Oil majors are gearing up to explore off the coast of Colombia, offering hope to a country struggling to reverse declines in reserves and output of its biggest export.
Royal Dutch Shell Plc is planning to drill this year in the Caribbean, while Exxon Mobil Corp., Repsol SA and state-controlled Ecopetrol SA will follow suit in 2022, Energy Minister Diego Mesa said in an interview.
Declining Production
“International oil companies are more focused on the offshore potential,” Mesa said. “They are working on getting the rigs for next year.” Spokespeople for Exxon and Repsol didn’t immediately respond to requests for comment.
Colombia’s exploration is part of a wider effort by major oil companies operating in South America to hunt for massive offshore fields, in contrast to Europe, where some of the same companies have scaled back crude investments in the North Sea to plow money into renewable energy. Deep-water drilling is on the rise in Brazil, Suriname and Guyana this year with rig fleets growing.
While explorers including Petroleo Brasileiro SA have struck oil and gas in Colombia’s deep waters, none of the fields have been brought into production yet. The success of further exploration and development is key to offsetting the decline in conventional oil fields on land that has been in production for decades.
Output has declined in recent months, in part because of blockades in some of the country’s main oil production regions amid nationwide anti-government protests. Production fell below 700,000 barrels a day in the second week of May, the lowest level since 2009. Average oil production in 2020 fell 12% from the previous year to 781,300 barrels a day.
Mesa expects output to rebound from here and average 790,000 for the year. The rise in oil prices has encouraged more onshore drilling, he said.
The country also has 32 onshore and offshore blocks up for grabs this year, including “frontier basins” in the Pacific. Mesa expects 10-15 blocks to eventually be awarded.
Source: Bloomberg
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