Cablegate: Colombia Auctions Nine Offshore Blocks On

VZCZCXYZ0017
RR RUEHWEB

DE RUEHBO #6862 2622012
ZNR UUUUU ZZH
R 192012Z SEP 07
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 9029
INFO RUEHBR/AMEMBASSY BRASILIA 7752
RUEHCV/AMEMBASSY CARACAS 9319
RUEHPE/AMEMBASSY LIMA 5404
RUEHLO/AMEMBASSY LONDON 1673
RUEHNE/AMEMBASSY NEW DELHI 0094
RUEHZP/AMEMBASSY PANAMA 0639
RUEHQT/AMEMBASSY QUITO 6006

UNCLAS BOGOTA 006862

SIPDIS

SIPDIS

WHA/EPSC FOR FCORNEILLE; EEB/IEC FOR MCMANUS

E.O. 12958: N/A
TAGS: ENRG EPET ECON EINV CO
SUBJECT: COLOMBIA AUCTIONS NINE OFFSHORE BLOCKS ON
CARIBBEAN COAST

1. (U) On September 18, Colombia's National Hydrocarbons
Agency (ANH) successfully auctioned nine exploration blocks
totaling $50 million. The nine blocks represent part of 13
oil and gas blocks off the coast of Atlantico, Bolivar,
Magdalena, and La Guajira departments offered in ANH's 2007
Caribbean Round auction. The GOC had anticipated receiving
bids on no more than seven blocks and touted the
better-than-expected results as a sign of increased investor
confidence in Colombia's energy sector.

2. (U) In addition to the higher than expected bids, the
auction ushered in three new international investors in
Colombia's offshore sector: U.S. firm Amerada Hess; BP; and
Indian firm ONGC Videsh. Amerada Hess will jointly explore
two blocks with Colombia's state-owned hydrocarbons company
Ecopetrol and Brazilian parastatal Petrobras while ONGC
Videsh will participate in three blocks with Ecopetrol. BP
will explore one block exclusively and partner with Ecopetrol
and Petrobras in another. Ecopetrol, which is in the process
of privatizing a ten percent stake in the company to raise
capital for increased exploration, is participating in eight
of the nine auctioned blocks. Chevron Texaco, one of the
first offshore producers in Colombia, did not submit bids in
the round.

3. (U) Under the terms of the auction, companies agreed to
invest a minimum of $5 million in exploration in each of
their respective blocks. Most company representatives
estimated they will announce exploration results within two
years. With completion of the 2007 Caribbean Round, Colombia
now has 6 million hectares (23,000 square miles) of offshore
blocks under exploration. ANH hopes to auction the four
other blocks as part of a future offshore round. Our energy
sector contacts hold high expectations for significant
natural gas findings in the blocks, but are skeptical that
major petroleum fields will be discovered.
Brownfield

© Scoop Media