Oil and Gas Exploration and Production (E&P) in Colombia - Market Analysis, Competitive Landscape and Forecasts to 2020

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1 Oil and Gas Exploration and Production (E&P) in Colombia - Market Analysis, Competitive Landscape and Forecasts to 2020 Reference Code: GDGE0067MAR Publication Date: October 2012 Colombia has Witnessed XX Oil and Gas Discoveries Since 2007 Colombia has emerged as one of the most attractive upstream investment destinations, as several discoveries in the country have attracted investors attention. Based on the number of oil and gas discoveries worldwide during 2007 to 2012, Colombia ranked XX after Brazil and Australia. Colombia witnessed around XX oil and gas discoveries during the period. The figure below shows the standing of Colombia globally in terms of oil and gas discoveries during 2007 to Oil and Gas Exploration Market, Global, Top Countries by Oil and Gas Discoveries, (August) Oil and Gas Production in Colombia is Estimated to Grow to XX MMboe by 2020 Oil and gas production in Colombia has grown at an AAGR of about XX% over the period. The country s total oil and gas production was estimated to be about XX MMboe in The production is estimated to grow to XX MMboe in 2020, witnessing an AAGR of about XX% over the period. The figure below presents the growth of oil and gas production in Colombia since 2006, and estimated production in Oil and Gas Exploration and Production, Colombia, Crude Oil and Natural Gas Production, MMboe, Number of Discoveries Brazil Australia Colombia Egypt Norway India United States Libyan Arab Jamahiriya Indonesia United Kingdom Oil and Gas Production (MMboe) Source: GlobalData, Oil and Gas etrack, Discoveries Database [Accessed on August 24, 2012] Note: *Oil and gas discoveries until August 24, 2012 are considered. In the early 2000s, Colombia s oil and gas reserves dropped significantly as a result of a decline in exploration activities due to continued guerilla attacks and a subsequent drop in foreign direct investments in the country s oil and gas exploration and production sector. In 2003, the government of Colombia initiated restructuring of the country s hydrocarbon sector, mainly focusing on sector organization, public governance, and fiscal and regulatory regimes redesign. These measures helped the country to attract investments in its oil and gas exploration activities, which led to an increase in discoveries and reserves. Source: GlobalData; US EIA [Accessed on July 9, 2012] The majority of crude oil and natural gas production in the country is light oil, representing about half of the total production in Heavy oil currently accounts for about 31% of the country s total oil and gas production. However, the significance of heavy oil in the country s oil and gas production has been gaining prominence in the past few years. Page 1

