Colombia’s Minister of Mining and Energy Hernan Martinez is in China attending the 2010 World Expo, where he will attempt to attract Asian petroleum companies to invest in oil exploration in the Andean nation.
“We are going to auction off almost 25% of Colombian [terrestrial and maritime] territory,” Martinez said Monday, adding that companies in Europe, South America, Canada, and the U.S. have also been invited to bid in the auction.
Colombia’s oil licensing agency, ANH, is interested in attracting investment from big Chinese oil companies that are already established in other South American countries such as Ecuador and Venezuela.
According to ANH’s director, Armando Zamora, three large Chinese oil companies, CNPC, Sinopec, and Sinochem, have a presence in Colombia, but only the latter has bought a subcontracting company and established a regional base in the country.
“China doesn’t discriminate, China is going where there are resources and adapts to each system, they don’t go to make value judgments, they go where they will be welcome, and in that sense, Colombia is very welcoming,” Zamora said.
In order to attract Chinese investment, Colombia is offering the Chinese petroleum companies “a modern franchising contract” in order to stay competitive with Venezuela, Martinez said.
“They don’t have to become partners with the Colombian government, it is a contract that works on a foundation of royalties and taxes only,” the minister emphasized.
Colombia produces 800,000 barrels of crude oil daily and aims to top one million barrels daily within two years.
Martinez said that for the next five years, Colombia expects its oil industry investments to produce an estimated US$50 billion.
Meanwhile, the expected investments on the part of the Chinese oil businesses could reach one billion dollars alone for the next two years.
In regards to the possibility of FARC guerrillas and Colombia’s internal conflict scaring off Chinese investors, Martinez said that security problems were the cause of Colombia not being on the “investment map” before, but added that the issue “has already been sufficiently overcome.”
“Obviously we don’t have a totally calm country,” Martinez recognized, but added that “no country in the world is totally calm,” citing terrorist groups ETA in Spain and the IRA in Northern Ireland as examples.
“We are already, in a great part of the Colombian territory, clean enough of that whole problem,” remarked Martinez, adding that “these days 120 companies work in Colombia without having had a single security incident.”
Colombia’s courting of Chinese petroleum comes on the heels of news that Colombia’s exports to China have increased five-fold in 2010 over last year, and have been an important factor in making up the deficit caused by Venezuela’s recent ban on Colombian exports.
Last week Ecopetrol Colombia reported its highest oil export figures since July 1999.