Colombia Selling 13 New Oilfields

Colombia will cease to be an oil exporting nation in the year 2004 if it fails to find new oil fields, which would mean a serious decline in public finances and a contraction of economic growth, according to the Foreign Trade Ministry's section of studies on the international economy. Thus, to forestall that possibility, Alberto Calderon, the new president of Ecopetrol, Colombia's state oil company, has issued a call for bids from both national and international investors on 13 new oilfields with potential reserves of 4.5 billion bbl of oil. It's "Ronda 2000," Calderon's scheme for boosting investment in the Colombian petroleum sector.

Ecopetrol has set up a special web page on the Internet that provides information on the attractions and guarantees Colombia can offer investors interested in oil activity.

The 13 areas put up for sale are located in the eastern plains; along the Magdalena River in central-western Colombia; the foothills of the Andes in the west; and the department of Putumayo to the south.

According to an Ecopetrol source, this is "the most important package of geological assets ever put up to tender" in Colombia.

In calling for bids on the new oil fields, Ecopetrol reduced its participation from 50% to 30%, in a new scheme governing joint ventures with associated companies last September, and offered greater tax breaks. The measures, criticized by the Union Sindical Obrera, the oil workers' union, are also designed to counteract attacks by guerrilla groups.

The main threats to Colombia's oil sector have come from the National Liberation Army (ELN), which in 1985 declared oil infrastructure one of its targets. The rebel group, the second largest in the country, has staged more than 500 attacks on oil pipelines, causing millions of dollars in losses and serious ecological damages.

Another factor with negative consequences for investment is the dispute between the US-based Occidental Petroleum and the U'wa indigenous community seeking to impede oil exploration in the Samore Bloc, an area near the group's reserve in northeastern Colombia, on the argument that drilling for oil would affect their customs and culture.

The U'was have held protests against the government decision authorizing Occidental to go ahead with its exploration activities. Around 500 indigenous protesters set up roadblocks on several routes leading to the Samore Bloc.

Through its new plan, Ecopetrol projects pushing production up from the current 850,000 b/d to 1.3 million by 2010, and plans to sign around 25 new contracts next year with local and foreign associates.

Besides the tax breaks offered to attract foreign capital, Ecopetrol is planning new investments in exploration and production, and in the expansion and modernization of its refineries, said Minister of Mines Luis Valenzuela. These new investments will be made possible by windfall revenues of around US$720 million, which the government is banking on due to the rise in international oil prices this year. If obtained, that sum would represent a 66% increase on last year's sales.

Ecopetrol initially forecast around $1.274 billion in export revenues this year, based on a price of $13 a bbl. But according to analysts, prices could stand as high as $25 a bbl by year's end.

In 1998, Colombia's oil sector drew $642 million in foreign direct investment, 30% below the 1997 total.