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Libertad y Orden The Colombian hydrocarbons sector Armando Zamora Director General National Hydrocarbons Agency Colombia Oil & Gas Investment Conference.

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Presentation on theme: "Libertad y Orden The Colombian hydrocarbons sector Armando Zamora Director General National Hydrocarbons Agency Colombia Oil & Gas Investment Conference."— Presentation transcript:

1 Libertad y Orden The Colombian hydrocarbons sector Armando Zamora Director General National Hydrocarbons Agency Colombia Oil & Gas Investment Conference Cartagena, 20 May 2005 Libertad y Orden

2 It all started 100 years ago… 1905 – De Mares and Barco concessions 1918 – First discoveries: La Cira and Infantas (Tropical Oil Co.) 1951 – Reversion of De Mares Concession – Ecopetrol is established 1953 – Petroleum code 1974 – Crude imports Chuchupa – Ballena discovery (TPC) Association contract Agencia Nacional de Hidrocarburos

3 Libertad y Orden The 80s witnessed the highest activity A-3 Wells Source: ACP, DOE 1999 WTI Oil price (US$/bl) 1991 Cusiana Opening of new areas worldwide Association Contract International Prices Sliding-scale participation War taxes and remittances R Factor Variable Royalties Caño Limón Crude imports 70%/30% Participation Agencia Nacional de Hidrocarburos

4 Libertad y Orden The new royalty scheme (2002) is competitive % of production (per field) 10% % Royalties Production level (000boe / day) Discount in relation to light crudes Gas- 20% Heavy Crude- 25% Offshore Gas (>1000 ft)- 40% 8% 25% Agencia Nacional de Hidrocarburos

5 Libertad y Orden Active areas are located in a few basins Agencia Nacional de Hidrocarburos Technical evaluation E&P ANH CONTRACTS --- D T L E A - Exploration Production ECOPETROL CONTRACTS D T A L E - A D E T A L E - A CHUCHUPA - BALLENA LA CIRA INFANTAS CUSIANA CUPIAGUA CAÑO LIMON

6 Libertad y Orden The new contractual scheme is attractive E&P Contract Taxes + Royalties Flexible Periods Automatic extension possible Materiality + autonomy Award process First come, first served Prompt and transparent Pre-set negotiation periods Agencia Nacional de Hidrocarburos

7 Libertad y Orden 40% 50% 60% 70% 80% 90% 100% Prospectivity Index State Take – Economic Fields PEPS Brazil Argentina Peru Bolivia United Kingdom India Australia Venezuela China Indonesia Angola Kazakhstan Pakistan Turkmenistan Colombia (2003) Source: PEPS-USGS Not very competitive Very competitive Gabon Norway Objective Competitiveness map Colombia (now)

8 Libertad y Orden Contracts signed since June 2004 with :* Libertad y Orden Alpha Consultores Ltda Argosy Energy International BHP Billiton C&C Energy S.A. Cel Consorcio Petrotesting - Colregistros Drummond Ltd Ecopetrol Emerald Erazo Valencia y Cia ExxonMobil Geoproduction Oil&Gas Co. Harken de Col. Hocol S.A. Hupecol LLC Kappa Resources Ltd. Mecantile Colombia O&G Monsa Occidental Andina LLC Petrobras Petrocolombia Repsol Exploración Colombia S.A. Petrocol R3 Exploración y Producción Solana Petroleum Exploration Colombia Ltd. Stratus Oil & Gas Tecnopetrol PEI Winchester Oil&Gas Petrominerales Colombia Ltd. Sucursal Colombia * New entrants in bold

9 Libertad y Orden (p)* Number of E&P Contracts Ecopetrol ANH-signed 39 approved (27 signed) ANH-for signature ANH Goal * Planned Agencia Nacional de Hidrocarburos

10 Libertad y Orden Exploration activity is increasing (P)* D-equivalent Kms of seismic Number of A-3 wells * Planned Agencia Nacional de Hidrocarburos

11 Libertad y Orden An unexplored country… Total sedimentary area: 1 million km 2 20%:off-shore basins 80%:on-shore basins Non- sedimentary areas 87% available Only 13% of total sedimentary area has been licensed: 5% by ANH 8% by Ecopetrol Agencia Nacional de Hidrocarburos

12 Libertad y Orden bls Self-sufficiency optimistic IHS ANH Source: IHS, ANH analysis New discoveries scenarios (to 2020) Geological potential (to 2020) Potential ? Agencia Nacional de Hidrocarburos

13 Libertad y Orden Sources: UPME, Ecopetrol, IHS 000barrels/day Current fields Self-sufficiency ANH IHS optimistic Production profiles contingent to potential scenarios Geologic potential scenarios: Agencia Nacional de Hidrocarburos

14 Libertad y Orden Contracts A3 Wells Discoveries (20mmbl) Required activity according to scenarios of reserves to be discovered up to Self-sufficiencyANHOptimistic IHS Agencia Nacional de Hidrocarburos

15 Libertad y Orden PromotionNegotiation Contract Management Identification of opportunities Investor support Promotion An aggressive campaign of new information acquisition is at the core of the ANHs strategy 1.New information 2.Identification of opportunities 3.Promote them to investors ANH´s investments in acquisition of new geological information: - ~ US$70million in ~ US$800million to 2020 Agencia Nacional de Hidrocarburos

16 Libertad y Orden Investment campaign 2005: seismic CAYOS 2D PACIFICO OFFSHORE - ONSHORE VMM SINU SAN JACINTO LLANOS Agencia Nacional de Hidrocarburos

17 Libertad y Orden Agencia Nacional de Hidrocarburos SINU- SAN JACINTO SEQUENCE STRATIGRAPHY VMM HEAVY OIL EASTERN CORDILLERA SOAPAGA CARTOGRAPHY LLANOS HEAVY OIL LLANOS FOOTHILLS CARTOGRAPHY Investment campaign: general studies Agencia Nacional de Hidrocarburos

18 Libertad y Orden The State will be priming the pump Plan 2020: to discover > 4Bn boe ANH and Ecopetrol to invest ~$15Bn in exploration and development (to 2020) ANH alone to invest around ~$800m in frontier areas (to 2020) Activity objective: ~ 30 new E&P contracts / year ANH flag projects: Heavy oil Tayrona Pacific basin Sinu-San Jacinto Tello field

19 Libertad y Orden Agencia Nacional de Hidrocarburos Thank you!

20 Libertad y Orden ANH heavy oil project –Llanos Basin Bidding Round Preparation: Early 2006 Planned Bidding Round: Mid 2006 Objective: To prepare a bidding round in heavy oil prone areas in the Llanos basin Background: Heavy Oil is an abundant non- conventional oil resource Shallow reservoir: ~ 3,000 ft The existence of a Heavy Oil Belt is inferred through the presence of three currently producing fields along a very large triangle in the area: Castilla, Rubiales and El Miedo Estimated OIP ~ 400mbl Preliminary studies to be carried out by the ANH – 2005 Calibration & Reprocessing of ~ 10,000 kms of seismic information Identification of potential plays

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