Colombia Oil Auction Seeks to Stem Shrinking Reserve Life
The round held today in Cartagena, northern Colombia, marked the entry of Statoil ASA to the South American state that’s betting on offshore and shale deposits to boost reserves amid a failure to make significant onshore discoveries in recent years.
Twenty-six blocks, or 27 percent of the 95 blocks on offer, received bids, below the 30 percent the government had been hoping for, Colombia’s Deputy Energy minister Orlando Cabrales told reporters after the bids were announced.
“This consolidates the presence of important players in Colombia’s Caribbean offshore,” Cabrales said. “Statoil’s entry stands out.”
Five deepwater and ultra-deepwater blocks received offers out of a total 19 offshore that were offered. Anadarko Petroleum Corp. (APC) was the sole bidder for three blocks, with a joint offer between Repsol, Exxon and Statoil the sole offer for another. A joint bid from Shell and Colombia’s state-controlled Ecopetrol SA (ECOPETL) was the highest bid for a Caribbean site.
Companies shunned areas off Colombia’s Pacific coast due to a lack of information. Out of 18 unconventional blocks that were offered, only one received bids, with the highest coming from Parex Resources Inc. Drillers are waiting to see how the industry develops, the head of Colombia’s hydrocarbons agency Javier Betancourt said.
“This was a frontier round,” Betancourt said. “It’s not the same as mature and proven areas.”
A total of 26 blocks received offers, generating a potential investment of $1.4 billion, Betancourt said, below the $2.6 billion the agency was seeking. The blocks will be officially awarded on Aug. 11.
Colombian oil reserves have failed to keep pace with rising production. The country’s reserve life -- a measure of how much oil is left based on current production -- shrank to 6.6 years at the end of 2013, from 6.9 years a year earlier.
Colombia’s oil output has been rising since 2005 as companies such as Ecopetrol and Pacific Rubiales Energy Corp. tap areas once overrun by guerrillas. A recent increase in rebel attacks on infrastructure, along with community protests and bottlenecks for permits threaten to crimp production.
Colombia produced an average of 1.008 million barrels a day of oil in June, up 3.5 percent from a year earlier, according to a July 7 Mines and Energy Ministry report. The ministry is forecasting average daily production this year of 1.007 million barrels.
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