Colombia eyeing new E&P incentives to tackle oil reserves decline

Colombia is preparing new incentives to boost investment in oil and gas exploration and reverse a decades-old trend of declining reserves, deputy energy minister Miguel Lotero said on Wednesday. 

According to the latest government estimates, Colombia's proven crude oil reserves will run out in 6.3 years at current production rates while existing natural gas deposits will last another 7.7 years. 

"We are working on incentives to promote the investment that will allow us to increase reserves and guarantee energy security," Lotero said during Vostock Capital's Colombia Oil and Gas conference, without providing details. 

He insisted the government's plans to ratchet up E&P activity did not clash with its clean energy agenda.  

"[Hydrocarbons] cannot and will not disappear," Lotero said. "And we'll continue needing them regardless of the higher participation that other energy sources could have."

The Iván Duque administration has pinned its hopes of expanding oil and gas production on auctions for new conventional acreage and fracking pilots. 

The latest bidding round – dubbed Ronda Colombia – offers 32 onshore and offshore areas and is expected to be completed in November. 

Meanwhile, state oil company Ecopetrol and US major ExxonMobil are awaiting environmental permits to begin investigative fracking projects in the Middle Magdalena basin. 

Operators are also expected to soon start drilling at previously awarded areas off the Caribbean coast, which require minimum investments of US$1.9bn, according to the energy ministry. Among the companies with deepwater exploration campaigns pending are Petrobras, Shell, Repsol, ExxonMobil, Chevron and Ecopetrol. 

On the regulatory front, national hydrocarbons agency ANH has this year established new terms and conditions for exploration and evaluation licenses, as well as for production contracts.

And earlier this month, ANH extended contractual deadlines for oil and gas operators impacted by social unrest by up to two months. The proposed resolution also includes a provision allowing operators to transfer investment commitments for existing exploration contracts to areas available in Ronda Colombia.