In Oil & Companies News 13/05/2015
Exploration drilling in Colombia’s oil patch in the first quarter fell 82.5% compared with the year-ago period, while seismic exploration sank by an even steeper 92%, the Colombian Petroleum Association (ACP) said.
Speaking at a press conference in Bogota, ACP president Francisco Jose Lloreda issued another in a series of recent appeals to the government to enhance the royalty and tax incentives available to wildcatters or face the possibility of declining production and reserves in coming years.
“Without tax incentives, it will not be feasible to reactivate exploration and current production levels of 1 million b/d, which would impact state revenue even more,” Lloreda told reporters.
He said only nine exploratory wells were drilled in Q1, down from 52 drilled in the year-ago period. Seismic exploration totaled 800 square kilometers, down from 10,000 sq km.
Lloreda acknowledged that the Colombian government had made some moves in recent months to make exploration and development more appealing to global oil companies. Those measures included royalty discounts on finds made from unconventional sources and in deep offshore waters, as well as a higher oil price threshold on the windfall tax paid by producers.
But the measures aren’t enough, he said, as evidenced by weakened exploration activity. “What’s needed are additional measures to make operations more viable, attract investment, and to reanimate the industry,” Lloreda said.
He added that positive signs included a diversification of Colombia’s export market to lessen its reliance on US Gulf Coast refiners. Between 2010 and 2014, the percentage of Colombian exports shipped to China rose from 5% to 23%, to India from 3% to 13% and to Spain from 0.3% to 9%.
But Lloreda warned that the “slight improvement” in oil prices in recent weeks “does not guarantee that exploration activity will take off and reach levels achieved in past years.”
To make his point that Colombia’s situation was dire, Lloreda noted the country’s stagnant reserves and a flattened crude production rate after years of double-digit growth. Q1 export revenue from shipments of oil, natural gas and products fell 44.7% from the year-earlier period, Lloreda said.
Last year, royalties and taxes from crude, natural gas and product sales accounted for 17% of all government revenues. Exports of hydrocarbons in 2014 accounted for more than 50% of the total export dollars collected.
