Colombia Sees Record Oil Output as Billionaire Slim, China Seek Reserves

Colombia, South America’s third- largest crude producer, said output will climb to a record this year amid investments from China and billionaire Carlos Slim.

Spending on exploration and production may surpass $3.5 billion to $4 billion this year, when annual output will exceed a 1999 peak to reach a record of 850,000 to 900,000 barrels a day, said Armando Zamora, director general of the state-run National Hydrocarbons Agency. Transport capacity is scheduled to reach 1.2 million barrels per day within two years, he said.

“Investment has started high,” Zamora said in an interview yesterday from his headquarters in Bogota. The outlook for Colombia “must be good if Slim comes.”

Slim’s Grupo Carso SAB entered Colombia’s oil market for the first time last month, joining companies including China Petroleum and Chemical Corp. and Spain’s Repsol YPF SA (REP) that will help almost double the nation’s output to 1.4 million barrels a day in 2014, Zamora said. The military’s response to kidnappings of oil workers this month shows the nation is prepared for guerrilla attacks that are on the decline overall, he said.

The government said March 8 that 22 of 23 oil workers kidnapped a day earlier in the eastern Colombian province of Vichada by the Revolutionary Armed Forces of Colombia were freed after a military dragnet. Another worker has yet to be found. Pipelines owned by state-run Ecopetrol SA (ECOPETL) also were sabotaged with explosives last month in separate attacks.

Military offenses reduced attacks on pipelines, roadways and bridges to 76 in 2009 from more than 800 in 2002, according to government figures.

Offshore Concerns

Forbes last week said Mexico’s Slim is the world’s richest person with estimated assets of $74 billion. Grupo Carso agreed in February to acquire a 70 percent stake in Geoprocesados SA’s Tabasco Oil Co., which won rights last year to explore and produce oil at a Colombian site near the Venezuelan border.

Gains in Colombian crude production after 2015 will depend in part on environmental regulatory approval as companies scope out new areas for drilling, including jungle areas and the Caribbean, Zamora said.

In the Archipelago of San Andres in the Caribbean, Colombia’s government last month suspended contracts for offshore oil exploration pending talks with local communities and environmental authorities. There is no date set to lift the suspension, Zamora said.

Crude oil for April delivery rose $1.06, or 1.1 percent, to $98.24 a barrel at 11:25 a.m. on the New York Mercantile Exchange. Oil earlier rose as high as $99.60 a barrel.

Venezuela and Brazil are South America’s first- and second- largest crude producers, respectively.

To contact the reporter on this story: Heather Walsh in Bogota at hlwalsh@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

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