Page 5 - LatAmOil Week 42 2021

LatAmOil COMMENTARY LatAmOil

These figures are roughly in line with the assess- their results, there is tempered interest in fron-
ment of Canada’s Canacol Energy, Colombia’s tier and offshore exploration blocks. This is an
largest independent producer. Canacol has industry sentiment. Plus, only a relatively select
determined that Colombian domestic gas con- group of companies can operate offshore.”
sumption is growing by around 3% each year.
Finding enough gas
No offshore solutions Armijos conceded that Colombia’s government
Under these conditions, the South American had taken some steps to promote the develop-
state may not have an easy time achieving its ment of the domestic gas sector. But he also
goals with respect to blue hydrogen production. pointed out that Bogota had not made many
The Colombian government appears to hope policy changes that were specifically designed to
that the exploration and development of new support upstream exploration and production.
offshore fields may relieve some of the pressure Rather, he said, it has focused on the demand
on the supply side. Energy Minister Diego Mesa side, offering tax incentives to consumers and
made remarks to this effect in July 2021, when end-users of gas, including producers of blue
he told Bloomberg that the government was hydrogen.
optimistic about the outcome of future offshore “We have seen some talk from the Deputy xxx
drilling projects by international oil companies Minister of Energy [Miguel Lotero] of poten-
(IOCs) and also for this year’s Round 2021, tial incentives for the natural gas E&P sector,
which includes more than 30 blocks. but there is nothing out yet,” he told NewsBase.
But Andres Armijos, the head of Latin “On the other hand, there have been numer-
America research at Houston-based Welligence ous incentives already brought forward on the
Energy Analytics, recently said he did not expect demand side (incentives for the increased use
offshore exploration to reduce the pressure on of natural gas in many ways, power, vehicular,
the supply side. “We see natural gas produc- residential, etc.).”
tion to be continually declining if no significant As such, Colombia is not yet in a position to
resources are found in the medium to long term expect that offshore exploration and develop-
to mitigate this situation,” he told NewsBase. ment projects will give blue hydrogen produc-
Armijos took a cautious stance on the poten- tion a boost. Meanwhile, its alternatives are not
tial of offshore fields, explaining that he believed necessarily any better. As noted above, most the
IOCs would likely to show more interest in the country currently gets most of its gas from fields
onshore blocks that the National Hydrocarbons in the Guajira basin that are maturing. Officials
Agency (ANH) has included in its upcoming in Bogota have expressed optimism about the
licensing round than in the offshore sites, many potential of unconventional gas fields, specu-
of which are in frontier basins. He also suggested lating that high-tech drilling techniques such
that the lacklustre respsonse to Brazil’s 17th Bid- as hydraulic fracturing (fracking) might boost
ding Round, which took place on October 7, was oil and gas reserves. However, unconventional
an indication that IOCs were taking a cautious projects are likely to face legal challenges and
approach to offshore projects. Even major play- widespread social opposition, so the idea may
ers with extensive offshore capabilities are mov- not gain much momentum before 2030.
ing slowly on this front, he said. In other words, Colombia’s prospects for
“The ANH is having its Round 2021 this year, securing new sources of domestic gas produc-
which includes some offshore blocks which they tion during the 2021-2030 period – that is, dur-
hope will bring more IOCs into the country. ing the first phase of the Hydrogen Roadmap,
However, the list of qualified companies shows when gas demand will be highest – are slim. The
independents that are likely only interested in country may therefore need to examine options
the onshore acreage on offer,” he commented. for importing gas – not just for blue hydrogen
“Having seen some recent results for other off- projects, but also to cover domestic consump-
shore exploration rounds in the region ... and tion. ™

(Image: BP)

Week 42 21•October•2021 www. NEWSBASE .com P5