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Colombian Oil and Gas Opportunties – Upstream
As in Aesop’s famous fable, “The Crow and the Pitcher,” amid the drought, the current Colombian government, together with the Ministry of Mines and Energy, and the National Hydrocarbon Agency (ANH), have cleverly designed and carved out the strategies to reactivate the oil and gas industry. Thirst for new oil and gas discoveries, more barrels and reserves, bringing more dollars into the country, and attracting new players made them react. This year, like in the fable, our leaders began dropping stones into a once fuller pitcher with the intention of reviving the industry.Upstream industry: highlights in the last quarter of a century

Upstream industry facts and figures
Colombia reported production of approximately 800,000 barrels of oil per day (BOPD) and reserves of about 1900 million barrels of oil at year-end 2018, in comparison with a 900,000 BOPD and 2.259 million barrels at year-end 2011, when the Colombian oil and gas industry was reaching one of its plateaus. Companies drilled 45 exploratory wells in 2018. Seismic data acquired was 986.6 kilometers. In 2011, seismic acquired was 23,000 kilometers. Offshore seismic acquisition in the Colombian Caribbean during 2011 explains such an enormous difference with 2018. In 2011, companies drilled 126 exploration wells. Companies signed 76 E&P contracts, including technical evaluation agreements. (TEAs). Today, this sector faces a critical life span of only 6.2 years for crude oil and 11.7 years for gas, unless there are discoveries that can significantly add barrels and reserves. The latest events and average numbers drove the need to reactivate the Colombian upstream industry.Government strategies to reactivate business

- Promotion of offshore projects to be developed in the Caribbean Basin. The government will offer leading companies offshore areas with high potential to add reserves. It has adjusted the E&P offshore contract model to fit offshore operations.
- Improved recovery, technologies, and incremental production implementation.
- Assignment of new exploration and exploitation blocks through permanent competition mechanisms, such as the Permanent Process of Assignment of Areas, (PPAA) launched by the ANH this year.
- Use of fracking technology for non-conventional reservoirs to increase reserves.
Strategic outcomes
This year the government has signed 5 offshore E&P contracts with high ranked oil and gas companies as a result of their strategic incentives to bring the industry back to life. Proven reserves of 450 MMBO were incorporated last year under improved recovery projects and incremental production. Under the PPAA, the ANH offered 20 exploration blocks this year, (18 on land, and 2 offshore) out of which ANH awarded 11 to upstream companies. Expedition of an updated land map also leveraged success. Shortly, exploration and exploitation blocks will be offered to companies. The second cycle is expected to take place in October 2019. ANH has already announced that a new process would be launched by mid-September offering 23 blocks, most of them for gas. After a Commission of experts rendered their opinion on the viability of using fracking in Colombia, Ecopetrol is in the process of starting a fracking pilot project. Such pilot will allow interested parties access to actual information. Experts can do a final review and trace a map road. As such, fracking approval has not occurred yet. Its approval will depend on the pilots’ results.
Opportunities for businesses
The upstream industry revival sends an important message to investors and to those wishing to do business in Colombia. The government, MME and ANH fully support such revival. Efforts are certainly being made to do so. Tax incentives drawn out in the Financing law are positive too. Currently, ANH is working on the LIGA B (B League), a process to encourage small and medium players to participate in upstream activities. Crows are dropping stones in the pitcher to bring the water to their reach. The pitcher needs plenty of water, but we are heading in the right direction.Biz Latin Hub can help you with starting a company in Colombia
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in Lima, Peru, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.
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Contact us today to find out more about how we can assist you in finding top talent, or otherwise do business in Latin America and the Caribbean. If this article on industries in Colombia was of interest to you, check out the rest of our coverage of the region. Or read about our team and expert authors.