Colombia Signs 7 Oil Exploration, Production Contracts

9.05.06

Rigzone.com

Colombia’s National Hydrocarbon Agency, or ANH, signed seven new oil exploration and production contracts and two new preliminary contracts totaling $34.4 million in investment as it seeks to encourage the discovery of reserves, the agency said Wednesday.

Australia-based BHP Billiton (BHP) secured two areas, each about 475,000
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hectares, to explore offshore Caribbean waters. BHP Billiton will invest $26 million over the next six years, the agency said in a statement.

The hydrocarbon agency also granted exploration rights to London-based Taghmen Energy (TAG.LN) to explore 41,000 hectares in the Magdalena River Basin, south of the Colombian capital of Bogota. Taghmen Energy has committed to investing $1.52 million within six years.

Canada’s Apex Energy won a concession to explore the Paloma block, also in the Magdalena River Basin. Apex Energy will invest $1.07 million within four years.

U.S.-based Hupecol will invest $3.18 million in the first phase of a contract to explore a 17,200-hectare area in the Llanos foothills, near the Venezuelan border, ANH added.

Occidental Andina, the Colombian unit of Occidental Petroleum Corp. (OXY), was granted an exploration and production contract to explore 46,000 hectares in the Magdalena River basin. The company plans to invest $1.9 million over the next four years.

Colombian company Maxim Well Services obtained acreage in Bosques, also located in the Magdalena River Basin. The company will invest $340,000 in four years.

The ANH also signed two preliminary contracts worth a total investment of $403,600 with Occidental Andina and Petrominerales, the Colombian unit, of Canadian Petrobank Energy & Resources Ltd.(PBG.T). These contracts grant rights to carry out preliminary evaluations – a step before formal exploration.

So far this year, ANH has signed 14 exploration contracts and six preliminary contracts.

ANH hopes to sign 30 exploration and production contracts this year.

The Colombian government said in November the country must sign 30 oil-exploration contracts and drill 60 oil wells every year until 2020 to reverse a decline in oil output and reserves as well as to maintain its self-sufficiency in the commodity.

Colombia, Latin America’s fifth-largest oil exporter, must discover at least 10 productive oil wells annually in order to increase average oil production to 700,000 barrels a day from 519,350 b/d in 2005, according to ANH director Armando Zamora.

Vast territories potentially rich in hydrocarbons remain unexplored in Colombia, which shares many of the geological features of oil-rich neighbor Venezuela. The Llanos and Magdalena basins, in particular, may have significant reserves.

Although analysts warn that new reserves may not be easy to find, a number of oil majors are dusting off seismic projects, thanks to government efforts to make the country a more appealing destination for investment..

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International Peace Observatory  |  Observatorio Internacional de la Paz  |  Bogotá, Colombia  |  NIT: 900.013.419-3

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