2 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction Overview GlobalData Report Guide Colombia - A Snapshot of its Oil and Gas Sector Colombia is an Emerging Oil Producer from South and Central America Colombia Recorded Two Billion Barrels of Proved Oil Reserves by the End of Key Drivers for the Growth of Colombia s Oil and Gas Market The Colombian Petroleum Sector has Attracted Substantial Foreign Direct Investment in Recent Years Colombia is Witnessing Increasing Exploration Activities for Oil and Gas Colombia to Offer Unconventional Oil and Gas Acreage for Bidding Under the 2012 Licensing Round Colombia - Oil and Gas Regulatory Regime and Investment Activities Fiscal Terms and Regulatory Regime Colombia Has Emerged as an Active Destination for Mergers and Acquisitions in Oil and Gas Exploration and Production Oil and Gas Exploration and Production in Colombia Llanos Basin is the Epicenter for Exploration and Production Activities in Colombia Colombia has Witnessed the Third Largest Numberof Oil and Gas Discoveries in the World Since Oil and Gas Production in Colombia has Increased with an Average Annual Growth of 12.8% Since Oil and Gas Production in Colombia is Estimated to Grow at an Average Annual Rate of 4.8% During Oil and Gas Exploration and Production in Llanos Basin Llanos Basin Has About 168 Exploration Blocks Llanos Basin Has Witnessed Nine Oil and Gas Discoveries in 2012 (until July) Llanos Basin is the Major Oil Producing Area in Colombia Llanos Basin - Recent Updates Oil and Gas Exploration and Production in Valle Medio Del Magdalena Basin Valle Medio Del Magdalena Basin Has 33 Exploration Blocks Valle Medio Del Magdalena Basin Has Witnessed Eight Oil and Gas Discoveries Since La Cira is the Most Active Oil Producing Field in Valle Medio Del Magdalena Basin Valle Medio Del Magdalena Basin - Recent Updates Oil and Gas Exploration and Production in Valle Superior Del Magdalena Basin Valle Superior Del Magdalena Basin Has Over 50 Exploration Blocks Twelve Discoveries Have Been Made in Valle Superior Del Magdalena Basin Since Guando is the Most Active Oil Producing Field in Valle Superior Del Magdalena Basin Valle Superior Del Magdalena Basin - Recent Updates Oil and Gas Exploration in Colombia s Emerging Basins Oil and Gas Exploration and Production in Caguan-Putumayo Basin The Caguan-Putumayo Basin has 39 Exploration Blocks Putumayo Basin Has Witnessed 14 Oil and Gas Discoveries Since Caguan-Putumayo Basin Has Been Witnessing Increasing Levels of Oil and Gas Production Since Oil and Gas Exploration and Production in Cordillera Oriental Basin Cordillera Oriental Witnessed a Rapid Increase in Oil Production in Oil and Gas Exploration and Production in Valle Inferior Del Magdalena Basin The Valle Inferior Del Magdalena Basin Has Witnessed Seven Discoveries Since Arianna is the Most Active Oil Production Field in the Valle Inferior Del Magdalena Basin Major Oil and Gas Companies in Colombia - Competitive Landscape Ecopetrol Participates in the Largest Number of Exploration Blocks in Colombia Petrominerales Colombia Ltd Has Made the Largest Number of Discoveries in Colombia Since Ecopetrol Leads in Terms of Oil and Gas Production in Colombia Pacific Rubiales is Emerging as a Strong Independent E&P Company in Colombia Page 3

3 11 Appendix Market Definitions Abbreviations Bibliography Methodology Coverage Secondary Research Primary Research Expert Panel Validation Contact Us Disclaimer Page 4

4 1.1 List of Tables Table 1: Exploration and Production Sector, Colombia, Value and Number of M&A and Asset Transactions, $m, (until July 15) Table 2: Exploration and Production Sector, Colombia, Major M&A and Asset Transactions, 2007-July 15, Table 3: Oil and Gas Exploration Market, Colombia, Number of Oil and Gas Discoveries by Top Basins, (August) Table 4: Oil and Gas Exploration and Production, Colombia, Crude Oil and Natural Gas Production, MMboe, Table 5: Oil and Gas Exploration and Production, Colombia, Crude Oil and Natural Gas Production, MMboe, Table 6: Colombia, Llanos Basin, Top 10 Exploration Blocks Based on Acreages, Sq km, Table 7: Llanos Basin, Major Companies with Gross Acreage, Acres, August Table 8: Oil and Gas Exploration and Production, Colombia, Major Discoveries in Llanos Basin, Table 9: Oil and Gas Exploration and Production, Colombia, Top 10 Fields in Llanos Basin Based on Production, MMboe, Table 10: Oil and Gas Exploration and Production, Colombia, Major Exploration Blocks in Valle Medio Del Magdalena Basin, Sq km, Table 11: Valle Medio Del Magdalena Basin, Major Companies with Gross Acreage, Acres, August Table 12: Oil and Gas Exploration and Production, Colombia, Major Fields in Valle Medio Del Magdalena Basin, MMboe, Table 13: Oil and Gas Exploration and Production, Colombia, Major Exploration Blocks in Valle Superior Del Magdalena Basin, Sq km, Table 14: Valle Superior Del Magdalena basin, Major Companies with Gross Acreage, Acres, August Table 15: Oil and Gas Exploration and Production, Colombia, Major Fields in Valle Superior Del Magdalena Basin, MMboe, Table 16: Oil and Gas Exploration and Production, Colombia, Major Blocks in Caguan-Putumayo Basin, Table 17: Oil and Gas Exploration and Production, Colombia, Major Discoveries in Caguan-Putumayo Basin, 2007-Present Table 18: Colombia, Caguan-Putumayo Basin, Top 10 Fields Based on Oil and Gas Production, MMboe, Table 19: Oil and Gas Exploration and Production, Colombia, Major Blocks in Cordillera Oriental Basin, Table 20: Oil and Gas Exploration and Production, Colombia, Major Blocks in Valle Inferior Del Magdalena Basin, Table 21: Oil and Gas Exploration and Production, Colombia, Major Discoveries in Valle Inferior Del Magdalena Basin, Table 22: Colombia, Valle Inferior Del Magdalena Basin, Major Fields by Oil and Gas Production, boe, Table 23: Oil and Gas Exploration and Production, Colombia, Major Companies by Participation, Number of Exploration Blocks, Table 24: Oil and Gas Exploration and Production, Colombia, Major Companies by Crude Oil and Natural Gas Production, MMboe, Page 5

