By Dan Molinski
BOGOTA--Colombia auctioned off the rights for oil companies to
explore new, promising oil fields Wednesday as it seeks to boost
reserves of crude oil, which has quickly become its dominant export
and the source of more than half its foreign revenue.
In first-round bidding for 115 available oil blocks, the
government received offers on 49 of them from 37 different oil
companies, including ExxonMobil Corp. (XOM) and Colombia's
state-controlled energy firm Ecopetrol (EC), the government's oil
licensing agency ANH said in a statement. The 49 bids received were
just shy of ANH's goal of securing 50 bids, but it said it will
re-open bidding next month in the hopes of receiving another five
to 10 offers.
"The results were positive given 43% of the blocks received
bids," the ANH said.
The oil auction, the first such event in two years in Colombia,
is expected to secure about $2.6 billion worth of new investment in
oil exploration during the next four years.
Colombia is Latin America's fourth-largest oil producer after
seeing a huge boom in oil output since 2005, doubling production
during that time to nearly 1 million barrels a day. But while new,
productive wells are consistently drawing fresh oil, the country
needs a big discovery or two to maintain production levels and
build up reserves. Its proven reserves of 2.3 billion barrels might
only last another eight years without more oil finds.
Colombia's government, as well as the many foreign oil companies
operating in the country, hope to be able to expand oil exploration
rapidly if the government's just-launched peace talks with
Colombia's main leftist guerrilla group, the Revolutionary Armed
Forces of Colombia, or FARC, prove successful. The oil industry in
Colombia has long been a favorite target of the FARC for bombings,
kidnappings and sabotage, which often forces the delay or
cancellation of planned oil-exploration projects in regions that
are rebel strongholds.
While new oil discoveries and higher production rates would
undoubtedly be a short-term positive for Colombia's economy, which
grew 5.9% last year, some observers warn the South American nation
may be becoming too dependent on oil.
"Increasing the size of the oil sector will further expose
Colombia to fluctuations in global commodity prices," warned
Capital Economics in a research note Wednesday. "Expansion of the
oil sector may lead to 'Dutch Disease' [in which] the commodities
sector crowds out the non-resources sector, particularly
manufacturing."
-Write to Dan Molinski at dan.molinski@dowjones.com