• 4 minute Hey Oil Bulls - How Long Till Increasing Oil Prices and Strengthening Dollar Start Killing Demand in Developing Countries?
  • 8 minutes Could oil demand collapse rapidly? Yup, sure could.
  • 15 minutes Oil prices going down
  • 45 mins Oil prices going down
  • 12 mins Could oil demand collapse rapidly? Yup, sure could.
  • 1 hour Migrants: Italy Wants EU Border Agency In Africa, Not At Sea
  • 5 hours Sabotage at Tesla
  • 13 hours Oil and Trade War
  • 20 mins Trump Hits China With Tariffs On $50 Billion Of Goods
  • 12 hours Germany Orders Daimler to Recall 774,000 Diesel Cars in Europe
  • 15 hours Sell out now or hold on?
  • 15 hours Russia and Saudi Arabia to have a chat on oil during FIFA World Cup - report
  • 1 hour After Three Decade Macedonia End Dispute With Greece, new name: the Republic of Northern Macedonia
  • 10 hours What If Canada Had Wind and Not Oilsands?
  • 9 hours The Wonderful U.S. Oil Trade Deficit with Canada
  • 1 hour The Irrelevance Of BTU Rating - Big Oil's Gimmick To Hoodwink The Public
  • 57 mins Nopec Sherman act legislation
  • 13 hours venezuala oil crisis
  • 13 hours When will oil demand start declining due to EVs?

Breaking News:

Nigeria Struggles To Sell Its Crude

Alt Text

Shale Shifts Attention To This ‘Forgotten’ Oil Play

As the Permian becomes overcrowded,…

Alt Text

Venezuela’s PDVSA Fails To Meet Oil Supply Obligations

Venezuela’s PDVSA has informed eight…

Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

More Info

Trending Discussions

Colombian Oil Patch Needs $70 Billion To Survive

Colombian drilling

Colombia’s energy industry needs $70 billion in fresh investments over the next ten years just to survive, according to the head of the country’s oil association, Jose Lloreda. This is twice as much annually as the $3.8 billion expected to be invested in the country’s oil patch this year—in exploration and production—and the discrepancy has sounded a loud alarm in the local oil industry.

When it comes to oil, Colombia has two big problems to deal with: lack of investment and limited reserves. There are solutions to these problems, but how viable they are is uncertain.

Investments in Colombian oil exploration started to drop as international crude prices crashed. Even though benchmark prices have recovered from the $27 reached in January, the bulk of analyst estimates don’t see oil rebounding to above $60 over the next three years, at least. Related: Why $50 Oil Makes Sense

This is bad news for Colombia because oil production in the Andean country is a high-cost enterprise: the rough terrain, lack of transport infrastructure and guerilla activity combine to seriously decrease Colombia’s attractiveness for oil investment.

Regarding the lack of sustainable reserves, Colombia currently has 2 billion barrels of proven oil. Lloreda says it needs another 1.3 billion barrels to avoid losing its energy independence. This could be done by either boosting conventional oil exploration, turning to shale, or a combination of both. According to the EIA, Colombia has 600 million barrels of recoverable tight oil reserves and 54.7 trillion cubic feet of recoverable shale gas reserves.

This much-needed boost could come through a tax reform for the industry plus other stimulus measures regarding capital adequacy and exploration deadlines that might encourage energy companies to ramp up their operations in Colombia. This could happen if the government gets on board with the Colombian Oil Association. Related: Iran Eyes $185 Billion In Foreign Investment With New Contracts

However, President Jose Manuel Santos seems to interpret the oil price slump as a blessing in disguise and that may well be the case. Although not as reliant on oil revenues as neighbor Venezuela, Colombia still relies on this income heavily as it represents around 20 percent of its total export revenues and a quarter of GDP. Santos argues, however, that the country can make do perfectly well without this revenue.

Weaning itself off oil will be a tough endeavor, but according to the FT, Santos has specific plans that include combining cost-cutting and tax increases, and argues that once these are implemented, Colombia will thrive even more than it did before the oil price rout. The reforms that the government envisages in its “intelligent austerity” initiative include stimulating manufacturing and introducing more personal and corporate taxes, so the tax burden is not all focused on only the biggest businesses in the country.

Still, energy independence is, or should be, a strategic priority, even in a diversified economy. To address this, the government must consider motivating energy companies to stay in the country and develop its conventional and—possibly--shale reserves.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment
  • Mchentrp on June 05 2016 said:
    Why do socialists never learn that you cannot tax yourself to prosperity?

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News