Oil expertise from Venezuela gives Colombia's industry a boost

Until recently in a free fall because of terrorist attacks that scared off wildcat drillers, Colombia’s oil production is staging a surprisingly robust rebound, boosted in no small part by the arrival of oil industry executives and engineers banished by Venezuelan President Hugo Chavez.

Increased production in Colombia, a close U.S. ally, is important for U.S. consumers because it advances the goal of reducing the country’s reliance on oil imports from unstable, unreliable or unfriendly governments.
At a public forum last month, Mining and Energy Minister Hernan Martinez said Colombian crude output would reach an average 700,000 barrels a day by December, cementing the nation’s position as Latin America’s fourth-largest producer after Mexico, Venezuela and Brazil. Colombia’s oil production for all of 2009 is estimated to average 645,000 daily barrels, up 10% from average daily output of 589,000 in 2008.

Recent statistics from the U.S. Energy Department show that Colombia is already a significant supplier to the United States. In May, it exported an average of 243,000 barrels of crude daily, making it the 13th-largest shipper of oil to the U.S.

“Colombia is ideally placed geographically to become an important exporter,” said Fred Kozak, an energy analyst at Canaccord Capital Corp., a Calgary, Canada, investment firm.

Kozak and other observers expect production and exports to climb in coming months. The country is benefiting from an influx of investment attracted by its improved security. Oil pipeline attacks by leftist rebels, once the bane of the industry, totaled 32 last year, down from 261 in 2001.

One discouraging aspect for investors about Colombian oil exploration is that no big new oil fields have been discovered after three to four years of intensive drilling. Exxon Mobil Corp., Petrobras and other partners spent $135 million on a single deep-water well off Colombia’s Caribbean coast in 2007 and came up dry.

But unlike Mexico and Venezuela, where oil output is skidding, Colombia’s is on the rise after years of decline, thanks mainly to better recovery of oil at existing fields. For all of 2009, oil output will average 645,000 barrels a day, up 10% from the year before, Martinez said.

Los Angeles Times