Colombia is on the way to becoming a significant player in the Latin American oil business, with current output of 850,000 barrels per day, a record 120 wells presently under exploration and annual investment exceeding $5 billion, the Andean nation’s energy sector regulator said.
Colombia “has the potential to be a significant player in Latin America and fill geo-political spaces” it was previously unable to fill, Armando Zamora, director of the National Hydrocarbons Agency, or ANH, told Efe Friday in an interview.
While other countries such as Venezuela, Ecuador, Bolivia and even Brazil “are closing (themselves off), we’re opening” the sector to foreign investment with an average of one new exploratory well “every three days” and “one discovery per week,” the head of the ANH, which awards energy exploration and production contracts in the Andean nation, said.
All of those aforementioned countries have made moves in recent years to extend state control over their energy sectors.
He said the convergence of three factors in Colombia gives cause for optimism: the perception that “there’s oil to discover” in the country, the sense that “it’s safe and profitable” to operate there and the renewed “interest” by the global investor community.
The result has been daily production of 850,000 barrels, similar to the boom year of 1999 but in a context of a much higher crude prices.
Meanwhile, gross investment levels have exceeded $5 billion per year, meaning net investment (deducting depreciation) of $3.5 billion annually, the ANH director said, adding that “this is generating significant economic activity.”
“We can’t say we’re at the level” of the regional oil powers, Zamora said, noting that Colombia has proven reserves of less than 2 billion barrels, which “is nothing” compared to Brazil’s 12 billion barrels and Venezuela’s 98 billion barrels.
(Brazil has also made massive offshore discoveries in recent years that could lead to a five- or six-fold increase in its proven reserves).
However, Zamora pointed out that Colombia ranks second in the region in terms of crude production per capita, trailing only Venezuela.
Colombia currently produces more than 1 billion barrels of oil equivalent (oil and natural gas) per day and the goal – established by the Mines and Energy Ministry, the ANH and state oil company Ecopetrol – is to reach output of 1.5 million boe per day by 2015 “not taking into account the prospects of finding heavy crude in the Orinoco,” Zamora said.
Oil exploration is migrating to that region of the eastern province of Vichada, near the border with Venezuela, after traditionally being concentrated in the middle and upper valleys of the Magdalena River and in Casanare, Meta and Putumayo provinces.
The lower valley of the Magdalena River, the Amazon basin and the Atlantic and Pacific coasts (both onshore and offshore) are other “new frontiers” for oil exploration, Zamora said.
The 120 wells that make up the current exploratory map belong to 35 different companies, including Ecopetrol; Spain’s Repsol-YPF; Canada’s Pacific Rubiales, Gran Tierra Energy and Talisman Energy; Hocol, a unit of France’s Maurel & Prom; South Korea’s SK Energy; Royal Dutch Shell; and Brazil’s OGX.
This oil “fever” has significant “multiplying effects and opportunities that range beyond production,” Zamora said.
But oil output also brings “a series of consequences and collateral effects” that will require authorities to foster good relations with communities inhabiting the new production zones, ensure environmental protection and build transport infrastructure.
“If things keep going well, Colombia could become an energy integration center, an important energy hub,” Zamora said.
Colombia also “can take the leap to become a gas exporter” and, in terms of crude exports, “also could have a significant opportunity if the Pacific window opens,” he added.
The company also has the potential “to add a great deal of value to its hydrocarbons” with investment in areas such as petrochemicals and fertilizers, the ANH director said. (EFE)