5 1.2 List of Figures Figure 1: Oil and Gas Industry, Colombia, Proved Oil Reserves, billion bbl, Figure 2: Oil and Gas Industry, Colombia, Proved Natural Gas Reserves, bcm, Figure 3: Oil and Gas Industry, Colombia, Foreign Direct Investments in the Petroleum Sector*, $bn, Figure 4: Oil and Gas Industry, Colombia, Exploratory Wells Drilled and Technical Success Rate, %, Figure 5: Oil and Gas Industry, Colombia, Locations of Unconventional Acreage in the 2012 Licensing Round Figure 6: Exploration and Production Sector, Colombia, Value and Number of M&A and Asset Transactions, $m, (until July 15) Figure 7: Oil and Gas Exploration and Production, Colombia, Map of Major Tectonic Domains, Figure 8: Oil and Gas Exploration Market, Global, Top Countries by Oil and Gas Discoveries, (August) Figure 9: Oil and Gas Exploration and Production, Colombia, Crude Oil and Natural Gas Production, MMboe, Figure 10: Oil and Gas Exploration and Production, Colombia, Share of Light Oil, Heavy Oil and Natural Gas in Production, %, Figure 11: Oil and Gas Exploration and Production, Colombia, Contribution of Basins in Production, %, Figure 12: Oil and Gas Exploration and Production, Colombia, Crude Oil and Natural Gas Production, MMboe, Figure 13: Oil and Gas Exploration and Production, Colombia, CPE 3 Block Location Map, Figure 14: Oil and Gas Exploration and Production, Colombia, CPE 8 Block Location Map, Figure 15: Oil and Gas Exploration and Production, Colombia, Number of Discoveries in Llanos Basin, (July) Figure 16: Oil and Gas Exploration and Production, Colombia, Oil Production in Llanos Basin, MMbbl, * Figure 17: Oil and Gas Exploration and Production, Colombia, Number of Discoveries in Valle Medio Del Magdalena Basin, Figure 18: Oil and Gas Exploration and Production, Colombia, Oil Production in Valle Medio Del Magdalena Basin, MMbbl, * Figure 19: Oil and Gas Exploration and Production, Colombia, VSM 9 Block Location Map, Figure 20: Oil and Gas Exploration and Production, Colombia, VSM 12 and VSM 13 Blocks Location Map, Figure 21: Oil and Gas Exploration and Production, Colombia, Number of Discoveries in Valle Superior Del Magdalena Basin, 2007-Present Figure 22: Oil and Gas Exploration and Production, Colombia, Oil Production from Valle Superior Del Magdalena Basin, MMbbl, * Figure 23: Oil and Gas Exploration and Production, Colombia, Tacacho and Terecay Blocks Location Map, Figure 24: Oil and Gas Exploration and Production, Colombia, Oil Production in Caguan-Putumayo Basin, MMbbl, * Figure 25: Oil and Gas Exploration and Production, Colombia, Muisca Block Location Map, Figure 26: Oil and Gas Exploration and Production, Colombia, Oil Production in Cordillera Oriental Basin, MMbbl, * Figure 27: Oil and Gas Exploration and Production, Colombia, Valle Inferior Del Magdalena Basin, Oil Production, MMbbl, * Figure 28: Oil and Gas Exploration and Production, Colombia, Major Companies by Participation, Number of Exploration Blocks, Figure 29: Oil and Gas Exploration and Production, Colombia, Number of Exploration Blocks of Companies, Figure 30: Oil and Gas Exploration and Production, Colombia, Major Companies by Number of Discoveries, (August) Figure 31: Oil and Gas Exploration and Production, Colombia, Major Companies by Oil and Gas Production, MMboe, Figure 32: Oil and Gas Exploration and Production, Colombia, Major Companies by Crude Oil and Natural Gas Production, MMboe, Page 6

