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One Of The Brightest Oil And Gas Prospects In South America

Call it a tale of two countries. Venezuela and Colombia border each other, and have had no shortage of hostilities. The Chavista government in Venezuela has long been skeptical of the U.S.-friendly government in Bogota. The late Venezuelan President Hugo Chavez even sent troops to the border in 2010 as tensions escalated in a senseless game of brinksmanship.

The two countries have had dramatically different experiences in their respective oil sectors as well. Venezuela is blessed with some of the largest oil reserves in the world, and its high levels of production have underwritten the Chavista government since its inception.

However, mismanagement, corruption, and a lack of investment have caused the country’s oil output to plummet since 2000, down by about 1 million barrels per day. More importantly for future production prospects, Venezuela has scared away private companies and is failing to invest. It appears unlikely that it will be able to turn things around.

Colombia’s Reforms

Colombia has taken a different approach. It has vastly fewer oil reserves – Colombia has 2.4 billion barrels of oil reserves (although potentially much more in shale), around 100 times less than Venezuela’s 298 billion barrels. As such, Colombia has had to develop a much more diversified economy.

Despite having disproportionately smaller reserves, Colombia has succeeded where Venezuela has failed. Colombia overhauled its oil sector to attract…

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