Colombia Denies Approval for ChevronTexaco's Catalina Proj.

The Colombian Government has said it would not approve the contract for the Catalina offshore development project signed by ChevronTexaco and Ecopetrol earlier this year. The Mines and Energy Ministry said it would explore other options to allow for Catalina to go ahead, including extending its current contract with ChevronTexaco.

The Catalina contract would have extended until 2016 Chevron Texaco's equity stake over a northeast zone where it currently produces 500 million cubic feet of gas per day. The rejected contract hit a snag earlier this year when the government's comptroller and lawmakers argued that in their view Colombia would forfeit $100 million in lost royalties under its terms.

The State Council issued an opinion on earlier this month against the contract, which guided the government's decision on Wednesday, the ministry said. President Alvaro Uribe, trying to slow the country's declining production, announced this month that foreign oil companies would be able to negotiate extensions on expiring production contracts for the first time.