November 26, 2019 / 10:14 PM / 18 days ago

Oil companies place bids for 15 blocks in Colombia auction, below target

BOGOTA (Reuters) - Oil companies placed bids for just 15 of 59 blocks in Colombia’s ongoing oil auction, the national hydrocarbons agency (ANH) said on Tuesday, below the ANH’s hoped-for number of offers.

The ANH had said it wanted to sign 20 contracts as a result of the round, bringing in some $800 million in potential investment. But it got 17 bids for 15 blocks from only 10 companies, less than half of the number which pre-qualified for bidding.

The 15 blocks will bring in more than $500 million in investment, the ANH said in a statement, but that figure could grow depending on what counteroffers are submitted in the next phase of the auction on Dec. 5.

The auction is the country’s second this year. Six companies won 11 contracts in the previous round, which the ANH also said would generate some $500 million in investment.

The two rounds give Colombia a 37% auction success rate, ANH head Luis Miguel Morelli said in the statement, “a result which is above the international average of 30% for assignment of areas by auction.”

“Today’s exercise shows the confidence of oil investors in the development of the country in a challenging environment of low prices and social turbulence in the region,” Morelli said.

Two onshore blocks - LLA 124 in the eastern plains and SIN 26 near the northern Caribbean coast - received two bids each.

The 10 bidders include several consortiums. The participating companies are state-run Ecopetrol, its subsidiary Hocol, Parex Resources, Amerisur Exploracion Colombia Limited, Canacol Energy, Frontera Energy, Gran Tierra Energy, Geopark, Captiva and La Luna.

Ecopetrol said in a statement that it and Hocol had made the best offers on five blocks - all onshore.

Hocol shares two of its bids equally with Geopark, the statement added, while Ecopetrol shares one of its with Parex.

Ecopetrol’s two bids would allow it to strengthen its presence in the eastern part of the country, the statement said.

The low numbers of bids reflects a regional struggle to generate investor interest in oil rounds.

In Brazil major global oil firms recently snubbed the second oil auction in a row, passing up offshore blocks and forcing officials to reconsider a bidding system that gives a privileged position to state-run Petroleo Brasileiro SA.

Reporting by Julia Symmes Cobb; Editing by Leslie Adler

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