* For other news from Reuters Latin America Investment Summit, click here
* Oil reserves at 6.9 years, but increasing slightly
* End of war with FARC would help oil industry
* Foreign investment falling from record
By Helen Murphy and Luis Jaime Acosta
BOGOTA, May 20 (Reuters) - With Colombia’s oil reserves stretching to less than seven years, its biggest challenge is boosting exploration and attracting fresh investment to uncap a “world of discovery” in shale oil, the energy minister said.
A decade ago, Colombia was on the verge of becoming a net importer of crude, but a boom of foreign investment on the back of improved security has allowed the country to become Latin America’s No. 4 oil producer after Venezuela, Mexico and Brazil.
Crude has become Colombia’s main export and a key driver for growth, which is putting pressure on the government to boost both reserves and output levels.
“Every day we work to increase reserves,” Energy Minister Federico Renjifo told the Reuters Latin America Investment Summit. “We are making a real effort so that foreign investment comes to explore.”
The Andean nation closed 2012 with oil reserves of 2.3 billion barrels, up 5.2 percent from 2011, and good for 6.9 years more. But its medium-term outlook as an oil producer is uncertain unless it boosts its crude reserves.
Colombia is betting it can extend the life of its crude deposits by deploying new technologies that rejuvenate older, less productive wells and make it possible to extract oil from so-called non-conventional shale deep underground.
“I really believe that in terms of non-conventional resources, Colombia has a world of discovery,” said Renjifo, a lawyer and former adviser to President Juan Manuel Santos. “As much as 70 percent of the country has not been discovered yet, has not been explored.”
Oil companies are not yet extracting shale oil in Colombia, but the government plans a bidding round for exploration blocks that may hold large shale deposits.
Some 10 percent of total reserves could eventually come from shale oil, Renjifo said in the interview in Bogota late last week.
Colombia’s oil output rose 3.16 percent last year to 944,000 barrels per day, a growth rate that came in below the expansion in reserves. However, production has almost doubled since 2007, and Renjifo said it will likely increase 13.3 percent this year.
Next year, the government will auction rights for companies interested in exploring for conventional crude deposits as well as shale oil. Investors pledged $2.6 billion for exploration rights last year in 55 blocks and Renjifo hopes to see similar amounts going forward. Some 33 percent of total 2012 reserves came from new wells, he said.
As international financial troubles hit corporate spending, the government fears that foreign direct investment - which flows mostly into oil and mining - will drop this year from its record of almost $16.7 billion in 2012.
Already, in the first four months of the year, overseas investment has slipped 6.5 percent from a year ago, with the oil and mining sector receiving $4.6 billion, 2 percent less than in the same period of 2012.
While higher output offset lower oil prices for Colombian exports, recent declines in commodity prices pose a risk for foreign investment in Latin America. Some analysts reckon that countries in the region will need to relax or improve investment terms gong forward, in a bid to lure investors.
“It’s a daily challenge because everyone knows that all modern nations want to have these kinds of investments; but not everyone has important assets like Colombia in terms of biodiversity and minerals,” Renjifo said.
Some companies have complained the government has been slow to issue environmental permits that would allow them to begin drilling and mining in remote mountain and jungle areas.
The central bank says that also has contributed to a slowdown in economic growth over the last year.
Once an investment pariah as drug-funded rebels kidnapped and killed oil workers and potted rural areas with landmines, Colombia has seen a dramatic turnaround, attracting record foreign investment that has allowed drilling in once off-limits areas and fueled economic growth.
The government is currently in peace negotiations with the Revolutionary Armed Forces of Colombia, a long-term foe of oil and mining companies. While attacks on pipelines, workers and infrastructure continue, a successful end to the talks would allow more exploration and greater access to foreign companies.
Renjifo is trying to harness that nascent, safer reputation to lure more foreign partners to help develop the potentially large oil reserves within shale rock and at the same time promote strong social and environmental practices.
“My daily challenge is achieving income and resource sustainability,” said Renjifo, who also served as Santos’ interior minister. “Not just in terms of oil reserves, but also in social and environmental terms.” (Additional reporting by Eduardo Garcia; Editing by Kieran Murray and Chris Reese)