Colombia Signs 11 Oil Exploration Contracts for $36M in Investments

BOGOTA Jun 13, 2007 (Dow Jones Newswires)

The Colombian National Hydrocarbons Agency on Wednesday said it signed 11 new oil and gas exploration and production contracts so far this year for a total of more than $36 million in investments.

The ANH increased the number of negotiations for such contracts as part of an effort to encourage the discovery of new hydrocarbon reserves.

Hocol SA, the Colombian unit of French oil company Etablissements Maurel et Prom SA (5107.FR), committed to invest $10.4 million in the next 22 months in exploration in two areas of 224,000 hectares and 45,000 hectares in the Llanos basin in Eastern Colombia.

Canada-based Petrominerales Ltd. (PMG.T) signed two contracts with ANH to invest $8.7 million in two areas in the Llanos basin in Eastern Colombia within 18 months.

The Canadian firm Petrolifera Petroleum Ltd. (PDP.T) committed to invest $5.2 million in an area in the Magdalena basin in northern Colombia, while U.S.-based Occidental Petroleum Corp. (OXY) agreed to invest $4.2 million in 18 months in the higher Magdalena valley in the center of the country.

Junior oil company Fenix Oil & Gas committed to invest $2.5 million in an area located in the Magdalena River valley, while Petroleos del Mar committed to spend $1.04 million in the next 12 months also in the Madgalena basin and Emerald Energy PLC (EEN.LN) committed to invest $885,000 in the Llanos basin.

Seep SA will invest $2.1 million to seek oil and gas in the lower Magdalena basin in northern Colombia, while Cepsa agreed to invest $1.1 million in the Llanos basin.

Additionally, ANH signed five technical contracts, a step before formal exploration, with Brazilian firm Odebrecht, Hocol SA, Petrolifera and two with local firm Cepsa. Those companies committed to invest $2.4 million.

The administration of President Alvaro Uribe hopes the new contracts will lead to the discovery of new oil reserves. If Colombia fails to find new reserves, the country will become a net oil importer in 2014, said National Hydrocarbons Agency Director Armando Zamora.

Canada-based Pacific Stratus Energy Ltd. (PSE.T) recently announced the discovery of an estimated 8 million barrels of oil at its Moriche block located in eastern Colombia.

Russia's OAO Lukoil Holdings (LKOH.RS) also said four months ago it discovered more than 100 million barrels of crude oil in the Condor block located in the Colombian Boyaca province in the center of the country.

Zamora said he is optimistic about the possibility of new findings in Colombia this year as state-owned oil company Ecopetrol SA and private companies are expected to drill at least 70 wells this year, up from 56 in 2006.

Vast territories, potentially rich in hydrocarbons, remain unexplored in Colombia, which shares many of the geological features of its oil-rich neighbor, Venezuela. The Llanos and Magdalena basins, in particular, may have significant reserves.

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