Sector reactivation progresses, but challenges in exploration persist: ACP

The Colombian Petroleum Association (ACP) presented the economic report ‘Advances and Perspectives for Oil and Gas Exploration 2019’, which highlights the work done jointly by the government and industry for the reactivation of the sector, while drawing attention to the exploration behavior that does not show the expected signs of reactivation so far this year.

• The national government has made decisions in the right direction for reactivation: Permanent Area Assignment Process, offshore minutes, regional presence, among the most positive aspects.
• However, the joint report from the Vice Presidency of Economic and Regulatory Affairs and Operations and Sustainability of the ACP shows that a structural lag in exploratory activity persists.
• Addressing environmental risks, economic and contractual incentives, and streamlining procedures are among the measures still required to accelerate exploration.

According to the report, 30 wells have been drilled to date and 48 are projected by December, meaning it remains at the same levels compared to 2018. Additionally, 1,426 km of seismic (eq) has been recorded to date, and it is expected to total 1,800 km (eq) by the end of the year; although the recorded amount exceeds the established target for 2019, it continues to be insufficient for the activity that the country requires.

“The levels of exploration we continue to see are what we reap from previous years when areas were not assigned and there were delays in procedures that slowed down projects. Although we have managed to replenish the reserves produced in the last decade, less than 20% comes from new discoveries, and resources in existing fields are depleting. The national government is aware of this, which is why we have been working and important decisions have been made to incentivize exploration, the fruits of which we hope to see in the medium term,” said the president of the ACP, Francisco José Lloreda Mera.

Among the advances to date, the implementation of the Permanent Area Assignment Process (PPAA), the issuance of the contractual minutes for offshore areas, and the signing of five exploration and production contracts stand out; the greater presence and regional support of the National Hydrocarbons Agency (ANH). Additionally, the Commission of experts for unconventional deposits recommended starting exploration through Comprehensive Research Pilot Projects (PPII) and the beginning of regulatory review to make the administration and assignment of E&P areas more competitive, which constitute options to identify and incorporate new reserves.

Likewise, the report presents a series of recommendations that would allow for increased exploration in the short term, related to: addressing environmental risks that affect the country's competitiveness, issuing economic and contractual incentives both in free areas and in contracted areas, streamlining procedures, and providing certainty in the respective processes, among others.

“If we were to return to exploration levels like those recorded in 2012, current fiscal revenues contributed by the sector could increase by 30%, thus helping to support revenue generation. The country has potential to develop in different types of deposits, conventional onshore, enhanced recovery, unconventional deposits, and offshore; and we hope to continue working hand in hand with the government to give greater impetus to exploratory activity, which will ensure the resources that Colombia needs for its energy self-sufficiency and fiscal sustainability in the future,” emphasized the President of the ACP.

[prefix_calltoaction title=»Economic report on ethanol imports supporting national production» button_text=»View report here» button_link=»https://acp.com.co/web2017/es/asustos/economicos/636-informe-economico-avance-y-perspectivas-para-la-exploracion-de-petroleo-y-gas-2019″ target=»blank» button_color=»#ffffff» button_background=»#f57305″]The Colombian Petroleum Association (ACP) highlights the decisions adopted by the government, which positively impact investments in the sector, which, accompanied by growth in oil production, show signs of reactivation[/prefix_calltoaction]