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The battle for black gold in Colombian seas

The battle for black gold in Colombian seas

Posted by PanamericanWorld on February 28, 2014

As Colombia keeps expanding the horizon of its oil business, which is estimated at 9 years at current reserve levels and extraction pace, big players are coming onto the scene to struggle for potential gains. Particularly, oil in Colombian seas is a niche to be developed, since offshore extraction is not yet at global competitiveness levels.

The government has been working on the economic and fiscal terms of reference for deep seas exploration and production. Colombia’s annual oil & gas tender will take place next July. According to the National Hydrocarbons Agency, some 97 offshore and onshore oil blocks will be offered, including 10 marine blocks in the Caribbean, 3 in the Pacific, 19 non-conventional blocks across La Luna region and 57 conventional onshore blocks. Royal Dutch Sell Plc, Exxon Mobil Corp and ConocoPhilips are some of the main bidders.

The largest recent oil reserve discoveries around the globe have been made through offshore exploration, becoming an important trend in the industry. The US shale oil revolution and Mexico’s energy reform will add growing competition for the global oil supply. According to the Colombian Petroleum Association (ACP), the country produced an average 1,007,000 barrels per day in 2013, which is expected to expand +2% this year.

To keep that figure growing, the country has devised a policy and incentives to attract foreign investment. These include: 100% ownership in oil ventures; a sliding-scale royalty rate; lengthening exploration licenses; and a potential sale of a 20% Ecopetrol stake to private investors. As the country continues to prepare the field, companies are lining up to take a shot at finding Colombia’s offshore oil. 

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