Colombia’s oil and gas industry doubtlessly got a shot in the arm last week when the Colombian military completed a daring raid to release some 15 hostages held by rebels of the Fuerzas Armadas Revolucionarias de Colombia (FARC).
FARC rebels have flexed their muscles a lot lately. Indeed, Colombia’s 780-km Cano Limon-Covenas oil pipeline was shut down late last month after FARC guerrillas dynamited it and stopped the transport of some 100,000 b/d of oil.
But one wonders if such an attack was a sign of strength or one of weakness—like the death throes of a wild beast. Just a few months ago, Colombian authorities struck hard at FARC when they conducted a surprise raid into neighboring Ecuador.
Laptop reveals support
Colombian forces killed Raul Reyes, FARC’s second most senior rebel commander. No less important, documents recovered from Reyes’ captured laptop computer revealed significant support for the rebels from the governments of Venezuela and Ecuador.
In a single stroke, the Colombian government wiped out much of FARC’s command structure and exposed the support it received from other Latin America nations. FARC rebels have since had little else to support them—apart from the hostages they have been holding.
Even that support now looks shaky following the government’s victory last week, and that means a much more positive climate for business in the country—especially the oil and gas business.
The timing could not have been better as Colombia last week announced an auction of exploration rights to more than 100 blocks, according to a senior official of the country’s hydrocarbons regulator, Agencia Nacional de Hidrocarburos (ANH).
ANH director Armando Zamora said the government will auction 100 small areas, some of which had been returned to the government, and interested companies will have until the end of August to apply for authorization to bid during the auction.
Encouraging to investors
The auction—also referred to as the Second Ordinary Round 2008—will offer mostly heavy oil blocks located in the Upper Magdalena basin, the Middle Magdalena basin, the Llanos basin, and the Putumayo basin.
A second round for several larger, heavy oil projects in the East Lanos basin is by invitation only, while the third round—the Colombian Round—launched in February includes 43 blocks in four basins: Sinu-San Jacinto, Cesar-Rancheria/Guajira, Eastern Cordillera, and the Llanos basin.
Colombia is hoping that its licensing terms will offer enough incentive for international oil companies to invest in its energy sector and help boost production to the desired levels.
Colombia needs the investment. In April Zamora said state-owned Ecopetrol aims to increase oil production to 700,000 b/d by 2015 and then to 1 million b/d by 2020 (OGJ, Apr. 7, 2008, p. 38).
Whatever may be said about the licensing terms, there can be little doubt that they will get a significant boost after last week’s victory over the FARC.
