Colombia has emerged as Latin America’s most attractive country for petroleum investment, according to an opinion survey of 95 international firms in the sector, reported business news source Portafolio.
With the results of the survey, conducted on behalf of the National Hydrocarbon Agency (ANH), Colombia jumped over other oil-rich countries in the region, including Brazil, Venezuela, Mexico, and Argentina, scoring a scoring a total of 3.9 out of a possible 5 points on indicators such as prospects, fiscal and contractual terms, and political and business climate.
MORE: Foreign investment in Colombia hits record high in 2013
Despite the positive relative ranking, the country’s overall attractiveness score has fallen since 2011, the last time the study was conducted. The largest ratings drops were observed from companies that have already invested in Colombia.
In the most recent test, high scores on fiscal and contractual terms and political and business climate offset a poor ranking on prospects in the eyes of investors, reported Portafolio.
The lack of faith in new oil discoveries could be related to reports that, at current production levels, Colombia’s oil reserves will soon be exhausted. Barring a new major discovery, the country has only seven-years-worth of reserves left, according to Ministry of Mining estimates.
MORE: Colombia only has 7 years of oil reserves: Energy Minister
The outcome of an ongoing maritime territorial dispute with Nicaragua may determine whether marine natural gas reserves can be used to compensate for diminishing petroleum resources.
MORE: Colombia will need to negotiate directly with Nicaragua on sea border: Court
Surveyed companies reported that the biggest challenge to exploration was inefficient environmental regulations, along with concerns relating to social conflict and security measures, it emerged from the survey.
ANH President Javier Betancourt stated that the Colombian government is focused on improving the environmental approval process. “We have seen that have reduced the time required for issuing environmental licenses to two months,” he said, as quoted in Portafolio.
Oil companies active in Colombia have raised numerous environmental concerns, including the impacts of extraction efforts on surrounding rural and indigenous communities.
MORE: 20k animals dead in devastating Colombia drought
A devastating drought earlier this year in the central state of Casanare was attributed, in part, to oil production activities in the region, which require heavy aquatic resources.
Over 81% of Colombia’s record foreign investment figures in 2013 came from the hydrocarbon and mining sectors.
Sources
- Colombia, la más atractiva en inversión petrolera (Portafolio)