A Promising Year for Colombia's Hydrocarbon Sector
If there’s something Colombia can be sure of, it’s that the initiatives created to reactivate the hydrocarbon sector’s investments have confirmed the country’s leadership status compared to other nations of the region. A perfect example of this is the Continuous Area Nomination Process (known in Spanish as PPAA), which establishes the guidelines national and foreign companies must follow and comply with to invest in oil and gas projects present in the country.
The PPAA
The PPAA’s operation is useful and attractive to investors due to 4 characteristics: It’s permanent, dynamic, competitive, and inclusive. This means that once investors are qualified, it allows them to maintain access to the later bid rounds.
Furthermore, it allows companies to participate in continuous offers of onshore and offshore O&G areas that have been identified and deemed as valuable opportunities through geological research. Companies also have the opportunity to propose their own areas of interest, making the whole process dynamic and interesting to both sides, generating valuable competition for the country and allowing investors to increase their activity and presence as much as they desire.
In 2019, through the first and second PPAA cycles, 26 areas were allocated with investment commitments of approximately USD 1 billion; while in 2020, the third cycle awarded 4 areas with an estimated investment of USD 40 million. And there is more to come… The fourth cycle was announced in November 2020 and will offer approximately 30 areas onshore and offshore, higher investment in geological research, the adoption of new technologies, the release of a new land map, and a simplified process, amongst other features designed to improve the efficiency and productivity of the process.
The potential that this fourth cycle offers underscores the Colombian Government and ANH’s interest in investing in new technologies and geological studies, already finding incredible investment opportunities and will be a turning point in terms of realising the O&G potential of the country.
The Future: 2040 Vision
The ANH is already looking to the future with their 2040 vision. Focussed on continuous improvement and adapting quickly to face upcoming challenges, as well as promoting strategic alliances and looking for new agreements that can help improve the results of the sector. By delivering on this vision, they will continue to improve their agility, efficiency and reliability.
After a season of changes and adjustments, 2021 presents a portfolio of great opportunities to invest in Colombia’s hydrocarbon industry - a sector that will play a key role in the country’s economic reactivation in a post-Pandemic world.
