This document provides background information on Colombia's oil and gas industry and upcoming licensing round. Some key points:
- Colombia has significant oil and gas reserves and production and is seeking to increase foreign investment in the sector.
- The National Hydrocarbons Agency of Colombia will hold an licensing round in June 2010 to auction exploration blocks.
- The round will offer 225 blocks spanning a large area of Colombia. Bidders will commit to minimum exploration programs and can offer additional investment or production share percentages.
- Exploration and production contracts and special technical evaluation agreements will be awarded. These contracts specify economic terms, work programs, environmental and social obligations, and confidentiality requirements.
- Colombia has strong environmental and
13. its efficient and transparent administration of the hydrocarbon resource and coordinated work with both industry and community; and
14.
15. Oil in South America Proven reserves (Billion barrels) Venezuela 99,4 Production 2,5 Colombia (E) (2%) Growing Brazil Ecuador 3,8 12,6 Falling (*) 2,6 Argentina (12%) (*) Production as of December 2009 (E) = end-2009 estimate Sources: BP Statistical Review 2009; ANH Analysis
16. Gas in South America Proven reserves (Tera cubic feet) Venezuela 170 Production Trinidad & Tobago 17 Colombia (E) 4,1 Growing (2%) Falling Brazil 12 Bolivia (*) Argentina 15 (7%) (*) Production as of December 2009 *E = reserves estimated Sources: BP Statistical Review 2009; ANH Analysis
62. Duration: at least for validity of E&P contract and/or Special TEA plus one more year
63. Each participant and its members shall be individually evaluatedNo participant may submit more than one bid for the same area or be part of more than one association or plural bidder for the same area Note: no temporary unions are allowed to bid
66. Type 3 Area: US$200 MMFinancial statements with notes for last three (3) years in USD, dully audited The above requirements per block are cumulative (*) Individually or per consortium
82. Contents Colombia Industry background Open Round Colombia 2010 Legal aspects and Contracts Communities and environmental priorities
83. Contractual aspects Contents: Legal framework Contract generalities Main contract provisions Special TEA Contract Common aspects of E&P and special TEA contracts
111. Paid in cash or kind at ANH’s choiceProduction % (per field) For light crudes 25% 20% 8% 600 400 5 125 Production Level (1,000 boe/day)
112. High price participation (oil) A share of production (Q) equivalent to the established percent (S) of the part of the average monthly reference WTI price (P) that exceeds a base price (Po), divided by the average monthly reference price (P) – applies after cumulative production reaches 5MMBls table 1 Where: P = WTI monthly average price (in USD) Po = Base price (in USD) [table 1] S = established percentage [table 2] table 2
113. Illustration For API gravity = 20° -> Po = USD 34,6 Q(%) 50 40 34 27 17 P (WTI) 4P 0 34,6 69,2 103,8 138,4 173,1 o 5P P P 2P 3P o o o o o
145. 50% at end of first 18 months-> Additional investment guarantee may be reduced as the value of activities are credited after their completion
146. Contract relinquishment Opportunity: within the first 18 months of the first phase Condition: the contractor shall transfer to the ANH 50% of the value of all non-fulfilled activities of the Minimum Exploratory Program and 100% of the balance of additional investmentnotused in exploration.
147. Contents Colombia Industry background Open Round Colombia 2010 Legal aspects and Contracts Communities and environmental priorities
148. MINISTRY OF ENVIRONMENT, HOUSING AND TERRITORIAL DEVELOPMENT Environmental and Social Priorities Viceministry of Environment
161. 3 groups of Afro-Colombian population: San Basilio de Palenque raizals (roots of people), San Andrés, Providencia and Santa Catalina raizals and Afro-Colombian population in general
186. ENVIRONMENTAL LICENSING – KEY FACTS Identify if the project requires removal of forest reserve areas. Control of the quality of the environmental studies specifically. Collect primary information during the exploratory stage of the project Fulfill the guidelines of participation