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Cablegate: Mass Oil and Gas Exploration Offers in Colombia

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R 041526Z DEC 09
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 1390
INFO RHEBAAA/DEPT OF ENERGY WASHINGTON DC
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UNCLAS SECTION 01 OF 03 BOGOTA 003878

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E.O. 12958: N/A
TAGS: ENRG ECON PREL EINT SENV CO
SUBJECT: MASS OIL AND GAS EXPLORATION OFFERS IN COLOMBIA

REF: BOGOTA 3350; BOGOTA 3415

1. (SBU) Summary. Colombia opened its ninth petroleum show on
December 2 with offers to explore and produce oil and gas in 168
blocks throughout Colombia and offshore. Close to 1,000
businessmen and women were in attendance representing firms from
North America, Europe, China, and Latin America. Although
Colombia's oil production has grown substantially, the lack of a
big discovery has tempered interest from the big multi-national
companies. Discussions about the Copenhagen Climate Change
Conference were critical, with the keynote speaker noting
Copenhagen will be a disguised failure. End Summary.

---------------------------------------------

Ministers of Energy and Environment Speak Out

---------------------------------------------

2. (U) Colombia's National Agency for Hydrocarbons hosted the
ninth Colombian Petroleum Show in Bogota, December 2-4. Close to
1,000 experts attended the opening, representing all businesses in
the petroleum sector. Minister of Mines and Energy Hernan Martinez
highlighted the investment-friendly environment for the petroleum
sector in Colombia and assured those present that the natural gas
transit problem will be resolved in 2010 (ref A).

3. (U) Environment Minister Carlos Costa emphasized that Colombia
has an impressive ecosystem that it seeks to protect. That said,
Costa noted that the process to obtain an environmental license is
transparent. The Minister underscored that the rules and the
environmental restrictions are clear, and that both the environment
and hydrocarbon sectors in Colombia are working together to promote
oil and gas investment in an environmentally-friendly manner.

-----------------------------

Positive Outlook for Colombia

-----------------------------

4. (U) Javier Gutierrez, President of Colombia's state-owned
petroleum company Ecopetrol, remarked on the many reforms Colombia
undertook to create a more open and business-friendly petroleum
sector. Since 2004, Ecopetrol has had to compete like any other
oil and gas company for exploration and production rights in
Colombia. These reforms also generated significant growth in the
petroleum sector, contributed to major increases in foreign direct
investment, and increased oil production in Colombia. Gutierrez
noted that Colombia is the fourth largest oil and gas producer in
Latin America, has the fifth largest oil reserves, and possesses
the seventh largest gas reserves in the region. He added that
Ecopetrol alone plans to produce 1 million barrels of petroleum
product by 2015, requiring a 12 percent growth year on year.

5. (U) Armando Zamora, Director General of the National Agency for
Hydrocarbons (ANH), announced the offer of 168 blocks, covering
126,023,745 acres. Of these, 74 are small blocks that have
geological data or are abandoned oil and gas plots; 31 are new
blocks with oil and gas data/projections; and the remaining 63
blocks are new locations covering 76 percent of the area up for
exploration and production. The new areas are located throughout
Colombia, but for the first time expand into the northern Amazon

BOGOTA 00003878 002 OF 003


area and around Colombia's Caribbean islands of San Andres and
Providencia. Zamora hopes to sell at least 50 blocks,
understanding that the industry continues to be cautious and
selective. ANH plans to conduct road shows in New York, London,
Shanghai, Buenos Aires, Calgary, and other sites to promote these
blocks.

6. (U) Julian Lee of the Center for Global Energy Studies
highlighted Colombia's growth in oil production, noting that from
2007 to 2008 Colombia had the fourth largest growth in oil
production, behind Iraq, Kazakhstan, and Brazil. In January 2007,
Colombia produced only 530,000 barrels per day (bpd), but in
October 2009, Colombia began producing over 700,000 bpd (the
highest in over a decade), and expects to reach 800,000 bpd in
2010. Colombia's goal is to produce 1 million bpd in 2014. Lee
noted that Colombia's oil is not "new oil," but is considered new
as the country emerges from a period of violence and instability.

--------------------------------------

Room for Non-Conventional Hydrocarbons

--------------------------------------

7. (SBU) Discussions on non-conventional hydrocarbons focused on
shale gas, coal-bed methane, oil (tar) sands, and marine gas
hydrates. A StatoilHydro company official noted Colombia as a
potential source for shale gas with three basins that could yield
30 trillion cubic feet of gas, but cautioned that large amounts of
water is needed. Romeo Flores of the U.S. Geological Survey (USGS)
indicated there is great potential for coal-bed methane (CBM) in
Colombia (Note: Flores is already working in Colombia under a
Memorandum of Understanding between USGS and Ecopetrol to provide
CBM technical assistance. ANH is in the process of requesting
technical assistance from the U.S. Trade Development Agency, ref B,
to develop a CBM regulatory framework. End Note).

8. (U) Daulat Mamora of Texas A&M highlighted several areas
throughout Colombia where large oil sands have the potential to
produce significant amounts of oil, though carbon emissions are 3
to 5 times greater than conventional oil and gas extraction.
Mamora claims that Colombia has theoretically up to 68 billion
barrels of oil in the following areas: Florencia (20bn bbl), San
Vicente (29bn bbl), Rio Guejar (15bn bbl), Rio Nare (3bn bbl) and
Sogamoso (704mn bbl). University of Texas' Nathan Bangs described
marine gas hydrates as the most exotic non-conventional hydrocarbon
and added that the technology to explore and produce gas from
hydrates is many years away. That said, Bangs noted Colombia has
the potential for 400 trillion cubic feet of gas in the form of
hydrates.

--------------------------

Criticism about Copenhagen

--------------------------

9. (SBU) On the opening day of the conference, only one presenter
spoke favorably of the Copenhagen Climate Change Conference, noting
that it was a good start. The majority of other speakers
criticized the Copenhagen event as a likely conference of
discussions but no actions. The keynote speaker, former U.S.

BOGOTA 00003878 003 OF 003


Secretary of Defense and Energy Jim Schlesinger, noted to the
audience to take Copenhagen with a couple of grains of salt. He
claimed that the end result will only be a disguised failure, which
will lead to cycles of blame. Schlesinger recounted his
conversation last week with the Chinese Ambassador to the U.S.,
noting that China's priority is to ensure that Copenhagen does not
affect its economic growth. He added that China is more concerned
about its sulfur than its carbon dioxide emissions.
BROWNFIELD

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