15:04 DJS Chief Of Colombia's State Oil Firm Sets Ambitious Exploration Goa
15:04 DJS Chief Of Colombia's State Oil Firm Sets Ambitious Exploration Goal
BOGOTA -(Dow Jones)- The new president of Colombia's state-run oil
company, Ecopetrol, aims to step up exploration efforts so that 50 exploratory
wells are drilled each year, a local daily newspaper reported Monday.
For the last three years, oil companies have dug only 23 to 25 new
wells a year in Colombia, underscoring lagging interest in a country plagued
by the drug trade and the guerrillas who help protect the illegal industry.
Global weakness in oil prices also has hit the country, where crude represents
the most lucrative legal export.
"The goal that has been traced is to increase exploration activity to
50 wells a year," said Carlos Rodado, who took over at Ecopetrol just last
week. He made his remarks in an interview with El Tiempo newspaper.
Insurgents have been known to attack pipelines in Colombia, sometimes
idling production. In addition, companies must take measures to protect their
engineers and executives from kidnapping by rebels looking for ranson money.
Investors sometimes are willing to back projects in the country despite
these risks, when there is "an appropriate profit margin" to justify it,
Rodado was quoted as saying. "But if the economic conditions of a contract,
including taxation, are not appropriate, that's where they don't find the
compensation for risks they might assume."
While he didn't offer specifics, Rodado said that tax reform offered an
area where Colombia might enhance its appeal to potential investors. At
present, foreign oil companies pay a 7% remittance tax on oil profits, plus a
20% royalty.
"The energy minister and Ecopetrol are interested in conversing with
the finance minister to analyze the tax policy with regard to hydrocarbons and
to see what can be done," Rodado was quoted as saying.
He also said contract terms could be revised to offer greater
incentives for companies to buy into less ambitious exploration plans.
With small wells of less than 30 million barrels, "I believe that the
contract terms can be revised," he said.
A recent sale of 17 Colombian exploration contracts produced only three
buyers, alerting experts to a need to reform oil policy if the country is to
find new reserves and remain a net exporter of oil products.
A big unknown in the equation is what demands rebel troops will make in
peace negotiations initiated by President Andres Pastrana. The rebels have
long insisted that Colombia should expand its participation in the oil
industry, while officials hold that the country needs expertise and capital
from abroad to advance exploration.
- Ruth Morris: 571-215-7132
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(:E.ECO)
09/21 3:04p CDT |
