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Cablegate: Colombia Auctions Off 22 New Oil Blocs to Extend

VZCZCXYZ0000
RR RUEHWEB

DE RUEHBO #4088/01 3172038
ZNR UUUUU ZZH
R 122038Z NOV 08
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 5547
INFO RUEHCV/AMEMBASSY CARACAS 1317
RUEHQT/AMEMBASSY QUITO 7429
RUEHZP/AMEMBASSY PANAMA 2639
RUEHPE/AMEMBASSY LIMA 6734
RUEHLP/AMEMBASSY LA PAZ NOV BRASILIA 8493
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS BOGOTA 004088

SIPDIS

EEB/ESC FOR MMCMANUS; WHA/EPSC FOR FCORNEILLE; ENERGY FOR
LEINSTEIN

E.O. 12958: N/A
TAGS: ENRG EINV ECON PGOV CO
SUBJECT: COLOMBIA AUCTIONS OFF 22 NEW OIL BLOCS TO EXTEND
SELF-SUFFICIENCY

REF: BOGOTA 570

1.(SBU) SUMMARY: Amid falling petroleum prices and uncertain
international financial conditions, Colombia has successfully
auctioned oil and gas exploration rights in 22 onshore blocs
in one of its largest offerings ever. The round attracted
numerous medium-sized international companies, including one
successful U.S. bidder (Lewis Energy), and more than USD 100
million in expected new investment, primarily in the heavy
oil belt of Meta Department. GOC officials expressed
satisfaction with the round, which follows a record year for
hydrocarbons exploration in Colombia, and plan to auction 100
mini-blocs in early December. Based on the aggressive
exploration push and the cumulative impact of several modest
finds this year, the GOC now expects Colombia to remain oil
self-sufficient until 2017, two years more than previous
estimates. END SUMMARY

Colombia Round 2008
-------------------

2. (U) On November 7, Colombia's National Hydrocarbons Agency
(ANH) offered 43 new blocs for oil and gas exploration
covering seven million hectares as part of Colombia Round
2008. Twenty-two blocs received exploration contract offers
from ten companies. Among the most successful offerings were
blocs in the lowland llanos region of Meta Department
extending east of Bogota toward the Venezuelan border.
Preliminary data suggests this area has strong potential for
development of heavy crude oil deposits.

3. (U) A total of 39 international firms participated in the
round. State-owned hydrocarbons company Ecopetrol bid on
seven blocs and won four. Other successful bidders included
Canada-based Pacific Rubiales (3 blocs), France-based
Metapetroleum (3 blocs), Argentina-based Tecpecol (3 blocs),
Argentina-based Pluspetrol (2 blocs), South Korea-based SK
Energy (2 blocs), Colombia-based Hocol (2 blocs), India-based
ONGC Vidash (1 bloc), Canada-based Talisman Energy (1 bloc),
and San Antonio-based Lewis Energy (1 bloc). Under the terms
of the new three-year exploratory contracts, the winning
bidder must conduct further seismic evaluation and drill at
least one exploratory well. The GOC expects total investment
in exploration in the 22 blocs to surpass USD 100 million.

4. (SBU) ANH Director Armando Zamora told Econoff November 10
that the GOC considered the round fully successful as it met
the GOC's target for confirmed offers on one-half of the
blocs. He said investor focus unsurprisingly centered on the
zones with known heavy oil and that most of the 21 blocs that
did not attract offers lacked substantial preliminary data.
More notable, Zamora said, was the fact that many of the
successful blocs were the subject of intense bidding. He
characterized the multiple bids on several blocs as the most
he had seen in his experience managing previous rounds.

More to Come
------------

5. (SBU) Following the success of Colombia Round 2008, ANH
plans to offer 100 mini-blocs in Putumayo, Magdalena and Meta
Departments on December 4 and expects participation from as
many as 70 companies. Zamora also said that ANH will do
further research and data collection on the 21 blocs left
from the November 7 round and re-offer them in 2009.

New Findings Extending Self-sufficiency
---------------------------------------

6. (SBU) Colombia Round 2008 follows a record year for oil
and gas exploration in Colombia with 100 exploratory wells
drilled in 2008 and more than 90 production contracts signed.
Thanks to this new exploration and the cumulative impact of
several small findings in 2008, Director Zamora publicly
estimates that Colombia's oil self-sufficiency has extended
from 2015 to 2017. Although Colombia's proven reserves of
1.3 billion barrels are still below 2001 figures (1.8 billion
barrels), Zamora expressed confidence that, based on new
reserve reporting requirements in 2009 as well as the
promising outlook for several of the newly auctioned blocs,
Colombia will soon be positioned to announce petroleum
self-sufficiency through 2020.


BROWNFIELD

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