The Emir of Qatar visited Colombia last week and he and President Santos signed a number of agreements for intergovernmental cooperation. Although the agreements spanned a range of activities including sport, we found this press release on the MinMinas web page. Translated and with commentary by Hydrocarbons Colombia.
The National Hydrocarbons Agency seeks comments by Friday, February 22, 2013 on a proposed change to royalty payments for fields where payment in kind is difficult. They call such areas Difficult to Recover Production Fields (CPDR) and rather than payment in kind, operators are to pay in cash based on production and recent average pricing.
As reported by internet news site Vox Populi, Orlando Cabrales, president of the ANH, said that Foreign Direct Investment (FDI) in the sector increased by between 28% and 30% in 2012 compared to 2011 figures. While in 2011 there was FDI of US$5B, in 2012, according to projections by Fedesarrollo and the Central Bank, the FDI was between US$6.4B and US$6.5.
RCN Radio reports that in Meta department the resources from 2011 royalties were wasted. This was stated by the Comptroller General, who reported that in Puerto Gaitán US$13M was invested in aqueducts that currently do not work. In the report, the Comptroller said, “the fiscal findings are related to the uselessness, neglect, deterioration and lack of functioning of priority works for the community, that after their construction are not fulfilling the function for which they were planned” .
National newspaper El Tiempo reports that the government’s agenda has been slowed due to prior consultations with ethnic minorities. The lack of clarity in the process has suspended the progress of the rural development law, Mining Code reform, section 3 of the Ruta del Sol highway and the CARs (regional autonomous environmental authorities) reform, among other projects, until minorities approve them.
MinMinas Federico Renjifo chose a neutral audience to make his first major policy statement of the year. The ANDI is the country’s major businessperson’s association and while there may have been members of the oil services industry in the audience we doubt there were many oil and gas company CEOs. He thus picked an audience that was not going to fight back if he said something that veered too far from the actual situation. From a MinMinas press release, translated and with commentary by Hydrocarbons Colombia.
There is concern in the oil sector about the possibility that Congress increases taxes on oil companies. Regarding this, Alejandro Martínez, Colombian Petroleum Association president, told a press conference: “We are extremely concerned about pending bills in Congress because these would increase the state’s share in the oil revenue, taking it from 70% to 90%, making Colombia lose competitiveness and attractiveness as an investment destination”.
The Hydrocarbons International Forum ‘Perspectives and value of companies in the sector’, organized by the School of Advanced Management Studies (Cesa) with support from the University of Alberta’s School of Business, will be held in Bogota on February 20. The forum will discuss investment opportunities in the mining and energy sector, access to capital markets for companies in Colombia and the valuation of oil companies in the global arena.
Business newspaper Portafolio reported that Paula Acosta, deputy director of National Planning Department (DNP), said the National Royalties Fund has 1,000 pending projects amounting to US$727B, even though after the royalties reform Legislative Act was issued, the government decided to liquidate it next December. (This is the fund for the old distribution scheme.)
Business magazine Dinero reports that Ecopetrol agreed to finance in pesos US$1B of its US$2B investment budget for this year, after the government recently requested the company to finance its operations in local currency instead of dollars (as we reported). The announcement was made by Minminas Mauricio Cardenas, who said that the projects will be funded: “The vast majority, over 50%, hopefully more than 60%, will be in local currency.”