Political instability has been a key factor in stopping investment in some producing countries. This is the case in Bolivia, Ecuador and Peru, where multinational companies could not count on sufficient security to comply with exploration plans. The situation in Colombia is different, which, thanks to the application of a series of financial adjustments, provided the necessary confidence to its international partners and, therefore, confirmed an important exploration plan until 2024.
Bolivia. One of the priorities of the government of President Luis Arce is to reactivate the country’s economy through the hydrocarbon sector. Thus, at the beginning of the 2021 administration, in view of the need to increase hydrocarbon reserves, a new exploration plan was drawn up, aimed at reactivating many projects that were delayed during 2020 and which are now in full execution. In fact, the new plan includes 19 exploratory projects, distributed in seven of the nine departments of the country. The aim is to discover 5 Tcf)of natural gas, with an investment of approximately $1.550 billion for this and the next four years. Investment in hydrocarbons until December will reach $780 million, the highest since 2018.
The hydrocarbon exploration plan approved by state-run YPFB guarantees that the export and internal consumption of gas will start in three areas: the southern and northern Sub-Andean; Boomerang; and Madre de Dios. This will continue until the end of 2022. According to the Ministry of Hydrocarbons, the plan aims to leave a greater volume of gas reserves for the 2025-2026 period. The plan includes the drilling of 17 exploratory wells and development holes to find hydrocarbons, but depending on the evolution of the project, the number could be increased.
Colombia. State oil company Ecopetrol will make investments between $4.8 billion and $5.8 billion in 2022, according to a strategic plan focused on profitable production growth, Fig. 1. The investments, which will be financed with the firm’s own resources, will also give continuity to the 2030 Strategic Plan of Interconectado Eléctrica S.A. (ISA), control of which was acquired this year by Ecopetrol.
The investment plan was calculated with an expected Brent crude oil price of $63/bbl, on average, for 2022 and a break-even price close to $36/bbl. According to the company’s plan, about 70% of the investment will continue to be allocated to projects in Colombia, while the remaining 30% will be for investments in the U.S. (14%), Brazil (8%), Peru (5%) and Chile (3%).
On the other hand, from 2022 through 2024, around 1,800 development wells will be drilled in different basins of the country. And in the unconventional fields, investments of more than $700 million are foreseen to continue with the growth of production in the Permian basin of Texas (U.S.), and capex of $20 million will be spent in the comprehensive pilot projects of Kalé and Platero, in the Middle Magdalena Valley.
Ecuador. After center-right candidate Guillermo Lasso won the presidential election last April, state oil company EP Petroecuador confirmed that the oil sector by 2022 will launch tenders for the Sacha, Amistad and Intracampos 2 fields, in the amount of $1.65 billion. It is an investment that the government cannot face without the help of private companies.
However, to fully bring back foreign and private investors, a reform of the Hydrocarbons Law is necessary.
Oil reform will be necessary to delegate to the private initiative the operation of the 22 oil fields that are in the hands of Petroecuador and that need million-dollar investments that the government cannot sustain. If the plans promoted by the Ministry of Energy are fulfilled, oil production by the end of 2022 would go from 487,000 bpd to 580,000 bpd.
Guyana. The President of Guyana announced that his administration plans to invest $3.5 billion dollars until 2025 as a result of projects and investments made in the oil industry.
The Minister of Natural Resources recently confirmed that offshore oil exploration carried out in Guyana has had a success rate of 80%, with 26 discoveries. He announced that it is estimated that by 2026, Guyana could produce 1.0 MMbopd. This figure will be reached, once the four oil development phases are completed, the first of which has already started, with the second expected to begin in 2022. By the second half of 2022, he indicated that his country already expects to produce 320,000 bopd.
Peru. Due to the political crisis and complications of the presidential elections that accompanied the first seven months of this year, the Minister of Hydrocarbons and Energies reported that only $400 million will be allocated in 2022 for the execution of exploration projects and hydrocarbon exploitation. This is with a view to achieving an annual oil income that exceeds $2.1 billion.
According to the Minister, the planned investment will allow work to continue on important projects that are part of an exploratory plan to maintain the level of hydrocarbon production. Likewise, he explained that the strategy will make it possible to fulfill the exploitation of natural gas with a view to 2025, to guarantee the development of several current industrialization projects and others that are in the portfolio.
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