Zero oil exploration in Colombia

Francisco Lloreda, president of the Colombian Petroleum Association (ACP), the leading oil industry trade association in the country, told reporters that the country needs to find a way to make the industry competitive again, given the collapse in global oil prices. Lloreda explained that, according to the ACP’s data, oil exploration in the country is practically paralyzed. This year has seen just 12 exploratory wells, compared with 68 during the same period last year, when oil exploration had already hit dangerously low levels.

Lloreda touched on the familiar problem with the Colombian oil industry: reserves that will last just six years. He stressed that the only solution for the oil sector’s problems is additional exploration, and the lack of exploration should be setting off alarms, as the bill for this lack of exploration will be paid in the years to come. Lloreda warned that even the recent deep water discovery in the Caribbean is not enough to assuage these fears, as it remains to be seen whether the hydrocarbons are oil or gas, and whether they can be extracted profitably.

Colombian daily El Espectador published a piece explaining how a barrel of oil gets priced in international markets, highlighting the differences between the prices different types of crude will fetch. The article explained that not only are Colombia’s oil reserves declining, but the balance of the remaining oil is skewed towards heavier, less profitable oil.