Transcript - International Pavilion

COLOMBIA
Agencia Nacional de Hidrocarburos
ANH
New E&P Contract
COLOMBIA
THIS IS THE
Julian García
TIME
AND THE
PLACE
ANH Abril 7/04
Technical Director
Dallas, April 19th 2004
Colombia: This is the time and the place
1
Threefold strategy
New institutional structure
New contract
Improved business environment
COLOMBIA
THIS IS THE
TIME
AND THE
PLACE
ANH Abril 7/04
Colombia: This is the time and the place
2
New Institutional Structure
ECOPETROL S.A.
ECOPETROL
Entrepreneur
Entrepreneur
+ Regulator
Association
Contract
ANH
Resource Administrator
New
Contract
ANH Abril 7/04
Colombia: This is the time and the place
3
New Contract
Basic Characteristics
Type of contract
Duration
Work Programs
Operations
Economic Terms
ANH Abril 7/04
Royalty / Tax system
100% WI to contractor through contract life
ExplorationResponsabilidad,
6 yrs Costos
+ 4yrs yextension
Riesgos
Evaluation
1-2 yrs + 3 yrs extension
Exploitation
24 yrs + 10 yrs extension, per field
Automatic extensions on fulfilment of pre-established conditions
Exploration
Evaluation
Exploitation
Minimum program, per phase, adjustable
At contractor´s discretion
Plan accepted by ANH, with updates
Annual work programs
Autonomy and flexibility to the contractor
Follow up by ANH
100% production to the contractor, after royalty payment
Sliding scale royalty + Tax
Eventual payment of 30% of surplus income over trigger price of
around US$ 27/bbl WTI
Natural gas and heavy oil have no payment and other incentives
Assets belong to contractor
Colombia: This is the time and the place
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Economic Terms
Sliding scale
royalty
Per field
% production
Discount
Light crude
Gas Onshore
- 20%
Heavy Oil
- 25%
Gas Offshore
- 40%
20%
16%
20%
12%
10%
(>1000 ft)
8%
4.8%
0
5
125
400
600
Payment to ANH
contingent to high
prices and only
for light crude
Production
(mboed)
30% of surplus income
over trigger price
As a % of actual field value
Trigger price
Around US$ 27/bbl WTI
Adjusted with oil industry evolution
ANH Abril 7/04
Colombia: This is the time and the place
5
Contractor Take (1 - State Take)
International Competitiveness
60%
Colombia
New Model
Pakistan
Peru
50%
40%
30%
20%
10%
0%
Argentina
Ecuador
Brasil
India
Kazahistan
Australia
Trinidad & Tob.
Colombia
Thailand Sudan
Previous model
China
Angola
Gabon
Turkemistan Bolivia
Norway
Malaysia
Egypt
Indonesia
Venezuela
10%
20%
30%
40%
United Kingdom
50%
60%
State
70% Take
80%
90%
100%
40%
50%
Profitability
Source: PEPS-USGS and calculations ANH
ANH Abril 7/04
Colombia: This is the time and the place
6
Advantages
Type of contract
Duration
Work Programs
and Operations
Economic Terms
ANH Abril 7/04
Top quartile
Full materiality, 100% of prize to exploration risk
No need to commit in advance re. cost oil, reserves, or profitability
Time enough to discover, to make it feasible and to realize the reward
Standard or better than industry
Evaluation: grace period to make feasible any discovery
Exploitation period per individual discovery / field
Extensions w/o negotiations
Autonomy and flexibility
Right to monetize discoveries
Non intrusive follow up – easy contract administration
Top quartile
Stake take (50%) and profitability
Robustness, lower downside - higher upside potential
100% cost effectiveness / incentive (before tax)
Simplicity – easy mathematics, known crude marker, no cost control
Incentives for gas and heavy oil
Colombia: This is the time and the place
7
Business Environment
Colombia´s Turnaround
Sustained improvement of all
socio-economic indicators
Dramatic turnaround of the trend
of security and drugs
GDP growth (from avg. 2.5% last 10 years to ca 4%)
Unemployment rate (from 18% in 2001 to current 15%)
Fiscal deficit ( from -5% to -2.5% of GDP)
Foreign investment +25%
Stock Exchange Index +100% last 12 months
External debt : sustained at 50% GDP
Country risk rate: spread from 1000+ to < 300 basic points
President Uribe´s popularity rating 70%
Democratic and Social Security Policy
Financing sources + number of rebel forces weakened
Coca illegal crops from 160.000 (2000) to ca. 50.000 has. today
Around 5.000 rebels demobilized
Defense Spending increased from 2% early 90s to 5% of GDP
Attacks against infrastructure - 30%
Attacks against towns - 83%
Illegal road blocks –60%
Kidnapping –28%
The basis
Long and relativelly rich oil
industry – proved basin
Exciting exploration open to
unkown potential
ANH Abril 7/04
e.g. 5 giant discoveries, many skilled professionals,
12.000+ km. pipelines
Relatively un-explored country
Geological modelling: more questions unresolved than
answered
Colombia: This is the time and the place
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Conclusions
New institutional structure
Ecopetrol as entrepreneur – ANH as resource administrator
New top quartile contract
R/T system
Time enough to discover, make it feasible and realize the reward
Autonomy and flexibility for work programs and operations
Top quartile economic terms
Simple
Business environment turnaround
Sustained improvement of all socio-economic indicators
Dramatic turnaround of the trend of security and drugs
Long and relatively rich oil industry – proved basin
Exciting exploration open to unkown potential
Colombia: This is the time and the place
ANH Abril 7/04
Colombia: This is the time and the place
9
COLOMBIA
THIS IS THE
TIME
AND THE
Thank you !
PLACE
www.anh.gov.co
ANH Abril 7/04
Colombia: This is the time and the place
10