According to the current Minister of Mines and Energy, Andrés Camacho Morales, “it is a discovery that the country hasn’t seen in 45 years; it’s a historic find, and it will mean a significant backup reserve for the country.”

The well is located in the Tayrona Block, approximately 31km off the coast, and will be operated by Petrobras, which holds a 44.44% stake, while Ecopetrol owns 55.56% of the project.

According to the Presidency of the Republic of Colombia, Petrobras’ initial estimates indicate that production from the Sirius well will begin between 2029 and 2030 with four production wells and an expected output of 13.3 million cubic meters per day over ten years. In the second stage, which would start in 2031, one or two production wells would be added, with a production rate of 15 million cubic meters per day.

An important reserve, but it does not solve gas problems

In September of this year, Colombia’s nine most important energy associations called for measures to be adopted to ensure that the country does not run out of energy in the next two years. In this statement, the associations highlighted the following:

Situation in the Electric Sector

• According to experts in the sector and the Mining and Energy Planning Unit (UPME) itself, by 2026 there would not be enough firm energy supply to cover the entire demand, and from December 2028, if El Niño or droughts occur, there would be energy rationing.
• According to a report by XM, reservoirs reached critical levels in April (below 30%), and there is a risk of hydroelectric energy shortages between December 2024 and January 2025.
• As of today, the system’s usable reservoir level, according to XM, is at 50.19%, a figure below historical averages for this period and 1.1 percentage points below the shortage path.
• Regulatory uncertainty, slow project rollouts, and growing energy consumption demand immediate actions to avoid future energy crises.

Situation in the Gas Sector

• Natural gas is a key contributor to the quality of life for Colombians, with 36 million Colombians having natural gas in their homes today, 84% of whom are families from social strata 1, 2, and 3 (low-to moderate income households).
• Natural gas vehicles (NGV) not only reduce pollutant gas emissions but also lower costs for the transport sector: 87,000 taxi drivers and 1,400 transport operators switched to NGV, as well as public mass transit systems that run on this energy source (100% of the fleet in Cartagena and Valledupar and 30% of the SITP-public feeder buses-in Bogotá). These users depend on the availability of natural gas in their daily lives.
• The most widely used energy source by industries is natural gas, representing 32% of the total energy used by this sector. It is essential in the production of food, glass, oxygen, cement, paper, fats, chemicals, salt, packaging, ceramics, appliances, and more. The lack of natural gas will lead many industries to revert to consuming higher-emission fuels, to plant closures like those producing fertilizers—strategic for the country’s food security—or to the elimination of high-value-added product lines, resulting in employment and inflation consequences.
• The electricity market operator XM identified a significant need for thermal generation, especially natural gas, due to low hydroelectric potential in its latest analysis of the energy landscape.

In a recent statement made by Ecopetrol, the company reached the Cenit-Promigas agreement to ensure gas supply in Colombia.

Above photo: Gas well Orca Norte -1. provided by Ecopetrol

Last August, the two brothers were arrested in São Paulo on charges related to fraud in the contracts between the Transpetro subsidiary of state owned petroleum company Petrobras and the Efromovich brothers’ Estaleiro Ilha S.A. (EISA) shipyard in Brazil. The Efromovich brothers were accused of paying bribes and committing “irregularities” in the bidding process to win contracts, costing the government approximately $110 million USD. Ilha S.A. went bankrupt in 2015.

Judge Marcus Vinicius Reis Bastos, of the 12th Federal Court of Brasilia ruled that the prosecution’s case “does not contain a description of the crime and all its circumstances,” as “it does not indicate the antecedent of the crime necessary for the configuration of the crime of money laundering, or because it does not contain a logical narrative of the facts.”

Though briefly arrested, the Efromovich brothers were released to defend themselves. Born in Bolivia and of Polish descent, Germán Efromovich holds multiple citizenship and is well established in the Colombian corporate milieu, most notably as the former controlling shareholder of Avianca Airlines.

 Date: 21-25 June 2021

Organizer: Vostock Capital

Web site: https://bit.ly/3xhxHBS

The 3rd Colombia Oil & Gas Online Business Congress and 1-2-1 meetings is an international business platform, bringing together flagship oil and gas companies from Latin America and world suppliers for the industry. The Colombia Oil & Gas 2021 Online Business Congress enables executives to continue networking, share ideas and experience, & work out anti-crisis solutions in a safe virtual format.

