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Exxon Looks To Recoup Investment As Colombia Prepares To Ban Fracking

ExxonMobil is holding discussions with the Colombian government to potentially recover some of its investments in projects as Colombia prepares to ban fracking in the coming months, sources close to the talks have told Reuters.

Colombia's leftist president Gustavo Petro, who took office on August 7, 2022, campaigned on a platform of ending hydrocarbon exploration, hiking taxes and banning hydraulic fracturing, known as fracking.

The Colombian Senate has already approved a ban on unconventional oil and gas exploration and projects, including fracking, and the Congress in the country is expected to vote on the bill later this year.

Exxon had a contract for a pilot fracking project, Platero, with investment planned at $53 million. But all eight of Exxon's exploration and production contracts in Colombia, including the pilot fracking project, have been suspended or terminated, Colombia's industry regulator, the National Hydrocarbon Agency (ANH), told Reuters.

"We will continue to have constructive dialogue with the Colombian government on a comprehensive assessment of our unconventional investments," Exxon spokesperson Michelle Gray told Reuters.

The regulator, ANH, is currently looking into the process of Exxon's withdrawal.

Earlier this month, the partner in a venture with ExxonMobil said that the U.S. supermajor had decided to withdraw as of May 31 from the joint venture operating agreement for an oil and gas field in Colombia.

Sintana Energy said that ExxonMobil had sent its subsidiary Patriot Energy Oil and Gas a notice stating that, based on the terms of the Joint Operating Agreement between ExxonMobil and Patriot, the U.S. supermajor had decided to withdraw from the agreement as of May 31, 2023.      

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The notice also says that Exxon will withdraw from the Contract with the Colombian regulator ANH, effective after obtaining required Government approvals. Both the JOA and Contract pertain to 43,158 acres of property known as the VMM-37 block in Colombia's Middle Magdalena Valley Basin.

By Tsvetana Paraskova for Oilprice.com

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