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Colombian oil and gas

Monday, July 28, 2014

Colombia is likely to increase the output of data, needed to develop the country’s unconventional oil-gas resources, as revenue from existing projects declines.

In addition, the state will need to do a better job of appeasing local communities, which have recently sabotaged several projects.

Last week’s auction of potential oil-gas properties produced little more than half of the amount, which Colombia expected, largely because of a lack of information about many sites.

Caribbean offshore oil blocks did well, including a winning bid from Norway’s Statoil, which will for the first time operate in Colombia.

Statoil’s bid was made jointly with United States-based ExxonMobil and Spain’s Repsol.

Meanwhile, the little-known area off the Pacific Coast was largely ignored.

Canada-based Parex Resources was the only company to bid on a Pacific block.

There were no bids on proposed onshore shale gas projects.

Total value of the bids was $1.4 billion, little more than half of the $2.6 billion, which Colombia expected.

In terms of data, exploration studies as of two months ago had been carried out in only a quarter of the projected 52,000 square kilometers of potential oil-gas properties.

Meanwhile Colombia's production of crude oil for the year to date is 100,000 barrels per day below the target of 1.1 million barrels.

Oil and gas last year accounted more than half of the country’s exports.

Some of the decline is due to a three-month shutdown of the 900-km Cano Limon pipeline, the result of repeated bomb attacks by rebels and community groups, which seek a bigger share of royalties from various projects.

At the same time, President Juan Manuel Santos was re elected last month, partly because of progress made in peace negotiations with the main rebel groups.

The Colombian economy in general has performed well since the 2009 recession, with impressive levels of foreign investment and a 50% increase in purchasing power per person.