Colombia will lower tax rates for oil companies drilling in some offshore blocks in the Caribbean, the Mines and Energy Minister said on Nov. 9, in an effort to encourage exploration amid a global slump in the price of crude.

Contracts for various offshore blocks will get a 25 percent discount on income taxes and will be exempt from value-added tax (VAT) and customs charges, Mines Minister Tomas Gonzalez said in a statement.

"We have seen the potential of the Colombian Caribbean for the future of hydrocarbons," Gonzalez said. "That is why we are making investment in offshore more attractive, taking measures that will allow us to incentivize exploration and production."

The move will help keep output near one million barrels per day in the medium term, he added.

Colombia's public finances have been battered by the fall in prices for crude oil, its biggest export and source of foreign exchange.

The Andean country produced an average 1.007 million barrels of crude per day in September.

State-run Ecopetrol produces more than half of Colombia's oil, while the Canada-based Pacific Exploration and Production Corporation is the biggest private player.

The government hopes to increase investment in the sector to some $15 billion a year from current levels of between $5 billion and $7 billion.

Offshore