Origins and Evolution of Colombia's oil industry

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Origins

The year 1905 marked the first activities in the Colombian oil industry, with the signature of the 'Barco' and 'De Mares' concessions. This beginning was consolidated by the discovery and development of the giant Cira Infantas field in 1918.

According to Juan Carlos Echeverry, the history of Colombia's oil and gas industry can be roughly divided into three periods as follows:[1]

1918-1969

During this period the property of all subsoil wealth in Colombia belonged to the state. Hopes of discoveries and favourable contractual conditions attracted international companies including Exxon, Shell, Chevron and others. Over this period several new fields were discovered, with an accumulated total of of 4.18 billion barrels of oil.[1]

Ecopetrol, now part-privatized and one of the largest oil companies in South America, was founded in 1951 when the 'De Mares' concession was reverted to the Colombian state.[2]

1970-1994

According to Echeverry, this was a period marked by nationalism and unfavourable contract terms, where the state-take was increased in contractual agreements. Many significant discoveries were made, including giant fields at Chuchupa (1973), Caño Limón (1983), Cusiana (1988) and Cupiagua (1993). Over this period 5,169 million barrels of oil reserves were discovered.[1]

According to the Los Angeles Times, big oil finds by British BP and US Occidental in the 1980s and 1990s began to rapidly dissipate, causing concerns that the country would lose even it's own self-sufficiency.[3]

1995 onwards

Colombia was a significant oil exporter during the 1990s, attracting investment from international oil companies such as BP, ExxonMobil and Occidental Petroleum [4]and in 1999 the country set an oil export record of 398,275 barrels per day (bpd) of oil and refined products. This exports record was not reached again until 2010.[5]

From 1993 onwards however, the number and size of discoveries of new fields became smaller. The most important discovery in this period was Petrobras' Guando field in 2000, with reserves of around 100 million barrels of oil.[1] As a result output fell from peak production of over 800,000 barrels per day (bpd) in 1999 to nearly 550,000 bpd in 2004.

Furthermore, the worsening security climate over this period make Colombia a very risky location in which to operate, particularly in the case of the exploration and production sector, often concentrated in areas where the state enjoyed limited control. Pipeline bombings, extortion and kidnappings were common.[4]

References

  1. 1.0 1.1 1.2 1.3 Oil in Colombia: history, regulation and macroeconomic impact Juan Carlos Echeverry, May 2008.
  2. Colombia’s Ecopetrol: A Legacy of PrinciplesAAPG Explorer, retrieved 19 January 2012.
  3. Colombia is a rising oil exporter to U.SLA Times, 7 April 2011.
  4. 4.0 4.1 Colombia's Energy RenaissanceCouncil of the Americas, 12 May 2010.
  5. Colombia the Rising Star of the Oil Industry in South AmericaMercopress, 12 May 2010.