Colombia’s government put 26 oil and gas blocks on offer, but the bids only total $1.4 billion which is well short of the expected amount, U.S financial magazine Wall Street Journal (WSJ) reported Wednesday.
Colombia received 19 offers on 26 of 95 oil and natural gas blocks in auction. According to U.S magazine Financial Times some of the worlds largest energy companies are bidding for exploration rights to the Colombian oil and gas blocks, the country is the forth-biggest oil producer in Latin America.
The auction attracted investments for $1.4 million, short of the expected $2.6 million which the Colombian government were hoping for, reported WSJ Journal. Deputy Energy Minister Orlando Cabrales remained optimistic, despite the fact that the total amount of investments submitted were lower than expected.
The Colombian oil reserves are predicted to run out before 2020, according to a statement by Colombia’s Mining and Energy Minister Amylkar Acosta in 2013.
MORE: 7 years of oil reserves no ‘doomsday scenario’ for Colombia: Analyst
“We need a lot of exploration activity and the only way to have it is by substantially improving the security situation.”
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Colombia was rated the most attractive country in Latin America for oil investment in June.
MORE: Colombia oil reserves up for bid in major exploration grant sale
The international companies bidding for the offshore blocks are U.S.-based Andarko, as well as Spain’s Repsol, Norway’s Statoil and U.S.-based ExxonMobil, who bid together, according to Latino Fox News.
The bidding round ends next month, where the winning bidders will be announced. Also quoting Deputy Energy Minister Orlando Cabrales, “We need a lot of exploration activity and the only way to have it is by substantially improving the security situation.”
Even though the challenges regarding internally affairs might force investors to be cautious investing in blocks off the Colombian Pacific Coast, international media suggest. Guerrilla groups such as FARC and ELN have continued to attack energy infrastructure, which in the first six months included 67 attacks on pipelines Colombia’s defense ministry stated, according to Financial Times.
Less than 10 years Colombia has almost doubled its oil production to nearly 1m barrels per day. This is due to improved security, liberalization allowing international investors and the to re-tapping of oilfields discovered years ago.
Sources
- Oil majors lodge bids for Colombia exploration rights (Financial Times)
- Colombia Oil Auction Disappoints (Wall Street Journal)
- 19 Companies submit bids in Colombia oil and gas auction (Latino Fox News)
- Colombia Oil Auction Seeks to Stem Shrinking Reserve Life (Bloomberg)
- Se acorta la autosuficiencia petrolera del país (El Espectador)