Colombia to offer 15 new blocks in the Sinú San Jacinto Basin

Earlier this month (September 2017) the Colombian Minister for Energy unveiled government plans to offer exploration licences for 15 blocks in the Sinú-San Jacinto Basin in the north-east of the country later this year. Colombia’s Agencia Nacional de Hidrocarburos (ANH) expects approximately 50 companies to participate in the licensing process, which would generate around $300mn of investment.

‘This proposed round follows a three-year hiatus in oil and gas licensing activity by the Colombian government,’ reports law firm CMS. ‘The recommencement of oil and gas licensing activities is one of the strategies by which the Colombian government is seeking to extend and guarantee self-sufficiency in hydrocarbons for a further five years. Interestingly, Sinú-San Jacinto will be the first block allocation process to be carried out under the new Acuerdo No. 002 (the latest regulation issued by the ANH). This new regulation was intended to ensure a more demand-led licensing process than in the past, and to allow operators a greater degree of flexibility in how they manage their investment commitments. Under the new contracts, the government will receive income from tax revenues and royalties, as well as a production sharing percentage to be proposed by the bidders. This percentage and the proposed minimum work commitments will be the criteria used to evaluate the bids.’

CMS also reports that the ANH has ‘gone to great effort to boost the quality and quantity of data available to potential bidders’. According to Orlando Velandia, Head of the ANH: ‘The Colombian government has invested more than $250mn in the last five years and this will allow us to offer areas with really good geological data.’

All the blocks to be licensed in this round are located onshore, two (SN20 and SN21) are mature fields, while the others are classified as emerging areas.