LatAmOil
09 October 2012, Week 40
page 6
INVESTMENT
Unconventional blocks on offer in Colombia bid round Interest is building amongst international oil companies (IOCs) ahead of Colombia’s 2012 Bid Round. The auction will be launched at a public ceremony on October 17 in Cartagena. “The majors are returning to Colombia,” said Javier Gutierrez, CEO of statecontrolled Ecopetrol. Gutierrez said that 80 companies had submitted their interest in participating in the event, which has been organised by the National Hydrocarbon Agency (ANH) of Colombia. The ANH is offering licences to explore 109 blocks. The vast majority are onshore, with 11 offshore blocks available in the Guajira, Sinu and Tumaco Basins. The winners will be declared by the end of 2012. This year’s round includes 31 unconventional blocks of shale oil and gas, oil sands and coal-bed methane (CBM). Major IOCs to have thrown their hats
into the ring include: Statoil; ConocoPhillips; EOG; Shell; Total; YPF; ExxonMobil and Petrobras. “There is definitely more interest in this licensing round than in previous ones,” Gutierrez was reported as saying by the Financial Times. Ecopetrol said it would be interested in partnering with an established IOC to develop unconventional blocks. The company intends to increase its output from unconventional sources to 50,000 barrels of oil equivalent per day by 2020. The government is eager to jump on the unconventional bandwagon and has offered incentives, such as royalty discounts, to encourage potential investors to bid in the upcoming auction. Andes Energia (AEN) announced it had teamed up with Integra Oil and Gas SAS to make a bid. The ANH has accepted the joint venture into the
process for an exploration and production contract at one of Colombia’s Type 1 blocks at a mature basin, according to Oil Voice. There are 656,520 hectares (6,565 square km) of Type 1 blocks on offer through the mature Lower, Middle & Upper Magdalena, Caguan-Putumayo and Llanos Basins. The bid round officially kicked off on February 21. Since then, the ANH has undertaken an eight-month roadshow around North America, the UK, Asia and Brazil to drum up interest. There is growing optimism about Colombia as an investment destination following the recent announcement that peace talks will take place between the government and Revolutionary Armed Forces of Colombia (FARC) guerrilla group.
PERFORMANCE
Colombia reports 7% increase in oil production Colombia’s oil production grew by 7% year on year in September. Production hit 956,312 barrels per day last month, which was up by 4% over the August average of 918,000 bpd, Colombian Energy Minister Federico Renjifo said on October 4. The September figure matched this year’s previous high, which was achieved in April, and has only ever been topped by the 962,000 bpd that was effected in November 2011. The boost in output was credited to a 70% decline in the number of attacks on oil industry infrastructure by leftist
guerrillas in September. The Revolutionary Armed Forces of Colombia (FARC) has entered into peace talks with the government and, although a ceasefire has not yet been agreed, the insurgents appear to have reined in their attacks on oil infrastructure. The fall in violence has renewed hopes that Colombia will soon achieve the important production milestone of 1 million bpd. The industry has been striving to hit the million-barrel mark by the end of the year. However, a rise in output had been thwarted by a surge in guerrilla activity in the months running
up to the announcement of peace talks. Ecopetrol’s CEO, Javier Gutierrez, said at the end of September that guerrilla attacks had only disrupted 3,000 bpd of production during the course of the month. Earlier in the year, output had been dragged down by 9,000 bpd, he said. “[The number of attacks] was greater at the beginning of the year but right now it has slowed down,” Gutierrez said. Ecopetrol’s chief has attempted to downplay the significance of the guerrillas this year.
Copyright © 2012 NewsBase Ltd.
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Edited by Ryan Stevenson
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LatAmOil
09 October 2012, Week 40
page 7
PERFORMANCE He said the influence of insurgents would only be responsible for a 1% drag on Ecopetrol’s production in 2012. However, disappointing production in July forced the state-owned company to reduce its output goal for the year by
2.5% from 800,000 bpd to 780,000 bpd. Despite the lower target, Gutierrez insisted that Ecopetrol remained on track to hit production of 1.3 million bpd by 2020. Ecopetrol, which is Colombia’s largest
company, is responsible for 60% of the country’s oil production, and therefore acts as a barometer for the fortunes of the domestic oil industry.
POLICY
First oil forecast for Falklands in 2017 The Falklands Islands could become a commercial oil exporter within five years, according to forecasts made by the archipelago’s government. “It is expected that the first oil will be in a super-tanker by 2017 and the Falkland Islands will then become an oilexporting nation,” Barry Elsby, the government minister with responsibility for the minerals sector, was quoted as saying by Mercopress last week. The islands, the British sovereignty of which is disputed by Argentina, currently rely on fish exports for revenue. An oil industry would be a much more stable source of income, but Elsby said the government was assessing carefully the socio-economic effects that becoming an oil exporter would entail. “Fishing, despite all the efforts we put into maintaining viable fisheries, is not entirely within our control... so our economy could fail. The oil gives us
much more security. But we also recognise that it carries downsides – mass immigration, huge amounts of money suddenly hitting a small community – so we are very much aware of that,” he said. Large-scale exploration efforts around the Falklands started in 2010 amid much fanfare. But hopes the area could become a giant new oil province – it had been hailed as a potential North Sea of the South – were fading until Rockhopper Exploration announced its Sea Lion discovery, which is estimated to contain 320 million barrels of oil. There have also been announcements of potentially large gas discoveries – one by Falkland Oil & Gas Ltd (FOGL) and another by Borders & Southern. Natural gas is a considerably less valuable prospect for the Falklands given that it would not have a natural market. Gas is not traded as a commodity like oil
and would be difficult to transport from the islands. Furthermore, the nearest natural market for the gas would be Argentina, which is a closed shop owing to the diplomatic tensions between Buenos Aires and London. Argentina’s threats to sue any companies involved in what it considers illegal exploration in its waters have been dismissed as sabre-rattling by Buenos Aires rather than a real deterrent by most players in the industry. Argentina has few real weapons at its disposal to force exploration to stop, although its refusal to let vessels engaged in exploration work in the Falklands pass through Argentine waters has bumped up costs for companies, which have been forced to resupply elsewhere. Elsby said the government was aiming for the oil industry to remain offshore in a bid to protect the islands’ flora and fauna, a key tourist attraction.
Argentine oil workers strike to demand higher wages Argentine oil workers will this week hold a strike in Chubut as they seek higher wages. It is the latest bout of industrial action to hit output in the country’s most productive oil province. The Private Oil Workers Union of Chubut called the five-day strike on
October 7 to demand a 25% wage increase for its 12,000 members, saying the walkout would run until October 12. Their demands are in line with 25% annual inflation estimates by many private economists. The strike could complicate national energy supplies at a
time when production is in decline following years of limited exploration, few finds and underinvestment. Chubut produces a quarter of the country’s 570,000 barrels per day of crude and 8% of its 120 million cubic metres per day of natural gas.
Copyright © 2012 NewsBase Ltd.
www.newsbase.com
Edited by Ryan Stevenson
All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents