Colombia's crude oil reserves declined by 16.8 percent last year, according to the country's natural resources ministry, but things are changing this year and more new wells had been dug thus far in 2017 than in the whole of 2016.
At their current level of 1.66 billion barrels, Colombia's reserves are enough for 5.1 years of production. In January, the ministry had estimated the country's reserves for 2015 at over 2 billion barrels - sufficient for 5.5 years of production.
South America's fourth-largest oil producer has, like the rest of the oil-producing world, suffered the effects of the 2014 oil price crash, but it has also had problems of its own, too, with militants from the National Liberation Army attacking pipelines as a demonstration of their opposition to the local presence of international energy companies, and with FARC, the biggest guerilla force in the country, making it an unsafe place to be.
Thanks to the combined effect of low oil prices and militant attacks, Colombia's production last year fell to 885,000 bpd, from over 1 million bpd in the previous year. Investments in production growth were also down, and some wells were shuttered as they became uneconomical in the new price environment.
In June 2016, the head of the country's oil industry association warned that Colombia needed investments to the tune of US$70 billion over the next decade in order to just survive. This was twice as much annually as the US$3.8 billion expected to be invested in the country's oil patch in 2016-in exploration and production-and the discrepancy 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. What's more, 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.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More