At the beginning of November, President Manuel Santos and his delegation from Colombia were in the UK on an
official state visit. The Wednesday of that week was dedicated to showcasing Colombia’s oil & gas industry with senior members from the industry presenting in London. The next day, the delegation continued their tour in Aberdeen to build ties with the historic oil & gas city.
OGInsights attended the event and had an opportunity to speak with Germán Arce, the Minister of Energy and Mines, and Orlando Velandia, President of the ANH. They shared their views on the current state of and the outlook for the Colombian oil & gas industry.
The delegation was clearly excited to be in London and Aberdeen and keen to talk about the future of Colombian offshore oil & gas. The offshore is very early stage, but critical to sustaining the country’s longer term production levels. Before the offshore can make material progress, it was recognised that a whole supporting industry together with offshore expertise would need to be established (its offshore experience is minimal with Colombia being an onshore producer to date). For example, this would include support for offshore drilling, rig servicing, helicopter services, vessels among a much longer list of things. Forming strong ties with Aberdeen, which is seen as a “centre of excellence” in the offshore and where the North Sea industry was born, is therefore a priority for Colombia.
Barranquilla, a coastal city in northern Colombia, has been appropriately chosen and aspires to be the “Aberdeen of Colombia”. The ties between the two cities are set to strengthen and Barranquilla will call on Aberdeen’s expertise, learnings and experience as it sets to build up the city to support the emerging offshore industry in Colombia. Academics, service companies and oil & gas companies were all present at the event with the mayor of Barranquilla, the charismatic Alejandro Char, emphasising the importance of knowledge transfer and desire to “learn everything”.
To date, 22 offshore areas have been licensed: 9 TEAs which are for technical evaluation only (not drilling), and 13 exploration contracts. In total, 45 areas have been drawn up with 33 in the Caribbean and 12 in the Pacific. The infancy of the offshore, together with the lack of a supporting industry translates into high risk; however the size of the prize is large enough to attract major international players including ExxonMobil, Anadarko, Shell and Repsol.
Despite the excitement around the offshore, the importance of the onshore was not forgotten. Managing surface risk is still very much top of mind. Minister Arce elaborated on the situation - the onshore has seen a reduction in the level of attacks but an increase in social activity. He therefore encourages E&Ps to evolve their corporate social strategy away from employing on-the-ground protection to negotiation and dialogue, which is a very different skill set. In the south of the country, the ANH believes there is vast potential, underexplored in part due to militant activity and sees the continuation of peace as critical to maximising hydrocarbon recovery in the onshore.
The Colombian oil & gas industry is at a turning point, with attracting international investment very much key to advancing the industry. The government has made significant effort in opening up the country and building a business friendly environment. With the offshore on the brink of being the next frontier, the world will be keeping a close eye on Colombia and how it will use its potential new found hydrocarbon wealth.
