Colombia to auction rights to seek oil

The Colombian government will auction about 100 small areas, some of which had been handed over by companies back to the government, Zamora said. Interested companies have until the end of August to apply to be authorized to bid during the auction, he added.Any interested company can apply for the bidding, he said. “I expect big companies as well junior ones to bid,” Zamora said, though he declined to identify any of the companies that already contacted him.Colombia has emerged as an increasingly attractive option in the region for investors as neighboring producers like Venezuela, Ecuador and Bolivia have rewritten contracts to impose tighter terms on foreign oil companies. In contrast, Colombia enjoys a reputation for strong contractual stability and favorable terms, including royalties as low as 8%.At the same time, the ANH is seeking to attract companies to bid for 43 blocks by Sept. 16 in the Sinu area, in the Cordoba province in northern Colombia, in the Cesar and Guajira provinces, in northern Colombia, and in the eastern mountain range in the center of the country, among other regions.The government will further auction, also this year, the rights to explore in eight blocks located near existing fields currently producing heavy crude.Earlier this year, Zamora has said he received interest from Chevron Corp., Royal Dutch Shell PLC, Exxon Mobil Corp. and Russia’s Lukoil Holdings, as well as companies from Japan, South Korea and Argentina.Zamora said the high price of oil as well as a positive environment and improving security are appealing factors for oil producers, Zamora said.Since 2004, the Colombian government has managed to bring in a huge amount of foreign investors to pour money into the oil industry. Colombia badly needs new oil sources because if production and consumption keep rising at the same pace and companies don’t find more oil than they are currently pumping, the country will probably become a net importer in 2016.Zamora said he expects foreigners to invest as much as $5 billion in Colombia in 2008, up from $3.5 billion in 2007.Companies who signed contracts with ANH since 2004 already produce about 50, 000 barrels of oil equivalent a day, he said.The country’s oil production stood at 561,000 barrels a day during the first four months of this year.Zamora said companies are in the process of labeling about 200 million barrels of reserves as “proven reserves.”Among the companies in that process, he mentioned Lukoil, Gran Tierra Energy Inc. and Petrominerales Ltd.So far this year, the country’s proven oil reserves have fallen by 65 million barrels from 1.46 billion barrels at the end of 2007.In 2009, the government plans to auction blocks on the Pacific coast, Zamora said. Indian company Reliance Industries Ltd., already explores in two offshore blocks near the Buenaventura port on the Pacific coast.“They bought seismic information and they are pretty enthusiastic about it,” he added. (Dow Jones)