The oil and gas machinery and services market continues to represent an important opportunity for U.S. companies as the Colombian government continues to place oil and gas exploration and production a top priority. Colombia is close to achieve production one million barrels per day as large upstream investment levels of USD 5 billion per year.
According to the Ministry of Mines and the National Hydrocarbons Agency in Colombia, during 2011, Colombia’s crude oil production averaged 971,000 barrels per day (with a peak of 939,895 barrels per day), and getting closer to the projected 1.2 million barrels per day, targeted for 2014. During the same period, Colombia’s average natural gas production averaged 1,036 million cubic feet per day (with a peak of 1,091 million cubic feet per day). Ecopetrol is currently the leader in crude oil production due to the implementation of enhanced production technologies in different fields.
Imports market is expected to grow 52 percent in between 2010 and 2011 maintaining its trend fueled by the development of ongoing (and planned) oil & gas mega projects and the reactivation of investments delayed by the global economic crisis. In 2010, the imports market reached USD 1.5 billion. U.S. products represented 36.7 percent of the total imports in 2010, followed by China (15.1 percent), Mexico (10.3 percent), Germany (5.5 percent), among others.
Chinese imports continued to outpace year on year imports over the last five years. Chinese companies’ main competitive advantage is lower cost compared to similar equipment from established vendors. However, the disadvantage is the lower quality and reliability of Chinese equipment. U.S. equipment suppliers are urged to keep in touch with local distributors and remind them of the benefits of U.S. equipments’ long-standing compliance with industry standards, reliability, lower shipment costs, innovation, and the current favorable exchange rate.
Colombia’s known oil reserves remains in two billion barrels due to the lack of large oil discoveries, allowing for the country to be self-sufficient until 2018 allowing more time for the country to identify new crude oil reserves, or may become a net importer of crude oil, if no major discoveries are found before then.
Natural gas reserves reached 5.4 tera cubic feet (TCF) of proven reserves, and up to 7 TCF of total reserves. Despite a significant number of exploration and production (E&P) efforts, only minor discoveries have been made so far, mainly due to the country’s complex geology and geography. A notable exception is the potential for up to four TCF of coalbed methane associated gas discovered by Drummond at its La Loma (state of Cesar) and Ranchería river (state of Guajira) sites. The government has also expressed interest in developing the country’s shale oil and shale gas reservoirs.
Oil and gas companies are conducting an aggressive exploration campaign throughout Colombia, including assessing its offshore Caribbean and Pacific Ocean basins. Despite the current oil prices (lower than 2008), these activities offer significant opportunities for U.S. exploration and production (E&P) firms as well as equipment manufacturers and service providers interested in this market in the medium and long term. The National Hydrocarbons Agency (ANH) continued its ambitious exploration program that includes direct seismic, gravimetry and magnetometry tenders, complementing E&P companies that are also engaging in related geological, stratigraphic and petrography studies. The ANH is also negotiating E&P and technical evaluation contracts to gain a better understanding of the country’s hydrocarbons resources.
On late May 2011, Ex-Im Bank announced the approval of US $2.8 billion for the developer of the modernization of the Cartagena Refinery project (Reficar), and complements approval of USD 1 billion dollar preliminary commitment of ECOPETROL to support the acquisition of U.S. goods and services to support the company’s key goals.
Upon the approval and implementation of the U.S. – Colombia Trade Promotion Agreement, U.S. equipment exporters will be more competitive as products will receive immediate duty-free treatment. In addition, the ban on remanufactured products will be lifted which will further improve return on investments on exploration and production projects.
Oil and Gas Machinery and Services