Incumbents scoop up Colombia blocks in tepid round

One quarter of the blocks on offer attracted bids in Colombia's second licensing round of 2019, the latest Latin American upstream auction to yield tepid results.

All but one of the proposals in today's auction came from incumbent independents and Colombian state-controlled Ecopetrol.

Of the 59 onshore and offshore blocks on offer, bids went to 15 onshore areas that represent initial total investment more than $500mn, according to hydrocarbons regulator ANH.

ANH president Luis Miguel Morelli attributed the disappointing outcome to the modest oil price environment and social "turbulence", alluding to protest marches in Bogota and other Colombian cities since 21 November.

ANH technical vice president Carlos Rodriguez added that the acreage in many cases has little or no exploration history. The ANH is considering offering technical evaluation agreements (TEAs) next year to encourage more exploration in such frontier areas.

Two of the 15 blocks that drew bids received two offers apiece, while the rest went unchallenged. A counteroffer round for all 15 blocks, which are still open to the pool of pre-qualified bidders, will be held on 5 December.

Mature oil-prone Llanos basin acreage in central Colombia drew the most activity. Ecopetrol, Ecopetrol subsidiary Hocol and Canadian independent Frontera submitted sole bids for Llanos basin blocks 121, 100 and 119, respectively. Ecopetrol and Canadian incumbent Parex bid together for Llanos 122. Adjacent block 123 drew a bid from Hocol and Latin American independent GeoPark. Llanos 124 attracted competing bids from GeoPark-Hocol and Parex.

Canadian independent Gran Tierra Energy (GTE) bid for Putumayo blocks 21 and 33 around its existing operations in southern Colombia. Similarly, UK-listed incumbent Amerisur, which GeoPark recently announced it would acquire, bid for Putumayo block 36.

Sinu block 26 in northwestern Colombia drew competition from Hocol and newcomer consortium La Luna/Captiva.

Canadian natural gas producer Canacol submitted bids for three Magdalena Valley blocks: VIM 33, VMM 45 and VMM 49. Parex bid for VMM 46 and VSM 36.

Morelli of the ANH noted that this year will wrap up with a total of 26 signed contracts, including the 15 new ones plus 11 from the previous round held in June, in addition to five offshore contracts, after five years with no new agreements. All 31 contracts represent about $2.7bn in total investment, the ANH said.

The ANH plans to step up promotion efforts in 2020, with a focus on attracting companies from China, India, Australia, Russia and Europe.

The Colombian auction follows lackluster back-to-back rounds in Brazil early this month.

Oil industry executives on the sidelines of today's event told Argus that the current unrest is primarily an urban phenomenon, leaving field operations untouched. But they note that the social tensions will make it difficult for Colombia to implement controversial pilot projects for unconventional exploration. Among the firms seeking to pursue unconventional projects in Colombia are Ecopetrol, ConocoPhillips and ExxonMobil.

By Patricia Garip