Colombia is preparing changes to its bidding process for oil areas in an effort to increase investment and find new reserves, the head of the oil regulator said on July 24, after repeated cancellations of its latest oil round.
The changes, including contracts adjusted to international crude price fluctuations and the chance for companies to propose exploration on land not yet on offer, will help attract spending and nearly double reserves to at least 10 years of consumption, Orlando Velandia of the National Hydrocarbons Agency (ANH) said.
“We’re looking to improve conditions for the country, to achieve competitiveness and motivate companies to make proposals about areas,” Velandia said in an interview on July 23.
The ANH in April postponed the deadline to receive offers for 15 onshore areas at its Sinu-San Jacinto auction until the second half of the year. It was the sixth time the round was delayed.
Colombia is the third Latin American country hosting oil auctions this year, after Mexico and Brazil. Its bidding round comes after a four-year pause when low oil prices stopped many Latin American countries from offering acreage.
Colombia has been awarding blocks to the highest bidder every two to three years, but bidding in the new system will privilege the first company that requests access to additional areas, Velandia said, likely improving the offers of other bidders.
“Once we evaluate the areas and they’re added to the map, companies can make offers in a continual competitive process,” Velandia said. Companies would no longer be required to outline planned investments or compensate the government if spending falls short, he added.
Colombia could offer at least 20 onshore and offshore Caribbean blocks with the changes, Velandia said.
Companies having problems with social protests or delays in environmental licensing could be offered alternative areas, he said.
Protests, along with pipeline bombings, are a major headache. State-run Ecopetrol lost some $100 million earlier this year because of blockades.
The country has 1.78 billion barrels of reserves, equivalent to about 5.7 years of consumption. Colombia produces about 860,000 barrels per day of crude, half for export.
The proposed changes must be approved by the ANH’s directive counsel, which includes the ministers of energy and finance.
Changes not approved before Aug. 7 will go to the government of President-elect Ivan Duque, who has promised tax cuts, investment in Ecopetrol’s refineries and a crackdown on attacks by rebel groups.
Recommended Reading
Kimmeridge Fast Forwards on SilverBow with Takeover Bid
2024-03-13 - Investment firm Kimmeridge Energy Management, which first asked for additional SilverBow Resources board seats, has followed up with a buyout offer. A deal would make a nearly 1 Bcfe/d Eagle Ford pureplay.
Laredo Oil Subsidiary, Erehwon Enter Into Drilling Agreement with Texakoma
2024-03-14 - The agreement with Lustre Oil and Erehwon Oil & Gas would allow Texakoma to participate in the development of 7,375 net acres of mineral rights in Valley County, Montana.
Duke Energy Appoints Harry Sideris to President
2024-03-15 - Steve Young, executive vice president and chief commercial officer, will retire from Duke Energy on June 30.
NOV's AI, Edge Offerings Find Traction—Despite Crowded Field
2024-02-02 - NOV’s CEO Clay Williams is bullish on the company’s digital future, highlighting value-driven adoption of tech by customers.
Hess Corp. Boosts Bakken Output, Drilling Ahead of Chevron Merger
2024-01-31 - Hess Corp. increased its drilling activity and output from the Bakken play of North Dakota during the fourth quarter, the E&P reported in its latest earnings.