Nine oil firms bid for Colombia's Niscota oilfield

Nine oil companies, including majors London-based BP, French Total and Russia's LUKoil Holdings, sent offers to bid for the Colombian Niscota oil field, the country's National Hydrocarbons Association, or ANH, said. Other companies that presented bids were Spain's Repsol-YPF, Argentina's Pluspetrol Resources, France's Perenco, Colombia's state-oil company Ecopetrol, UK Talisman Energy and Hocol, the Colombian unit of French oil company Etablissements Maurel et Prom.
The Colombian government delayed the auction of the rights on the field to Sept. 1 from Aug. 17, said ANH.

Carlos Caballero Argaez, former mines and energy minister, told that Niscota has attracted oil majors due to the very high probability of finding oil and gas.
"Niscota is located on the same geologic formation of the Cusiana-Cupiagua oil and gas field," said Caballero, who works now as a researcher for the private think-tank Fedesarrollo. With proven reserves of 1.3 bn barrels of oil, Cusiana-Cupiagua has become one of Colombia's largest oil fields. Cusiana-Cupiagua was discovered in 1989 and production began 1992.

BP, in association with Ecopetrol, had already explored the Niscota field since 2000, but then relinquished it in July 2005 because it didn't find any profitable reserves. BP invested more than $ 50 mm to search for oil in the area of Niscota, which is located in the north-eastern province of Casanare. Higher oil prices prompted BP to change its mind, said a BP official.
"The exploration prospect is interesting amid the current hydrocarbon situation," the BP official said.

Ana Maria Briceno, deputy director of the National Association of Hydrocarbons, said in May that the geology of the area suggests the presence of hydrocarbons.
"They didn't find any commercial reserve," she said. "But there must certainly be interesting things underground," Briceno said. "The fact that BP didn't have luck in the past doesn't mean that there is no oil there," Caballero added. Briceno said the winner will be the company that offers to transfer the biggest percentage of the eventual production to the Colombian government.

The new operator of the field will work alone and will own the exploration rights for six years and production rights for 24 years. Alejandro Martinez, president of the National Association of Oil, whose members include domestic and overseas private oil firms, said the announcement proves that Colombia is succeeding in attracting big companies.
The auction is part of a government program to encourage companies to invest in oil exploration. The Colombian government said last year that the country must sign 30 oil-exploration contracts and drill 60 oil wells every year until 2020 to reverse a declining in oil supplies and maintain self-sufficiency.

Crude oil is Colombia's number one export and a vital source of revenue. The country risks losing its oil self-sufficiency by 2012 if there is no major oil discovery.
Colombia hasn't had a major oil discovery since 2000, when an oil field called Guando, exploited by Petrobras turned up total proven crude reserves of 200 mm barrels.