Thursday, June 1, 2023

The hard truth about oil contracts in Colombia

On the ground, there is debate over whether new gas and oil exploration and production contracts are needed. Although the Government of Gustavo Petro has stated that it is not for the time being granted, in the next few days the Ministries of Mines and Energy, Finance and Commerce based on the Report on Resources and resources that will be presented by him. National Hydrocarbons Agency (ANH) in May will be used for future determinations.

Among the various factors that accountants will take into account are the useful lives of the reserves and the status of the contracts already considered.

For this reason, figures such as the reasons for the cancellation of contracts become relevant. In the last 12 years, 162 oil contracts were awarded and cancellation procedures were initiated in 67, according to figures from the Agency. This means that for every 2.4 contract released in this environment, another one is already in force.

According to the entity, the country has signed 330 contracts for the exploration and production of oil and gas, of which the Mining and Energy portfolio has already indicated that it will seek to reactivate the 32 contracts that are in question, mainly due to reasons. social order

The termination of hydrocarbon contracts is a normal process in the actual allocation of areas. These correspond to social, environmental, public order or society moments of discretion.

By 2022, for example, 32 contracts have been decided and similarly the termination process of another 9 has been initiated.

Andrés Bitar, Vice President of Promotion and Assignment Areas of ANH, stated in his participation in Colombia “as an industry we are doing something wrong if on the one hand we judge contracts, but at the same time we accept termination requests.”

He explained that although there are usually boundaries, the truth is that this also shows a series of socialization challenges in the regions, so that communities recognize the contributions of society and the benefits that can be provided to the areas. those around him.

But When analyzing the data, it is clear that since 2012 between one and 13 terminations have been requested; since 2018 the largest number of requests has been reached.

When, then, there was a variety in these; For example, in 2022 nine were requested and only this year there is already one.

This is the case of Emerald Energy, which was involved in the public situation, the request of the ANH noted to suspend the Ombú exploration and production contract, which had to produce a thousand barrels per day through the Capella field by 2022.

Case terminations

Of the 67 contracts that ended in 2012, 52% are due to two reasons; after the completion of the period and the autonomy of the contractor, cases 18 and 17 requests respectively.

Bitar points out that in the case of the past, this refers to the cases in which the oil companies in the obligations pending once the period has ended, which is why the ANH monitors did this.

“The contract stipulates that if the term expires without allowing a notice of discovery, evaluation of the program or declaration of commerciality, it remains immersed in this case,” he explained.

On the other hand, the contractor’s autonomy refers to the freedom that companies have to terminate the contract for internal reasons.

In fact, for this reason Emerald Energy left the area assigned to it in San Vicente del Caguan.

With respect to public order conditions, the Agency recognizes a series of categories to refer to these problems. Only the public order indicated the conditions of the eight requests.

For its part, the category of public order and social conflict has been released since 2012. Now, public order conditions and circumscriptions led to the termination of one.

Another category that ANH recognizes is the social conflict that led to one accident. From his side of the competition, he added three points to the surrounding area.

Bitar confirmed that the government continues to work to make viable the contracts that have already been signed today. Because of this, approximately $45,000 million has been allocated each year for the next four years, so that those who can already be born from there. This is the case, for example, of contracts that are suspended and have announced that they will seek execution.

Emerald Energy has notified the ANH of the proposal to suspend the Ombú exploration and production contract, in Caquetá, which through the Capella field had to produce 1,939 barrels per day between 2022. The Minister of the Interior, Alphonso Prada, indicated the Government. “I will respond to the legal lines in response to the request for the cancellation of the company’s exploitation agreement and will hold talks at the highest level with the Chinese Embassy and the company to find a solution to the conflict.”

Nation World News Desk
Nation World News Desk
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