Colombia is preparing changes to its bidding process for oil areas in an effort to increase investment and find new reserves, the head of the oil regulator said, after repeated cancellations of its latest oil round.
The changes, including contracts adjusted to international crude price fluctuations and the chance for companies to propose exploration on land not yet on offer, will help attract spending and nearly double reserves to at least 10 years of consumption, Orlando Velandia of the National Hydrocarbons Agency (ANH) said.
"We're looking to improve conditions for the country, to achieve competitiveness and motivate companies to make proposals about areas," Velandia said in an interview on Monday. The ANH in April postponed the deadline to receive offers for 15 onshore areas at its Sinu-San Jacinto auction until the second half of the year. It was the sixth time the round was delayed.
Colombia is the third Latin American country hosting oil auctions this year, after Mexico and Brazil. Its bidding round comes after a four-year pause when low oil prices stopped many Latin American countries from offering acreage. Colombia has been awarding blocks to the highest bidder every two to three years, but bidding in the new system will privilege the first company that requests access to additional areas, Velandia said, likely improving the offers of other bidders.
"Once we evaluate the areas and they're added to the map, companies can make offers in a continual competitive process," Velandia said. Companies would no longer be required to outline planned investments or compensate the government if spending falls short, he added.
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