

Copyright (c) 2005 Dow Jones & Company, Inc.