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Same-Day Analysis
Colombian Oil Regulator Releases Final Results of Licensing Round
Published: 10/5/2010
IHS Global Insight Perspective | |
Significance | The ANH has announced the award of 76 of the 228 blocks on offer in the recent licensing round. |
Implications | The participation of the oil major Shell and the offers received from newcomers such as OGX Petróleo e Gás will be seen as a sign of confidence in the sector's growth potential. This confidence also reflects recent improvements in the security situation and the offer of more attractive fiscal and contract terms than in neighbouring countries, although there may be disappointment that offshore areas that have seen little previous exploration received little interest. |
Outlook | The outlook remains positive, with Colombia expected to maintain its upward trend in production; output in August rose to 788,000 b/d and the head of the ANH hopes for the country’s oil production to reach 1 million b/d by 2015. |
The Colombian oil regulator, the ANH, has released the final results for its recent licensing round (see Colombia: 21 June 2010: Colombia Kicks Off Ambitious Licensing Round). A total of 228 blocks were on offer with 96 bids received and 76 blocks awarded. Although earlier lists of validated offers had been released, the licensing process had had to be extended following issues arising as a result of restrictions on the award of adjacent blocks to the same bidder. The problem arose after one company, Montco Energy, submitted the best offers for three adjacent blocks in the Putumayo basin; and the ANH decided to seek legal advice to resolve the issue. According to the amended list released by the ANH, a total of 59 Type 1 blocks were awarded. These blocks formed part of a mini round and are located in mature basins, with smaller prospects but more information. In addition, seven Type 2 blocks were awarded. These blocks are considered new prospects with "interesting potential". Ten special technical evaluation agreements (TEAs) have also been awarded for areas which have less information and higher exploratory risks but "larger potential". The state oil company Ecopetrol will take the largest number of blocks: nine in total, comprising six on its own, two in partnership with Repsol and one in partnership with South Korea's SK Energy. Meanwhile the Brazilian independent OGX Petróleo e Gás which is entering the Colombian oil sector for the first time, has come away with five blocks (VMM 26, VIM 5, CR2, CR3 and CR4). As in previous rounds, Canadian independents were particularly active such as Gran Tierra Energy which secured two blocks, Alange Energy which won five blocks and Talisman which bid for blocks CAG 5 and CAG 6 in partnership with Meta Petroleum Ltd (owned by Pacific Rubiales). CAG 5 saw an additional investment commitment of US$75.1 million—around six times more than the next highest. In total Meta Petroleum will participate in six new blocks. Other winners included Shell (two blocks), Hocol (five blocks) and France's Perenco (one block). Two additional blocks were added to the definitive list Lla 15 and LLa 19 awarded to Petrominerales.
Open Round 2010 | |||
Area | Basins/Location | Total Number of Blocks Offered | Total Number of Blocks Awarded |
Miniround (Type 1) |
| 141 | 59 |
New Prospective basins (Type 2) | Onshore: Guajira, Sinu-San Jacinto, Lower Magdalena Valley, Eastern Llanos, Choco Offshore: Los Cayos, Tumaco, Uraba, Sinu | 31 | 7 |
Special TEA's (Type 3) | Onshore: Guajira, Cesar-Rancheria, Cauca-Patia, Lower Magdalena Valley, Middle Magdalena Valley, Catatumbo, Cordillera Oriental, Uraba and Sinu San Jacinto, Caguan-Putumayo, Tumaco, Choco Offshore: Los Cayos, Colombia, Choco, Tumaco, Guajira | 56 | 10 |
Total | 228 | 76 | |
For a full list of winners see: Open licensing round (pdf)
Outlook and Implications
As significant parts of Colombia's potential oil-bearing region have not been explored (only eight of the country's current 18 sedimentary basins are producing oil and/or gas), the potential for the discovery of additional reserves is thought to be high. However, the results of the new licensing round showed that investors remain wary of venturing into areas where little or no previous exploration has been conducted, such as offshore blocks in waters of the Caribbean Sea and the Pacific Ocean. Given the highly prospective nature of some of the basins in which the blocks are located, the head of the ANH, Armando Zamora, was reported by Dow Jones as saying prior to the round that the award of just a quarter of the total 228 blocks on offer would be considered a success. It has exceeded this target, although there maybe some disappointment that Shell was the only oil major to present any bids. The head of the ANH has said that the round is expected to generate over US$1-billion-worth of investment in new exploration.Most Viewed Articles
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