High Taxes and Royalties Hinder Oil Exploration in Colombia

Oil companies operating in Colombia face crippling taxes and royalties that have led to a significant decrease in exploratory drilling efforts. The Colombian government collects an astonishing 85% of the profit made by foreign oil companies, making it one of the highest tax rates in the world. This has resulted in a decline in drilling from 53 wells in 1979 to just 14 in 1993. Despite these challenges, companies like British Petroleum plc have found the region worth investing in, developing fields in eastern Cusiana Colombia.

Key Takeaways:

• Colombia's high taxes and royalties have led to a significant decrease in exploratory drilling efforts, from 53 wells in 1979 to 14 in 1993.
• The government collects approximately 85% of the profit made by foreign oil companies, making it one of the highest tax rates in the world.
• British Petroleum plc has found the region of eastern Cusiana Colombia worth investing in, with estimated reserves of 2 billion bbl.
• The Cusiana oil field is BP's largest find since the discovery of Alaska's Prudhoe Bay field in the late 1960s.
• A consortium of BP, Total S.A., Triton Energy Corp., and Ecopetrol (Colombia's state-owned oil company) operates the Cusiana and Cupiagua oil fields, with Ecopetrol receiving half of the profits.
• Texaco Inc. plans to invest $90 million in its onshore and offshore gas operations in Colombia over the next five years.

Statistics:

• 85%: The percentage of profit collected by the Colombian government from foreign oil companies.
• 53: The number of exploratory wells drilled in Colombia in 1979.
• 14: The number of exploratory wells drilled in Colombia in 1993.
• 2 billion bbl: The estimated reserves in the Cusiana oil field.
• $42 million: The cost of drilling one exploratory well in Colombia's eastern plains.
• 50,000 b/d: The planned daily oil production by BP in the Cusiana field by the end of 1994.
• 500,000 b/d: The planned daily oil production by BP in the Cusiana field by the end of 1997.
• 300 MMcfd: The daily gas production by Texaco Inc. in Colombia.

Sources:

• "Colombia's high tax, royalty rates seen discouraging oil investment" - Undated article from an undisclosed publication, referenced in the article.
• Interview with Gerardo Heller Ovalle, an economist with the Colombian Petrol Association.
• Interview with Jaime Triana, an engineer for British Petroleum Co. plc (BP).
• Article "BP Finds Oil in Colombia" by the Los Angeles Times, February 14, 1992.