Request the brochure

Congress Highlights:

 250+ decision-makers of Oil and Gas industry from Colombia and all-over Latin America

Colombia, Ecuador, Brazil, Peru, Argentina, etc., as well as government officials, regulatory bodies, project owners, technology and service providers, international and local investors

 Strategic Opening Session – Government Plans to Strengthen the Oil and Gas Industry in Colombia in the Post-Pandemic Times

New governments strategies, plans of projects initiators, operators, and investors

 Major Oil and Gas Projects of Colombia and LATAM: Status and Updates in Current Economic Situation

Upcoming, ongoing, and planned projects in the region; identification of the new strategies of the key companies to survive in this new economic situation?

• Breakthrough Innovations for Oil and Gas Industry in the region

Innovative technologies, equipment, and services, discussions on what technology is needed for the optimization of the projects.

• Attracting Potential Investors and Financial Opportunities to the Oil and Gas Industry in Colombia and LATAM.
• Hotline with business experts!

Ask your burning questions, call for advice, and share your experience during and after sessions!

 Online 1-2-1 Meetings and Business Networking

Connect with industry leaders while working from home

Request the brochure

 Among the regular participants: EcoPetrol, Biomax, ANH, Campetrol, CEPSA, Emerald Energy, ConocoPhillips, CleanEnergy Resources, Canacol, Trafigura, GranTierra Energy, TGI, InterOil, ProGasur, PromiGas, Equion, Hupecol, Mompos Oil, PDVSA, Refineria Sebastopol, Proma, Chevron, Repsol, Terpel, NGEC, Tenaris, MCDERMOTT, Frontera, Shell, Petrobras, Interoil, Garrido, AECOM, Montagas, ABC, CruzSur, Siemens, Wattle, Petro Colombia, Halliburton, Sacyr, Mansarovar, Spiecapag, Bridgemaster, Tracerco, TPC, IBM, Posneft, Honeywell, Tecpetrol and many more.

Organizing Committee Contact:
Catalina Velasco,

LatAm Marketing Manager
cvelasco@vostockcapital.com

Official website: https://bit.ly/3xhxHBS 

Sponsored content

According to Brazilian government sources, the Efromovich brothers were arrested today in São Paulo on charges related to fraud in the contracts between the Transpetro subsidiary of state owned petroleum company Petrobras and the Efromovich brother’s Estaleiro Ilha S.A. (EISA) shipyard in Brazil. The Efromovich brothers are accused of paying bribes and committing “irregularities” in the biding process to win contracts, costing the government approximately $110 million USD. Ilha S.A. went bankrupt in 2015.

Also read how Efromovich was ousted from Avianca Airlines (click here)

A court in Curtiba, Brasil ordered prison for the brothers, but that order was modified to house arrest with electronic surveillance due to the Coronavirus COVID-19 Pandemic. 70 year old Germán Efromovich was born in Bolivia to a family of Polish immigrants and holds Brazilian, Colombian & Polish citizenship.

The charges so far do not indicate any criminal wrongdoing related to Avianca Airlines Colombia, or Avianca Airlines Brasil, both formerly controlled by Efromovich & both now bankrupt.

“Full cycle costs are above price expectations for 2020, leading to negative cash flow generation,” said Lucas Aristizabal, Senior Director. “Companies will need to support their liquidity with CapEx and OpEx cuts, as well as access debt.”

With half-cycle costs below price expectations, almost all Latin American exploration & production (E&P) companies could generate enough cash flow to cover operating and administrative costs, and interest expenses, assuming production remains relatively flat. Fitch estimates that a 10% decrease in production could increase average half-cycle costs by up to $4/boe.

All vertically integrated Latin American oil and gas companies, most of which are national oil companies, benefited from vertical integration during 2019. Although materially lower demand for oil products in 2020 will hinder downstream cash flow generation, crack spreads are expected to remain positive, complementing cash flow generation from downstream businesses – notably for Ecopetrol, Petrobras and YPF. Pemex’s downstream business is not typically a material cash flow contributor.

Fitch expects Latin American oil and gas production to continue the declining trend observed in recent years.

Above photo: Ecopetrol’s refinery in Barrancabermeja, Colombia on the banks of the Magdalena RIver (courtesy Ecopetrol)

Click here for more information or to register.

Online Forum participants will benefit from

• Prescheduled One-on-One meetings in virtual rooms
• Prescheduled brief presentations and meetings
• Online platform that allows to ask, comment, discuss in a chat room or by video call
• Closed One-on-One chat rooms with all participants available
• Closed Online VIP-club for C-suite
• Enlarged delegations from Latin America Oil & Gas companies
• ZOOM-cocktail party and other options for informal networking!

