Canada inks Colombia trade deal, boost for oil firms

Tue Jun 22, 2010 12:17pm EDT

* More than Colombian 200 oil blocks on offer

* Investment in oil, mining up sharply in Andean nation

CARTAGENA, Colombia, June 22 (Reuters) - Canada's Senate has approved a free trade deal with Colombia, the Latin American country's energy minister said, adding it was good news for Canadian explorers bidding for oil blocks on Tuesday.

South America's No. 4 oil producer is auctioning off more than 200 exploration and production blocks in a move that could double its crude oil reserves and draw hundreds of millions of dollars of investment into an already booming sector.

"I have some good news for our Canadian friends. The Senate has just approved a free trade agreement ... so that opens the way for a lot of opportunities and our government is very happy about that," Energy and Mining Minister Hernan Martinez said at the auction in the coastal city of Cartagena.

He gave no further details of the agreement.

Investment in the Andean nation's oil and mining sectors has nearly quintupled since President Alvaro Uribe took power in 2002, driving rebels out of resource-rich regions and attracting foreign capital with pro-investment policies.

Bogota is offering three types of blocks: already explored and producing areas, newly prospective basins, and acreage in largely unexplored areas to foreign and local companies eager to tap the Andean nation's black gold. [ID:nN21245962]

Former defense minister Juan Manuel Santos won a landslide victory in an election run-off on Sunday and have vowed to continue with Uribe's popular policies. [ID:nN20126923]

Colombia wants to add 4 billion barrels of oil reserves over the next 10 years, but officials say the country may be able to add as much as 6 billion barrels if exploration holds steady and state-run Ecopetrol ECO.CN boosts recovery rates. [ID:nN03183757]

It recently certified about 3.1 billion barrels in proven, probable and possible reserves, double its previous estimate. [ID:nN03227295]

Most of the energy companies are bidding for more than 130 blocks in Type One, or already explored areas, with a total of 6 million hectares (14.8 million acres). The basic contract will be for six years, with the possibility to extend. (Reporting by Daniel Wallis; Editing by Jack Kimball and Marguerita Choy)

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