Colombia one of CNPC targets for investment

PUBLISHED : Saturday, 28 November, 2009, 12:00am
UPDATED : Saturday, 28 November, 2009, 12:00am

China National Petroleum Corp, the country's largest oil and gas producer and parent of listed PetroChina, says Colombia will be one of its investment focuses in South America.

Despite the fact the oil major has yet to start operations in Colombia, it has already secured exploration rights in two areas there.

'We have not started exploration work on our two blocks in Colombia, but the country will definitely become one of CNPC's investment focuses in the region,' CNPC South America general manager Wu Dongshan told the Third China-Latin America Business Summit.

His comments came two days after Colombia's Minister of Mines and Energy Hernan Martinez said the country would open 170 blocks next month for tendering of oil exploration rights.

Wu did not provide details of the two blocks, but Reuters said CNPC had a 30 per cent stake in a consortium with Argentina's Pluspetrol and Korea National Oil Corp on the CPE 7 field in the eastern region of Llanos, which accounts for about 70 per cent of Colombia's total oil output.

Colombia aimed to raise the total output of state oil company Ecopetrol and foreign firms operating in the country to 1.3 million barrels a day by 2015 from about 700,000 a day currently, National Planning Department general director Esteban Piedrahita said.

The country, whose oil exploration has been hampered by a long-running insurgency and drug cartel violence, is eager to attract new oil investment, as security has improved greatly in recent years.

CNPC and its South American partners produced 10.56 million tonnes of oil last year in that region, or 7.6 per cent of its total output. The output primarily came from Venezuela, Ecuador and Peru, much of it from mature and declining oilfields revitalised by CNPC's technology.

The company and state-owned Petroleo de Venezuela signed a framework agreement last year to form a joint venture that will produce 20 million tonnes of heavy oil, which is dense and expensive to refine, in Venezuela.

The agreement also envisioned the construction of a refinery in western Guangdong province to process oil from the Junin 4 field in Venezuela's Orinoco heavy oil belt.

While CNPC and its partners aimed to triple output in South America from last year by 2013 under the accord, Wu said it was 'only a target that would not be easy to achieve'.

A tender originally due in April for seven undeveloped blocks with a total potential annual output of 40 million tonnes in the Orinoco oil belt had been shelved indefinitely, the International Energy Agency said.

Venezuelan Oil Minister Rafael Ramirez said potential bidders needed more time, but analysts said the move was caused by lower oil prices, the global financial crisis, uncertain regulations and less favourable investment terms for foreign firms.