National Hydrocarbons Agency A new era in the Colombian oil and gas industry. Armando Zamora Reyes Director General

Transcription

1 National Hydrocarbons Agency A new era in the Colombian oil and gas industry Armando Zamora Reyes Director General May 2005

2 The tide has turned in Colombia The new policy is now fully in place: Resource administrator (ANH) separated from Ecopetrol (State-owned) The new E&P contract is competitive Enthusiastic industry response (2004): - Licenses: 21 E&P and 7 TEA contracts awarded - Seismic: ~ km - 2D equivalent ANH and Ecopetrol to invest ~ US$170 million in 2005 in exploration - ANH: acquisition of geological information in frontier areas - Ecopetrol: dynamic management exploration activities The licensing process is transparent and effective ( first come first served )

3 New E&P and TEA contracts basic elements (I) Type of contract E&P Royalty + Tax + High price participation 100% WI to contractor throughout the duration of the contract TEA Preference right to match E&P offer presented by a third party Exploration: Evaluation: Exploitation: 6 yrs + 4yrs extension 1-2 yrs + 3 yrs extension 24 yrs per field * One-phase contract: - Onshore: up to 18 months - Offshore: up to 24 months Duration * - Extension to economic life - Automatic on fulfillment of preestablished conditions Extension: automatic if the evaluator is acquiring seismic information or drilling stratigraphic wells, until finishing activities plus 2 months Work programs One each for: -Exploration -Evaluation - Exploitation (+ annual update) Technical Evaluation Program Final evaluation report (within 2 months TEA termination)

4 New E&P contract basic elements (II) Operations E&P Materiality, autonomy and flexibility to the contractor Follow-up by ANH TEA 1.Autonomy and flexibility for the evaluator 2.Bigger areas to identify prospects and then focus on E&P activities 3. Surface exploration activities such as: - geology and geophysics - seismic operations - stratigraphic wells Economic terms Sliding Scale Royalties: 5% to 25% according to production levels High price participation: 30% over $27/bl WTI trigger US 10 per barrel produced One time payment: ~ US 0.20 per hectare

5 Economic terms Royalty* % of production (Per field) High price participation* US$/bbl WTI 20% 10% 8% 4.8% 20% Production level (mboe / day) Monthly Discount over light crude Gas Onshore Heavy Oil Gas Offshore (>1000 ft) - 20% - 25% - 40% 30% of surplus income over trigger price Trigger price (Adjusted with US PPI) Light crude: Heavy crude: Gas: ~ US$ 27/bbl WTI US$ 40/bbl WTI agreed (Henry Hub) *For cumulative production > 5 mmbls

6 Geological potential scenarios (to 2020) bn bls 12 Volume discovered to December bn bbls ? 4 2 Self-sufficiency scenario ANH scenario IHS optimistic scenario Potential scenario Source: IHS, ANH analysis

7 Production profiles according to geological potential 000 bbl/day Domestic refining needs Demand projections Scenario IHS optimistic ANH Self-sufficiency Producing fields Source: ANH

8 Most of the 18 sedimentary basins remain under-explored BASINS UPPER MAGDALENA MIDDLE MAGDALENA LOWER MAGDALENA CATATUMBO URABÁ GUAJIRA AMAZONAS CESAR RANCHERÍA CORDILLERA ORIENTAL CAUCA CHOCO PUTUMAYO LLANOS ORIENTALES CHOCO PACÍFICO TUMACO CAGUÁN VAUPÉS SINÚ CAYOS NON SEDIMENTARY AREA T O T A L S E D I M E N T A R Y A R E A: ~ 1 million km2

9 Next steps Plan 2020: to discover > 4 bn boe ANH and Ecopetrol to invest $10 bn in exploration and development (to 2020) ANH will invest around $800m in frontier areas (to 2020) Contractual goal: award ~ 30 licenses per year Ecopetrol refinery expansion (from 75 to 150 mbd) Development of gas potential ANH and Ecopetrol are organizing bidding rounds: - Heavy oil - Tayrona - Pacific basin - Tello field - Small discoveries - Other Ecopetrol

10 Lessons learned Energy policy has to take into account the international environment Contract terms alone are not enough Separation of regulator from operator pays off Critical role of independents and startups The licensing process matters

11 Conclusions Many E&P opportunities with unknown potential and exciting exploration Positive industry response Improved business environment Competitive policies and contract terms Significant achievements in the first year Colombia has a thorough development strategy to 2020

12 Thank you for your attention

13 New E&P contract is competitive Contractor Take (1 - State Take) 60% 50% 40% 30% 20% 10% Argentina Ecuador Brasil Australia Kazahistan Trinidad & Tob. Thailand Sudan Angola China Turkemistan Bolivia Gabon Norway Malaysia Indonesia Egypt Venezuela 0% 100% 10% 20% 30% 40% 50% Source: PEPS-USGS and calculations ANH Profitability Colombia New Model India Pakistan Peru Colombia Previous model United Kingdom 40% 50% 60% 70% 80% 90% State Take NEXT

14 Competitiveness Scenario 100% Not very competitive Venezuela Indonesia State Take Economic Fields PEPS 90% 80% 70% 60% 50% 40% Gabon Peru Turkmenistan Bolivia Colombia Pakistan Argentina Norway United Kingdom India Angola Prospectivity Index Source: PEPS-USGS Brazil Objective Kazakhstan Australia China Very competitive BACK

15 Contracts signed since June 2004 Alpha Consultores Ltda Argosy Energy International BHP Billiton C&C Energy S.A. Cel Consorcio Petrotesting - Colregistros Drummond Ltd Ecopetrol Emerald Erazo Valencia y Cia ExxonMobil Geoproduction Oil&Gas Co. Harken de Col. Hocol S.A. Hupecol LLC Kappa Resources Ltd. Mecantile Colombia O&G Monsa Occidental Andina LLC Petrobras Petrocolombia Ray oil Tool Co. Inc. Repsol Exploración Colombia S.A. Sheridan O&G, Petrocol, Geoconsult Sismopetrol S.A y R3 Exploración y Producción Solana Petroleum Exploration Colombia Ltd. Stratus Oil & Gas Tecnopetrol y Comercial de Oriente U.T. Alcaraván (Tecnopetrol) U.T. El Triunfo R-3 Exploración y Producción U.T. Esperanza (Geoproduction Oil & Gas Co.) U.T. Omega (PEI) U.T.Moriche Winchester Oil&Gas Petrominerales Colombia Ltd. Sucursal Colombia BACK

16 Gas development projects Pipelines connecting fields and markets already in place Gas exports to Venezuela and Panamá (via pipeline) CNG for vehicles (to substitute gasoline) GTL (diesel oil) Enhanced penetration ChevronTexaco / GPL BACK

17 ANH heavy oil project Eastern Llanos Basin Objective: To prepare a bidding round in heavy oil prone areas in the Eastern Llanos basin Bidding Round Preparation: Early 2006 Planned Bidding Round: Late 2006 Background: Heavy Oil is an abundant nonconventional oil resource Shallow reservoir: ~ 3,000 ft The existence of a Heavy Oil Belt is inferred through the presence of three currently producing fields along a very large triangle in the area: Castilla, Rubiales and El Miedo (OIP ~ 400mbl) Preliminary studies to be carried out by the ANH 2H/05 Calibration & Reprocessing of 10,000 kms of seismic information Identification of potential plays BACK