Colombia to help private firms finance oil exploration

May 23, 2005 02:00 AM

Colombia plans to help private companies with the costs of exploring for oil in an effort to halt a recent drop in production that may turn this country from an oil exporter to a net importer, the president of state-owned oil firm Ecopetrol said.
Isaac Yanovich said oil-exploration firms that do not have enough capital for the high costs of exploration in Colombia would be able to draw from the $ 100 mm fund.

Drilling for oil in Colombia involves huge costs because exploratory wells often need to go down nearly 20,000 feet in search of oil deposits, compared to places such as the Middle East, where deposits can be found just a couple of hundred feet below the surface. The oil exploration fund, which would be available sometime this year, is backed by institutional investors such as pension funds and insurance companies, Yanovich said during an oil seminar in this seaside resort city.
"We expect 30 % returns for investors," he added.

Colombia, Latin America's fifth-largest oil producer, currently pumps around 530,000 bpd, well off its all-time high of 830,000 bpd in 1999.
Only 13 % of Colombia's territory has been explored for oil as many firms are scared off by the country's 41-year guerrilla conflict. Leftist rebels, who often blow up oil pipelines and other oil installations to hurt the country's economy, have called foreign oil firms military targets. But attacks on oil infrastructure in Colombia have declined significantly in the past two years, and the government hopes investors will take note.

Earlier, Colombian oil officials travelled to Houston in search of more foreign investment in the oil sector. They urged oil companies to invest in the revitalization of an oil field in the north-western Tibu region, one of the most dangerous war zones in Colombia.
Despite the dangers, Colombian officials said the government has firm control of the zone.

Source: The News and Observer
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