MercoPress. South Atlantic News Agency

Colombia determined to ensure a floor oil production of 1 million bpd

Orlando Cabrales, president of oil regulator National Hydrocarbons Agency

Colombia which has become South America’s third- largest crude supplier, is speeding environmental permits for oil companies as delays threaten to derail an output target of 1 million barrels a day this year, the nation’s regulator said.

Fields awaiting permits include Rubiales, the nation’s largest, said Orlando Cabrales, president of the state-run oil regulator the National Hydrocarbons Agency, in an interview in Bogotá. The field is owned by state-run Ecopetrol SA and Pacific Rubiales Energy Corp. (PRE)

“There is an action plan within the government to see if the licenses can go out as fast as possible,” Cabrales said from the agency’s headquarters. “We’ve already identified the critical licenses.”

Delays in awarding permits and guerrilla attacks against oil pipelines have slowed production this year in Colombia, said Omar Escorcia, an analyst at Asesores en Valores SA in Bogotá.

Some permits already are being expedited, according to Cabrales. The government is taking steps after an increase in the number of companies seeking permits to expand exploration and production, and stricter environmental rules, doubled wait times for licenses in some cases, he said.

Pacific Rubiales expects delays in environmental permits to be resolved in the third quarter, company President Jose Francisco Arata said in an interview broadcast on the website of Bogotá-based newspaper La Republica.

Colombia will need new oil discoveries to repeat a surge in production that almost doubled the nation’s output since 2006, Cabrales said.

Production jumped 73% to an average of 914,000 barrels a day last year from 529,000 barrels a day in 2006, which enabled the nation to surpass Argentina as South America’s third-largest oil producer, according to government figures. Brazil and Venezuela are South America’s largest oil producing nations.

To increase investment, Colombia will auction rights to 115 oil and natural-gas blocks this year, including areas with reserves of unconventional energy like oil shale.

In related news Colombia’s private oil association said the country needs at least 120 billion dollars in investment over the next ten years to reach and sustain oil production of more than 1 million barrels per day (bpd).

Colombia is ramping up petroleum output at existing fields, hoping to hit 1 million bpd this year, but a series of attacks on oil installations and social protests have prevented Colombia from reaching its goal so far.

“We hope to reach (1 million bpd this year), but the fundamental goal is to sustain those production levels in the future which will require new and bigger investments in existing fields and new discoveries,“ Alejandro Martinez, president of the Colombian Oil Association, told reporters.

Martinez said that oil output had not hit the government's goal, mainly due to 60,000 bpd of production being locked up due to delays in environmental licenses, while attacks and security problems have also played a role. In May, oil output was 936,000 bpd.

Energy Minister Mauricio Cardenas said in late May that he expected crude output to reach 1 million bpd in about two months, the time it will take for two ”important” oil fields to get environmental permits.

Colombia received almost 15 billion dollars in foreign direct investment last year, up from just 2.1 billion in 2002 when guerrilla groups such as the Revolutionary Armed Forces of Colombia roamed across great expanses of mining territory.