Colombia Expects E&P Boom After Record 2005 Investments
Colombia's government expects a boom in oil exploration in 2006 after the oil and gas sector received total investments of US$1.5bn in 2005, the highest in 17 years, Colombia's presidential news service SNE reported.
Of the total, US$1bn came from private investment and the remaining US$500mn was invested by state oil company Ecopetrol and state hydrocarbons regulator ANH, the statement said.
The country hopes to surpass that figure in 2006, when oil exploration is expected to increase thanks to the country's good geological potential and attractive investment conditions.
Investments will include collecting 10,000km of seismic data, 7,000km of which will be collected by private companies, and the drilling of 40 exploratory wells, a 14.3% increase with respect to 2005, the statement said.
The ANH also plans eight new tender processes from 2006-08, two of which will be conducted this year.
The first of these tenders will be for the 62,275ha Niscota block in the Llanos basin, which will be launched in the coming weeks, the statement said.
After signing an association contract in 2000 and investing US$80mn, UK oil company BP (NYSE: BP) relinquished the block last July. The ANH is expected to announce the winner of the tender by April, according to a previous BNamericas report.
The second tender process this year will be for blocks in the Caribbean basin, which were relinquished by Anglo-Australian resources company BHP Billiton (NYSE: BHP).
At the end of January BHP Billiton converted two technical evaluation agreements into E&P contracts for the Fuerte Nor and Fuerte Sur blocks.
Each of the blocks is roughly 470,000ha and is located directly south of Colombia's Tayrona block, which is being explored by Ecopetrol, Brazil's federal energy company Petrobras (NYSE: PBR) and US oil company ExxonMobil (NYSE: XOM).
The ANH has led an aggressive campaign in the past few years to attract foreign investment to the country in the hopes of stimulating production in order to avoid becoming a net hydrocarbons importer.
"There are large companies, but there are also new companies in the country, small companies searching for small prospects, which are also a fundamental part of our strategy," ANH director Armando Zamora said in the statement.
"Fortunately the country is winning the confidence of multiple investors, who are putting their money toward the search for oil," he added.
Ecopetrol expects the country's oil production to fall 1.4% to 519,000 barrels a day (b/d) of oil in 2006 compared to 526,162b/d in 2005 due to lower production from association contracts.
Colombia's production has been dropping since 1999, initially at a rate of 6-9% a year as a result of lack of exploration in the 1990s. However, in the past two years the country has succeeded in slowing the production decline, largely as a result of the increased exploration requirements in association contracts since 2003.
Colombia's oil production fell 0.4% in 2005 from the previous year but exploration activities helped the country exceed its 2005 production goal of 510,000b/d by more than 16,000b/d.
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