Colombia's ANH to Sign Over 50 E&P Contracts, TEAs in 2005

Colombia's hydrocarbons regulator ANH plans to approve over 50 exploration and production contracts and technical evaluation agreements (TEAs) in 2005, ANH director Armando Zamora said at the INGEPET oil and gas seminar in Lima, Peru. Some 30 of these will be E&P contracts and 20 TEAs, Zamora said.

ANH's goal at the beginning of the year was to sign 30 E&P contracts and TEAs, so the regulator has already far surpassed its target, he added.

Through October ANH had awarded a total of 46 contracts including 24 E&P contracts and 22 TEAs, according to a previous BNamericas report.

Only 34.5% of Colombia's territory was covered by exploration contracts as of September 2005, including 8% under TEAs, 6% for state oil firm Ecopetrol, 8% for the ANH and 12.5% as special areas, Zamora said.

ANH expects new exploration to be focused on the northern Caribbean coast and the Pacific coast, where new seismic studies are now being carried out, Zamora said.

ANH expects a total of 40 wells to be drilled in 2005, up from 21 in 2004. Ecopetrol and its partners have drilled 24 wells already, 12 are in progress and three or four more wells should be drilled by year-end, Zamora said.

Colombia's oil production has declined to about 500,000 barrels a day (b/d) in 2005 from 700,000b/d in 2000 and the country is in danger of becoming a net oil importer in the next few years if new discoveries are not made soon.

However, the worst is over as the number of new contracts signed and wells being drilled is increasing. "We are touching bottom in terms of the decline of production and are on the road to recovery," Zamora said.

According to ANH projections, the country must discover a total 4 billion barrels of oil, or some 250 million barrels a year, for Colombia to maintain self-sufficiency in oil through 2020, he added.

To achieve that target the ANH must sign at least 30 exploration contracts a year and a total of US$800mn, or about US$50mn a year, must be invested in exploration through 2020, he said.

Colombia offers an attractive royalty regime of 8-25% depending on the size of the field, making both small and large fields profitable for private investors, Zamora said.

Exploration contracts are for 6 years, evaluation 1-2 years and production 24 years. "We would rather have 50% of something than 100% of nothing;" Zamora said, referring to other Latin American countries that have increased royalty rates to take advantage of high oil prices.

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