6 2 Introduction 2.1 Overview Colombia is increasingly gaining global importance for its exploration and production of oil. The main drivers for the growth of exploration and production in the country include a friendly fiscal regime for oil and gas investors, improved security in the country, and demand for the country s oil and gas in the global energy market. As a result of increasing exploration and production activity, Colombia has witnessed financial deals (mergers, acquisitions, and asset transactions) worth more than $XX billion since The country has witnessed significant activity in terms of mergers, acquisitions, asset purchases and partnerships in its oil and gas exploration and production industry. The important basins in Colombia for exploration and production include the Llanos basin, the Valle Medio Del Magdalena basin and the Valle Superior Del Magdalena basin. The Llanos basin is considered to be one of the most prospective basins in the country. The Eastern Llanos basin holds most of the exploratory potential. Among the emerging basins in Colombia, the Caguan-Putumayo basin is considered to be the most important. The basin is estimated to have proved reserves of more than XX million barrels of oil equivalent (MMboe). The participation of oil and gas companies in Colombia has increased after the country s government announced several regulatory reforms since Both local and international oil and gas companies have a presence in Colombia. Ecopetrol, the country s National Oil Company (NOC), currently leads the way in Colombia in terms of both exploration and production. 2.2 GlobalData Report Guide This report provides market analysis of the exploration and production (E&P) in Colombia, including the competitive landscape and forecasts to It begins with an executive summary chapter, which highlights the key features of the report. The main body of the report is structured as follows. Chapter three provides an introduction on E&P in Colombia. It also describes some of the key drivers for the growth of E&P in Colombia. Chapter four describes the oil and gas regulatory regime, and investment activities in Colombia. It also provides an analysis of financial deals that have taken place in the country since Chapter five provides an insight on the significant oil and gas basins in Colombia. It also provides information on the discoveries of oil and gas reserves in the country since Chapter six describes exploration and production in the Llanos Basin. It also describes major discoveries in the basin and key production fields. Chapter seven provides an insight on exploration and production in the Valle Medio Del Magdalena Basin. It also discusses major discoveries in the basin and key production fields. Chapter eight describes exploration and production in the Valle Superior Del Magdalena Basin. It also describes major discoveries in the basin and key production fields. Chapter nine provides details on important emerging basins in Colombia - Caguan-Putumayo, Cordillera Oriental and Valle Inferior Del Magdalena. It also describes exploration and production activities in the three basins. Chapter 10 describes the activities of important E&P companies in Colombia - Ecopetrol, Petrominerales Colombia Ltd and Pacific Rubiales. Chapter 11 is the appendix of the report. Page 7

