News and AnalysIs for

MinHacienda Mauricio Cardenas announced that the government intends to introduce three amendments to royalty budget management. The budget for the next two years totals CoP$17.7 billion (US$9.7B). The changes are designed to tighten control on projects even further and to make royalty funding available to the central government for capital projects. The changes do not address community frustration over the changes to the system already introduced this year. We comment on the changes and the royalty system in general.

National newspaper El Espectador reports that a delegation from the IACHR is in Colombia to analyze the situation of human rights in the country. This visit, which is by invitation of Colombia, can be seen as a test of the will of the Colombian State to cooperate with the Commission in monitoring human rights in the region. It is also a step forward for Colombia on its way to get off the blacklist of the Commission.

According to a survey by national radio station W Radio of 1000 adult men and women, Santos president’s favorability is at 48%, while 44% of respondents do not agree with how Santos is managing the country. 77% of respondents disapprove the way Santos handled the San Andres issue.

Bucaramanga newspaper La Vanguardia reports that The College of Management and Decision (OCAD), responsible for defining investment projects to be financed from royalties, approved CoP$3.2B (US$1.8B) of the CoP$6B(US$3.3B)that will be allocated for this purpose in 2012.

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.