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Gold/Mining/Energy : Harken Energy Corporation (HEC) -- Ignore unavailable to you. Want to Upgrade?

To: Robert Sanders who wrote (4125)	2/2/1999 1:02:00 AM
From: Robert Sanders	Respond to of 5504

New Columbian Energy Minister Speaks of Need for Change Of interest to HEC shareholders, from PRNewswire 2/1/99 HOUSTON, Feb. 1 /PRNewswire/ -- Colombia must make dramatic and immediate changes or risk the ruin of its oil industry, new Colombian Energy Minister Luis Carlos Valenzuela tells the authoritative petroleum industry newsletter Petroleum Argus in today's issue. Colombia is one of the leading exporters of oil to the United States. In an exclusive interview, Valenzuela offers an unusually frank discussion of the country's problems, laying blame on the state oil company, the government, and the Marxist guerrillas who have scared away foreign petroleum investment. Next to President Andres Pastrana who appointed him in August, Valenzuela may have the toughest job in the country. Oil exploration and production in the country is at standstill, foreign oil companies are slashing their capital spending budgets in the wake of the lowest oil prices in over a decade, and the guerrillas want foreign companies out of the country. "In a very clear way, we are doing something wrong," Valenzuela says. "We are not competitive enough. In Argentina 400 wells were drilled last year and in Colombia, only 38." Colombia produces 850,000 barrels of oil a day and exports 300,000 barrels a day of that to the United States. Oil is now the country's leading export, having surpassed coffee last year. But the country will have to begin importing oil within six years if it doesn't find a way to attract private oil companies to drill for oil in the country. Valenzuela is pushing a series of tax and royalty reforms through a reluctant Congress that he says will entice oil companies to return to Colombia. Tough exploration contract terms and the guerrilla violence forced several companies last year to scale back operations in the country, including Shell and British Petroleum. "We have to change the royalty system and we have to make some changes to the contracts," Valenzuela told Petroleum Argus. "All the emphasis now is on finding Cusianas and Cupiaguas (Colombia's largest oil fields). But you cannot bet your future production on that. You need to be able to find medium-sized fields." The future of Colombia's oil industry may hinge on an auction of exploration rights in March. The government will offer 19 fields to the highest bidders. A similar auction last year was a failure, attracting only three bidders. Unless Congress approves the tax reforms, Colombia is setting itself up for another failure, Valenzuela says. Combating guerrilla violence against the oil companies may be an even more difficult problem to solve. Valenzuela calls the guerrillas misinformed. "The war is not between multinationals and the guerrillas. The war is against the whole Colombian society. Twenty-five percent of our exports are related to oil. What happens to a country if in five or six years it loses 25pc of its exports?"