7 3.3 Key Drivers for the Growth of Colombia s Oil and Gas Market The Colombian Petroleum Sector has Attracted Substantial Foreign Direct Investment in Recent Years The Colombian government has embarked on policies to create a more favorable business environment for investors and increase the country s internal security. As a result, the Gross Domestic Product (GDP) of Colombia witnessed an Annual Average Growth Rate (AAGR) of XX% during , which was higher than Brazil s GDP growth (XX%) during the same period. In 2011, Colombia witnessed a GDP growth rate of XX%, which was one of the highest in Latin America. The important factors for such high growth in Colombia s GDP include the strong global demand for the country s commodities, such as oil, natural gas and coal. As a result of strong global demand for Colombian commodities such as oil and gas, the country was also able to attract substantial Foreign Direct Investments (FDIs) in the petroleum sector. Many oil and gas companies such as Chevron Corporation, Pacific Rubiales, Gran Tierra Energy and Petrominerales have invested in the country. The figure below shows FDI flows to the Colombian petroleum sector for the period 2005 to Figure 3: Oil and Gas Industry, Colombia, Foreign Direct Investments in the Petroleum Sector*, $bn, Foreign Direct Investments ($bn) Source: Banco de la República, 2012 * Provisional figures Colombia s petroleum sector is expected to continue to witness a significant flow of FDIs in the petroleum sector in future, as demand for oil and gas is expected to continue to grow in the global market. In December 2011, Chevron renewed an agreement that was signed with PDVSA Gas S.A. (PDVSA) in 2007 for the supply of gas from Colombia to Venezuela. This extension of the agreement indicated that foreign investors are continuing to be bullish about Colombia s petroleum s sector. Page 11

8 10.2 Petrominerales Colombia Ltd Has Made the Largest Number of Discoveries in Colombia Since 2011 Petrominerales Colombia Ltd and Alange Energy Corp. (now part of Pacific Rubiales Energy Corp) have witnessed the largest number of oil and gas discoveries in Colombia since These companies have made four discoveries each in the country. The other prominent player in the country is Ecopetrol, with three discoveries since The figure below shows the number of discoveries by major companies in Colombia. Figure 30: Oil and Gas Exploration and Production, Colombia, Major Companies by Number of Discoveries, (August) Number of Discoveries Petrominerales Colombia Ltd Alange Energy Corp. Ecopetrol Compania Espanola de Petroleos, S.A. C & C Energy Ltd Source: GlobalData; Oil and Gas etrack, Discovery Database [Accessed on September 6, 2012] Alange Energy Corp is now part of Pacific Rubiales Energy Corp. Of the four discoveries made by Petrominerales Colombia Ltd during this period, three were made in the Llanos basin and one was in the CAG-VAU basin. The discoveries in Llanos basin include Yatay-1 discovery and Mantis-1 discovery in January 2011, and Guala-1 discovery in June In the CAG-VAU basin, the company made the Heliconia-1 discovery in March Alange Energy Corp. (now part of Pacific Rubiales) has made all four of the discoveries in the Llanos basin s Central Cubiro block between August 2011 and February These discoveries are: Petirojo-1, Copa B-1, Copa A Sur-1 (Copa AS-1), and Cernicalo-1 ST. Page 57

9 11 Appendix 11.1 Market Definitions Ranking of fields in all the basin chapters is based on the basis of production in Historic data is taken from US EIA, BP Statistical review of World Energy, oil and gas ministry website, company websites and oil and gas related news journals. All the capacities given in this report are annual capacities taken on 31st December of every year and have been rounded off to one decimal point. The ownership stakes are taken from company news items, press releases and other forward-looking statements issued by companies/ministries. Total active blocks are as of 31st December of each year. By default, the number of blocks by company refers to the number of blocks in which the company has ownership stake. Natural gas production is converted to barrels of oil equivalent using the following conversion factor, 1 Mcf = 0.176boe Abbreviations Average Annual Growth Rate (AAGR) barrels of oil equivalent per day (bopd) Billion barrels (billion bbls) billion cubic feet (bcf) billion cubic meter (bcm) Exploration and Production (E&P) Foreign Direct Investments (FDIs) Gross Domestic Product (GDP) Initial Public Offering (IPO) Million barrels (MMbbl) Million barrels of oil equivalent (MMboe) National Hydrocarbons Agency (ANH) 11.3 Bibliography ANH (2007). Colombian Sedimentary Basins: Nomenclature, Boundaries and Petroleum Geology, a New Proposal. National Hydrocarbons Agency (ANH) Available from: ANH (2012a) via Pacific Rubiales Energy Corporation. Investor Presentation July Available from: [Accessed September 04, 2012]. ANH (2012b). Ronda Colombia National Hydrocarbons Agency (ANH). Available from: [Accessed September 11, 2012]. Banco de la República (2012). Statistics. Banco de la República. Available from: [Accessed September 10, 2012]. Page 61

