‘Friendly’ Colombia sitting on big oil reserves

Financial Times
By Ed Crooks in London
Published: April 2 2008 03:00 | Last updated: April 2 2008 03:00

Colombia’s heavy oil area could hold 20bn barrels of recoverable resources, giving the country greater reserves than leading producers such as Mexico and Algeria, its natural resources agency said.

Foreign investment in Colombia’s oil and gas industry is booming, and the country hopes to lift oil production to 1m barrels a day in the next decade, from about 550,000 b/d currently.

Colombia’s heavy oil potential is dwarfed by that of its neighbour Venezuela, which is estimated to have at least 240bn barrels recoverable in its Orinoco belt region. But Colombia has the great advantage of welcoming foreign investment.

It is one of the few countries with significant resources becoming more accessible to international companies, and capable of growth in oil exports.

The ANH, the national hydrocarbons agency, is today setting out details of Colombia’s second licensing round in London, following presentations in Houston last week.

Larger companies have been invited to bid for heavy oil exploration acreage in the Llanos Basin, towards the border with Venezuela. ExxonMobil and Chevron of the US, Royal Dutch Shell and Lukoil of Russia have expressed interest.

The estimate of recoverable heavy oil comes from a study by Halliburton, the oil services group.

Halliburton also suggested Colombia could have more than 50,000bn cubic feet of gas, about as much as Canada or the Netherlands.

David Thomson of Wood Mackenzie, the consultancy, said he thought the estimate of recoverable heavy oil was “probably on the hopeful side, but by no means impossible”.

“Colombia is not like Venezuela, Bolivia or Ecuador, which have all been pursuing unfriendly policies towards business, and its geology is also relatively easy, so it is attractive.”

Armando Zamora, director-general of the ANH, told the Financial Times he thought Colombia was now the most popular country in Latin America for foreign investment in oil and gas production. That investment rose from $1.8bn in 2006 to $3.5bn last year, and is expected to be close to $5bn (€3.2bn, £2.5bn) this year.

Mr Zamora acknowledged there were security concerns because of possible attacks by Farc rebels, who he said took refuge in bases across the border in Venezuela.

However, Farc activity had declined sharply.

He would reassure potential investors about the tension between Colombia and its neighbours Venezuela and Ecuador. “There is no chance we would start a war with them,” he said.

Copyright The Financial Times Limited 2008

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