* Industry players highlight Andean differences
* Colombia wants to further develop its booming sector
By Daniel Wallis
CARTAGENA, Colombia, June 25 Colombia should
learn from the mistakes of neighboring Venezuela if it wants to
make the most of booming investment in its crude oil
sector, oil industry executives told a conference on Friday.
"Colombia is doing all the right things. Venezuela is doing
all the wrong things," Alange Energy ALE.V President Luis
Giusti told the World Petroleum Council's regional meeting
"Colombians should be very pleased about what is happening
Colombia drew $1.3 billion in financing pledges from energy
companies when it put more than 200 oil blocks up for auction
this week, building on dramatically improved security and new
political and legal stability. [ID:nN22143519] [ID:nN23202379]
Giusti, a former executive at Venezuela's state oil company
PDVSA, is one of scores of ex-PDVSA employees who left the
company after President Hugo Chavez came to power. They are now
working in Colombia.
The business-friendly approach of Latin America's No. 4
crude producer is in sharp contrast to the stance of Chavez's
socialist administration in Venezuela, where output has
stagnated because of the country's efforts in recent years to
nationalize many industries.
While Colombia hopes to double its reserves from a modest
3.1 billion barrels, OPEC member Venezuela has said its Orinoco
belt alone holds about 26 billion barrels of recoverable oil.
Caracas signed deals with foreign companies this year to
exploit new heavy crude projects in Orinoco that are slated to
add more than 2 million barrels per day (bpd) of new production
at a total investment cost of some $80 billion.
But foreign oil executives have said there is doubt about
when the projects will come online due to loss of expertise in
PDVSA, which has a majority stake in each project, and
political uncertainty about investing in Venezuela.
"Processing that extra heavy crude requires a lot of capital
and equipment, and the climate is not good for that there at
the moment," said one analyst who follows the sector and asked
not to be named.
Chavez fired half of PDVSA's workers in 2003 after a massive
strike, and in the past four years he has frightened off
potential investors by nationalizing stakes held by majors like
ConocoPhillips (COP.N) and Exxon Mobil Corp (XOM.N).
Colombia's current President Alvaro Uribe welcomed foreign
investment, loosening regulations, creating a streamlined
hydrocarbons agency and lowering industry taxes.
On Friday, president-elect Juan Manuel Santos said the
private sector in Colombia could expect much of the same from
"It is clear Colombia is a leader in South America when it
comes to speeding up investment in its petroleum sector," said
Randy Gossen, president of the World Petroleum Council.
Across the border, Venezuela's Orinoco projects could still
be a success if PDVSA makes the most of experienced partners in
the blocks, including Chevron (CVX.N) of the United States,
Spain's Repsol (REP.MC) and Italy's Eni (ENI.MI).
"Colombia's crude projects have a learning opportunity, to
look at what the neighbors did wrong," said Waldyr Rodriguez, a
senior executive at Argentina's Pluspetrol.
(Editing by Jack Kimball, Toni Reinhold)