Concerned about ‘oil leaving underground’ Colombia looking to boost pace of investments

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Colombia, which holds regular licensing rounds to invite investment in its upstream sector, has recently undertaken what National Hydrocarbons Agency President Jose Armando Zamora called a “full review of our contract offering for bidding rounds,” building on its attractiveness to investors.

In a report published by S&P Global Platts on Monday, Zamora is quoted as saying, “We want to boost the pace of investment for these opportunities and are testing them in Colombia’s Round 2021.”

He said the world will still rely on fossil fuels for the next three or four decades and therefore Colombia must use this window of opportunity to maximise benefits from its resources. “So, we see a window of opportunity [where we] take advantage of this potential. Otherwise, our endowment will remain underground forever, and society won’t benefit.” He was speaking at the time at the annual CERAWeek conference, by IHS Markit.

Meanwhile, representatives from large international oil companies said at the event that for the next 20 years, upstream producers will need to sharpen their skills, revise their portfolios, and position themselves for changes ahead, becoming more efficient, fiscally disciplined and focusing investments on where they are most competent and advantaged.

“We recognize there’s a finite demand for oil and gas and that we have to make returns for shareholders,” Al Cook, Executive Vice President of Development and Production-International for Norway’s state-run Equinor, said. “But we believe there will be growing levels of oil and gas demand and a real need for hydrocarbons in the 2020s through the 2030s.”

“This is about focusing our operating capabilities where we believe we’re the best in the world,” he said.

Cleaning house, in several respects, is a key part of how Nigeria’s national oil company is preparing for its future, Adokiye Tombomieye, Chief Operating Officer for the Nigerian National Petroleum Corporation, said.

“We at NNPC are trying to reduce our costs,” through a cost optimization program, Tombomieye said.

Moreover, the agency has made an effort to promote transparency, which, in turn, will provide efficiency and competitiveness as it proceeds through the energy transition, he added.

Nigeria in years past grappled with corruption, and the US Department of Justice at one time charged various oilfield service company representatives with offering bribes to officials in that country to smooth business transactions.

Meanwhile, John Hess, CEO of US Bakken Shale producer Hess Corp, which also has a growing operation in Guyana, said during a separate panel that a “huge” investment challenge lies ahead of the industry to grow oil and gas supplies and keep ahead of the demand for hydrocarbons.

“The International Energy Agency is clear that the world needs to invest $500 billion-$600 billion a year to grow global oil and gas to keep up with demand growth in the future,” he said. “The number spent last year was $300 billion, and in the last five years, $300 billion to $450 billion.”

Moreover, if total spending has been below needs, exploration spending especially has lagged requirements in recent years, he added.

ExxonMobil has found around 9 billion barrels of oil equivalent in Guyana along with co-venturers Hess and China’s CNOOC, in the 6.6 million acres Stabroek Block.

The Guyanese government has said it is looking to forge ahead with the offshore developments which are expected to catapult the country to among the top Latin America producers by the end of the decade.

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