Colombia offers seven offshore gas blocks for lease

Jul 12, 2001 02:00 AM

Oil-rich Colombia has jumped into large-scale natural gas exploration with an offering of seven largely gas-prone offshore blocks along its Caribbean coast, Alberto Calderon, president of Colombia's state company Ecopetrol, said. A deal for an eighth block with TotalFinaElf is set to be inked. The blocks, each of which contains both shallow- and deep water, are available for negotiated leases to what will probably be larger global oil companies.
Following an Ecopetrol presentation to majors and large independents, Calderon said Colombia is "moving [from mostly-oil production) to gas and offshore E&P," both of which are relatively new in the country, he said. Ecopetrol hopes to ink several deals this year, but first output isn't likely until 2006 because infrastructure is lacking.

TotalFinaElf's block is located along the country's western Caribbean coast. Its deal, which future contracts will likely echo, calls for 18 months of seismic and a well to be drilled shortly afterward. The other seven mostly adjacent blocks available for lease could contain up to 28 tcf and 3 bn barrel of net unrisked reserve potential, Calderon said. They range in size from about 1.6 mm to 3.2 mm acres and extend almost exactly between Colombia's borders with Panama on the west and Venezuela on the east.
Each block extends about 150 km offshore, from the coastline to about 9,000-meter water depth. Calderon said the state company, which has talked about developing its gas reserves for years, realized it had to move quickly to catch up to its South American neighbours Bolivia and Venezuela.

Colombia's nascent offshore contracts will benefit from a new royalty scheme with better production terms to oil producers and also a recent measure offering a more favourable oil-to-gas conversion ratio. With these incentives, even a field that produces very large gas volumes will not pay much in royalties, Ecopetrol officials said.
"If you produce 500,000 mm cfpd, which is a lot of gas, you'd pay about 10 % in royalties," said Calderon. Offshore blocks available for lease include, from west to east:
Fuerte; Aguila; Ensenada; Bahia; Oca; Cuisa; and two non-adjacent blocks near Texaco's acreage that comprise a single lease, Portete Norte and Portete Sur. "If we sign three of these [deals] by the beginning of next year, we'll be very happy," said Calderon.

Source: Petroleumworld
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