(Bloomberg) — Colombia is targeting oil output of 1 million barrels per day by pressuring drillers to step up activity in underused exploration blocs, according to the nation’s top energy official.
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The Andean nation is also taking steps to boost natural gas output, as its projections point to a shortfall by the start of next year, Mines and Energy Minister Andrés Camacho said in an interview.
The government is seeking to juice output at “lazy contracts,” which may have been signed 10 or 15 years ago but have led to little or no exploration activity, he said.
Through this and other measures, Camacho says Colombia can lift output to around 800,000 barrels of oil a day by the end of the year, up from an average of 774,000 barrels in the first quarter.
President Gustavo Petro, who has made fighting climate change a priority, refuses to sign new drilling licenses even though oil and coal account for about half of the nation’s exports. Camacho says the administration instead wants to boost exploitation of already-outstanding blocs.
“More contracts don’t necessarily mean more exploration,” Camacho said Thursday in Bogotá. “Our policy is to boost exploration with what’s already there.”
Through the National Hydrocarbons Agency, the government has set up a series of requirements that have to be met in each contract. Camacho says this was agreed with companies and is now starting to be applied, although it took effect at the end of last year.
That is helping stop the practice of some companies that had signed contracts only to sell them later at a higher price without having used them, according to Camacho.
Some requests from the companies were also granted, including allowing drillers to move to a different area within the same field, he added.
Falling Reserves
Natural gas reserves dropped to the equivalent of 6.1 years of output at the end of last year, from 7.2 years in 2022, the hydrocarbons agency said Friday. Proven crude reserves fell to the equivalent of 7.1 years of output, down from 7.5 years of production in the previous assessment.
Government estimates show that Colombia’s natural gas supply will fall short of demand by the start of 2025 and imports will need to plug the gap before deep water deposits come online in 2027 at the earliest. Camacho, however, is betting that measures such as a push to restart contracts that had been suspended will help reduce the gap.
“We’ll have offshore gas which will guarantee supply in the medium and long term,” Camacho said. In the meantime, the government is trying to ensure that companies can overcome social and environmental obstacles so that existing contracts become commercially viable, he added.
Exploration
In April, state oil company Ecopetrol announced an agreement with Parex Resources Inc. for exploration in Casanare in the eastern plains. Besides the central area of Piedemonte Llanero, its also focusing its efforts to increase gas output in northern Cesar province, near the Caribbean coast.
Colombia also recently changed regulations to allow pipelines to carry both oil and gas, which will allow fields that couldn’t get the gas to market to now have infrastructure available to do so, Camacho said.
Regarding options to import gas, Camacho said that a private liquefied natural gas port in Cartagena, known as SPEC, could be ready to increase its regasification capacity by around 80 million cubic feet a day as soon as this year. That additional fuel would be available to all users, beyond thermal plants.
Venezuelan Gas
Importing gas from Venezuela could also help address the shortfall, Camacho said. However, given US sanctions on the neighboring country and the need to repair the pipeline that connects the two nations, that will only happen around 2026 instead of this year, as initially planned.
Ecopetrol is using enhanced oil recovery to improve the volumes that can be extracted from a reservoir, which is also helping increase crude output, Camacho said. The recovery factor in Colombia is currently at an average of 27% and compares to some countries that have achieved more than 40%, so there is room to improve, he added.
–With assistance from Oscar Medina.
(Adds reserve data in 10th paragraph, Camacho’s comments on natural gas from 11th paragraph)
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