Colombia, South America’s third-largest crude producer, said oil output will climb to a record this year amid investments by 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 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 also were sabotaged with explosives last month in separate attacks.
Receding violence helped Colombia earn an investment grade credit rating today from Standard & Poor’s, which raised the nation by one step to BBB-, from BB+.
Military offenses reduced attacks on pipelines, roadways and bridges to 76 in 2009 from more than 800 in 2002, according to government figures.
President Juan Manuel Santos took office in August under pledges to sustain his predecessor Alvaro Uribe’s security policies, which helped increase foreign direct investment in the nation’s oil industry by more than fivefold to $2.5 billion in 2009 from 2002. In September, a military strike killed rebel leader Mono Jojoy, who was a “symbol of terror,” Santos said at the time.
Investors in Colombia’s oil industry now include Slim, who Forbes last week said 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.
Foreign direct investment in oil jumped to $2.5 billion in 2009 from $449 million in 2002, according to central bank figures. The industry lured $2 billion in the first nine months of 2010.
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 80 cents, or 0.8 percent, to settle at $97.98 a barrel on the New York Mercantile Exchange. Futures earlier rose to $99.60 before the European Union’s energy chief said Japan’s crippled Fukushima Dai-Ichi nuclear power plant risks provoking a “major disaster.”
That crisis will spur demand for oil in the long-term, Zamora said.
Oil production in Colombia rose to a monthly record in February of 861,000 barrels per day. Venezuela and Brazil are South America’s first- and second-largest crude producers, respectively.