MinMinas Federico Renjifo participates in The Colombia Business Summit conference organized by The Economist in Paris. From a MinMinas press release. Translated and with commentary by Hydrocarbons Colombia.
Many Colombian news sources picked up a BBC story about Qatar investing its oil wealth in building a knowledge-economy. That so many picked up it meant a number of news editors thought it suggested a different approach to using royalties. That got us thinking as well.
Based on numerous reports in the Colombian press Minminas Federico Renjifo believes about 100,000 barrels of oil production is held up due to delays in the granting of environmental licenses. In some cases National Environmental Licensing Agency (ANLA) employees are making requirements beyond those established by law. Renjifo also claimed that the licenses are a bottleneck and there need to be manuals for the procedures to be followed by companies to get crude oil exploration and development licenses.
Of this amount, CoP$8,668 (US$4.8M) will be invested in the Meta and CoP$3,447 (US$1.9M) will be allocated to many projects in Casanare.
The Ministry of Commerce, Industry and Tourism reported that Foreign Direct Investment (FDI) destined to sectors not related to mining and energy increased from US$1.299,1M in November 2010 to US$2.634,1M in November 2012. During the course of 2012 the FDI indicator has grown by 12.9%.
The Colombian press and congress is stirred up about the lost hydrocarbons potential of the territory that disappeared in the redrawing of the Colombia-Nicaraguan maritime border (see map by Hydrocarbons Colombia). Nicaragua adds fuel to the fire by publicly rubbing its hands with glee over the prospect of auctioning the zones to deep pocketed oil companies. That may indeed happen – although we think PDVSA will end up with them – but we do not believe this represents lost reserves, production or money to Colombia.
Resolving a long standing dispute between Colombia and Nicaragua, the International Court in The Hague redrew the maritime boundaries between the two countries today. Colombia keeps the islands in the Caribbean that have been part of the country for a very long time but the court extended Nicaragua’s economic zone further east, surrounding some of this islands and nearly enclosing others. Some offshore blocks disappear from the National Hydrocarbons Agency’s (ANH’s) inventory completely and some have been reduced in size.
As reported by newspaper El Nuevo Siglo, according to the Central Bank (Banco de la República), US$11.411M of the US$13.988M invested by foreigner entrepreneurs in Colombia between January and October 2012, were directed to the mining and hydrocarbons industries. These two sectors offer the greatest growth of foreign investment in the country.
The Ministry of Agriculture and Rural Development reported that the government will allocate CoP$107B (US$59M) in royalties to fund projects in science, technology and innovation. These projects are aimed at foods like avocado, cocoa, milk, coffee, sugarcane, and fruits, and matters of farming, bioenergy, fisheries and promising species.
Congress approved the presentation of a project (004, 2012) which intends that the oil and gas sector pay the industry and commerce tax (ICA). The industry is currently exempt from this municipal tax because royalties are presumed to fulfill the same role.