Colombia, South America’s third-largest crude supplier, is speeding environmental permitting for oil companies as delays threaten to derail an output target of 1 million barrels a day this year, the nation’s regulator said.
Fields awaiting permits include Rubiales, the nation’s largest, said Orlando Cabrales, president of the state-run oil regulator the National Hydrocarbons Agency, in an interview yesterday in Bogota. The field is owned by state-run Ecopetrol SA and Pacific Rubiales Energy Corp.
“There is an action plan within the government to see if the licenses can go out as fast as possible,” Cabrales said from the agency’s headquarters. “We’ve already identified the critical licenses.”
Delays in awarding permits and guerrilla attacks against oil pipelines have slowed production this year in Colombia, said Omar Escorcia, an analyst at Asesores en Valores SA in Bogota.
Some permits already are being expedited, according to Cabrales. The government is taking steps after an increase in the number of companies seeking permits to expand exploration and production, and stricter environmental rules, doubled wait times for licenses in some cases, he said.
Shares of Ecopetrol gained 0.7 percent to close at 5,460 pesos in Bogota at 3:00 p.m., compared with a 0.2 percent drop in the nation’s IGBC general stock index.
Bottleneck in Permits
A bottleneck in permits is slowing exploration for new reserves, said Rupert Stebbings, managing director at Celfin Capital in Colombia, by phone today from Medellin.
“There’s a limited amount they can do in the short term since we’re already in June,” he said. “It’s not like they can move 200 licenses next week. The holdup is industrywide.”
Pacific Rubiales expects delays in environmental permits to be resolved in the third quarter, company President Jose Francisco Arata said in an interview today broadcast on the website of Bogota-based newspaper La Republica.
Shares slid 2.2 percent to close at 40,020 pesos in Bogota.
Colombia will need new oil discoveries to repeat a surge in production that almost doubled the nation’s output since 2006, Cabrales said.
Production jumped 73 percent to an average of 914,000 barrels a day last year from 529,000 barrels a day in 2006, which enabled the nation to surpass Argentina as South America’s third-largest oil producer, according to government figures. Brazil and Venezuela are South America’s largest oil producing nations.
To increase investment, Colombia will auction rights to 115 oil and natural-gas blocks this year, including areas with reserves of unconventional energy like oil shale.