News and AnalysIs for

As reported by RCN Radio, inhabitants of Guaduas (Cundinamarca) complain to the government about the delay in granting environmental licenses for the construction of a section of the Ruta del Sol which connects Guaduas to the municipality of Villeta. They note that an oil company has had a license to operate for more than 13 years in the area.

Business newspaper Portafolio reported that President Juan Manuel Santos said the government appointed six delegates of the National Planning Department (DNP) to decentralize this entity and establish direct contact with governors and mayors. The goal is to accelerate implementation of royalty-financed projects. The governors and mayors may think this is not enough.

Mauricio Cardenas, currently Finance Minister but until September 2012 Minister of Mines and Energy, closed the International Forum on Hydrocarbons 2013. He gave the finance department’s twist on the industry present and future and it gave the audience a somewhat different perspective. It was a generally positive speech, welcome in these difficult days.

Ecopetrol issued a brief press release with its year-end 2012 reserve figures. After rising 10% in each of the previous two years, Ecopetrol only managed a 1% increase in reserves in 2012. Revisions played an important role, representing 45Mboe or 17.5% of the additions. Enhanced recovery contributed 26% leaving new discoveries and extensions with 57% of the additions. In this early release of the numbers, the company did not separate Colombian from non-Colombian reserves. It only said that 95% came from the “mothership” versus 5% for subsidiaries which include Colombian subsidiaries like Hocol and Equion. Considering the importance the government puts on reserves and the importance of Ecopetrol to overall statistics, this result has to be a disappointment.

Recently the press picked up a statistic that none of the exploratory wells drilled in 2012 had entered into production. We did not publish the story because we knew there had been announcements of wells entering production or at least getting to the stage of production. Now National Hydrocarbons Agency head Orlando Cabrales has given the statistics seen in the above chart. This was part of an excellent presentation he made to the International Forum on Hydrocarbons 2103 jointly organized by Colombia’s best business school CESA and the Alberta School of Business.

Business magazine Dinero reports that the Comptroller General found irregularities in royalties’ resource management. According to a Comptroller’s report there are US$260Mn at risk in the Caribbean, Central East, Coffee Region, Llanos, Pacific and Central South regions, and projects from the National Royalty Fund in liquidation, for unfinished projects and for projects that do not work or have overruns.

In an interview with RCN Radio, MinHacienda Mauricio Cárdenas spoke of the need to increase oil reserves and the consequences of last year’s attacks against pipelines in the country. Cardenas said that considering there is enough oil in Colombia only for the next eight years, it is necessary to increase exploration; and this needs investment: “we need to explore properly: first, seismic activity. Then the expensive part of drilling wells, which can be worth US$30M, US$40M or US$50M.” He added that “this year Ecopetrol has US$10B, of which US$6B are for exploratory process. They are drilling more wells than at any time in their history. “

National weekly news magazine Semana published an article with the collaboration of Juan Carlos Sierra on the need for prior consultations with indigenous people in the Tayrona National Natural Park, and how this may influence the approval of other projects in other regions of the country.

In an interview with RCN Radio, the mayor of Arauca, Luis Emilio Tovar, said that after a week of protests, the situation at the Caño Limon Coveñas complex was partially normalized: “The entrance to the Caño Limón complex was restored; we are already entering with a military convoy. The rest of the department is blocked but today the public transportation is available and people are coming and going to Arauca “.