Colombia pinpoints at least 21 suspended oil and gas contracts for assistance

Parex Resources

21/06/2023 14:00

By Oliver Griffin
       BOGOTA, June 21 (Reuters) - Colombia's government is
preparing to help energy companies revive at least 21 suspended
oil and gas contracts with a $38 million initiative aimed at
solving security and community relations problems, the National
Hydrocarbons Agency (ANH) told Reuters.    
    The leftist government of President Gustavo Petro has made
weaning Colombia away from its reliance on hydrocarbons a key
policy, urging companies to develop already-awarded blocks,
despite industry demands for new licensing rounds.
    Pipelines and other infrastructure are regularly the target
of attacks by illegal armed groups, and earlier this year two
people were killed and almost 100 taken hostage by rural
communities demanding that Emerald Energy, a subsidiary of
China's state-owned company Sinochem, fix roads.
    Communities often complain oil development comes with
environmental damage and few infrastructure improvements.
    The ANH said it has so far identified concessions owned by
companies including Geopark  GPRK.N , Gran Tierra Energy
 GTE.TO , SierraCol Energy, majority state-owned Ecopetrol
 ECO.CN  and Emerald as potential beneficiaries of its
Territorial Hydrocarbons Strategy.
    The ANH has earmarked 160 billion pesos (over $38 million) -
equivalent to 40 billion pesos for each year of Petro's
administration - for the strategy.  
    "We've been working on implementing an agreement focused on
providing alternatives, to make exploratory activities facing
delays in their execution viable," the ANH said in written
responses to Reuters.
    The regulator will help companies coordinate with entities
like the interior ministry, which often mediates between
companies and communities, "guaranteeing the development of
social dialogue spaces and effective community participation."
    Companies are required to carry out community consultations
before projects advance, but successive governments have failed
to streamline the process.
    Though the number of contracts included in the scheme may
change, some awarded blocks are unsuitable for inclusion, the
ANH said, either because companies have asked to return them or
because they are for nonconventional exploration like fracking,
which the government opposes. 
    The contracts included in the revival effort have been
suspended on average for between eight and 10 years, the ANH
said.
    Five were awarded to Amerisur Resources, a formerly
London-listed company which was bought by Geopark in a deal
finalized in 2020. 
    Geopark declined to comment about the effort to galvanize
suspended contracts. 
    Previously, the company said the development of one of the
contracts - PUT 9 in Putumayo province - was suspended due to an
unspecified force majeure before the Amerisur takeover.
    Three concessions belong to Ecopetrol, which said it always
intended to develop the blocks and has been reviewing issues
impeding their development with the government. 
    "In all three there is high complexity mainly due to social
conditions or security," Ecopetrol said in a statement. 
    Two contracts in Arauca province have been affected by
security issues, Ecopetrol said, while the Odisea block in
Casanare province has faced opposition from local communities. 
    SierraCol has discussed the Llanos 39 and Llanos 52
contracts with the government, it said, adding, "restarting
activities in these blocks depends on conditions that gave rise
to the force majeure (declaration) ceasing to exist."
    The force majeure was connected to security issues,
SierraCol added, without elaborating.
    Other companies included in the list of 21 contracts either
did not respond to requests for comment or could not be
contacted.

 (Reporting by Oliver Griffin in Bogota
Editing by Matthew Lewis)
 ((Oliver.Griffin@thomsonreuters.com; +57 304-583-8931;))