10 BP Plc (2012a). Statistical Review of World Energy, BP Plc. Available from: [Accessed September 04, 2012]. Ecopetrol (2012). Energy for the Future. Ecopetrol. Available from: %20V3.pdf. [Accessed September 11, 2012]. ExxonMobil Corporation (2009). Financial and Operating Review. Available from: 09Financial%20&%20Operating%20Review_0053.pdf. HOCOL (2012). Exploration Activities of HOCOL. Available from: [Accessed on September 04, 2012] Ministry of Mines and Energy, Colombia (2012). Production Statistics. Available from: oria=842. [Accessed on August 30, 2012] Pacific Rubiales (2012). Investor Presentation July Available from: [Accessed September 04, 2012]. US EIA (2012). International Energy Statistics. Available from: [Accessed July 09, 2012] Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with marketing, market research and consulting backgrounds in the energy industry, and advanced statistical expertise. GlobalData adheres to the codes of practice of the Market Research Society ( and the Strategic and Competitive Intelligence Professionals ( All GlobalData databases are continuously updated and revised Coverage The objective of updating GlobalData s coverage is to ensure that it represents the most up-to-date vision of the industry possible. Changes to the industry taxonomy are built on the basis of extensive research of company, association and competitor sources. Company coverage is based on three key factors: market capitalization, revenues and media attention/innovation/market potential. An exhaustive search of 56 member exchanges is conducted and companies are prioritized on the basis of their market capitalization The estimated revenues of all major companies, including private and governmental, are gathered and used to prioritize coverage Companies which are making the news, or which are of particular interest due to their innovative approach, are prioritized GlobalData aims to cover all major news events and deals in the energy industry, updated on a daily basis. The coverage is further streamlined and strengthened with additional inputs from GlobalData s expert panel (see below). Page 62

11 Secondary Research The research process begins with exhaustive secondary research on internal and external sources being carried out to source qualitative and quantitative information relating to each market. The secondary research sources that are typically referred to include, but are not limited to: Company websites, annual reports, financial reports, broker reports, investor presentations and SEC filings Industry trade journals and other literature Internal and external proprietary databases National government documents, statistical databases and market reports News articles, press releases and web-casts specific to the companies operating in the market Primary Research GlobalData conducts hundreds of primary interviews each year with industry participants and commentators in order to validate its data and analysis. A typical research interview fulfills the following functions: It provides first-hand information on the market size, market trends, growth trends, competitive landscape, and future outlook It helps in validating and strengthening the secondary research findings It further develops the analysis team s expertise and market understanding Primary research involves interactions and telephone interviews, as well as face-to-face interviews for each market, category, segment and sub-segment across geographies The participants who typically take part in such a process include, but are not limited to: Industry participants: CEOs, VPs, business development managers, market intelligence managers and national sales managers Outside experts: investment bankers, valuation experts, research analysts and key opinion leaders specializing in oil and gas markets Expert Panel Validation GlobalData uses a panel of experts to cross-verify research and forecast methodologies and drive its analytical content. The GlobalData expert panel comprises marketing managers, product specialists, international sales managers from energy companies, academics and geologists from research universities, consultants from venture capital funds and distributors/suppliers of oil and gas goods and services. Details of the makeup of the expert panel can be viewed through our website, and are available to clients on request. Page 63

12 11.6 Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means; electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. Page 64