Forum highlights:

• Online One-on-One Meetings and Business Networking – connect with industry leaders while working from home.
• Online networking, virtual bar and zoom-cocktail party, online VIP-club for C-suite, and a lot more.
• Hotline with business experts: Ask your burning questions, call for advice, and share your experience during and after sessions.
• 400+ senior executives of growth and major Oil and Gas companies from Colombia and the rest of Latin America, investment projects, technological leaders, and industry experts
• Strategic plenary session and discussion: Colombia´s oil and gas industry revival. What are the most effective short-term and long-term anti-crisis and risk management strategies? What is the best strategy in the time of uncertainty and turbulence?
• Special focus: interactive parallel technical discussions – pose your burning questions about geological exploration, uncapping unconventional resources and monetizing oil and gas to your peers from Oil and Gas companies from Colombia and Latin America
• Innovation for Colombia´s Oil and Gas Industry: How to optimize costs and improve efficiency in current market situation?
• Case Studies. Success formulas and candid tips from industry leaders: productivity growth, optimization of production processes, and much more

A safe online platform: Stay connected with colleagues and experts from your home office

Among the regular participants: EcoPetrol, Biomax, ANH, Campetrol, CEPSA, Emerald Energy, ConocoPhillips, CleanEnergy Resources, Canacol, Trafigura, GranTierra Energy, TGI, InterOil, ProGasur, PromiGas, Equion, Hupecol, Mompos Oil, PDVSA, Refineria Sebastopol, Proma, Chevron, Repsol, Terpel, NGEC, Tenaris, MCDERMOTT, Frontera, Shell, Petrobras, Interoil, Garrido, AECOM, Montagas, ABC, CruzSur, Siemens, Wattle, Petro Colombia, Halliburton, Sacyr, Mansarovar, Spiecapag, Bridgemaster, Tracerco, TPC, IBM, Posneft, Honeywell, Tecpetrol and many more.

Organizing Committee:
Vostock Capital Team,
Tel:     +7 495 109 9 509
Fax:    +44 207 231 1600
Email: events@vostockcapital.com
Web:  https://colombiaoilandgas.co/

“This bet in Brazil is part of the business plan designed to continue increasing our oil and gas reserves.” – Felipe Bayón, president of Ecopetrol

By winning the joint bid, which Ecopetrol submitted along with BP and China National Offshore Oil Corporation (CNOOC), the company now has an interest in exploration output from a highly sought after and potentially very lucrative section of the vast offshore “pre-salt” area, where billions of barrels of oil are located deep below the seabed.

As part of the bid agreement approved by the country’s National Agency of Petroleum, Natural Gas and Biofuels (ANP), 63.8% of the oil found in the block will go to the Brazilian government. BP, as operator of the planned exploration, holds the rights to 50% of the remainder of the extracted oil. CNOOC will get 30% and Ecopetrol will receive 20%.

According Reuters, the consortium also agreed to pay around $125 million USD up front to the Brazilian government for rights to explore the Pau-Brasil block, which spans 1,184 square kilometers off the southern coast of the states off São Paulo and Rio de Janeiro.

“We are very pleased to enter one of the offshore exploration areas with the greatest hydrocarbon potential in the world, which allows us to diversify and strengthen the Ecopetrol Group’s exploration portfolio,” said Felipe Bayón, president of Ecopetrol.

In announcing the news, Ecopetrol released the above chart from the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP) showing the location of the Pau-Brasil block off the southern coast of Brazil. (Credit: Ecopetrol / ANP)

Though Ecopetrol will benefit the least of the three companies involved in the bid, the move to participate in the Brazilian auction aligns with the company’s ongoing push to increase its reserves by looking beyond mainland Colombia.

“This bet in Brazil is part of the business plan designed to continue increasing our oil and gas reserves,” said Bayón.

This marks the fourth exploration block in Brazil that the Bogotá-based company now holds an interest in, with other bids won in the Foz do Amazonas, Potiguar, and Ceará Basins.

Ecopetrol has also won joint bids on coveted blocks off the coast of Mexico following the nation’s decision to open its oil industry and has conducted a series of offshore drilling expeditions in U.S. waters in the Gulf of Mexico as well as the Colombian Caribbean.

Today’s auction in Brazil was fifth conducted so far by the Brazilian government for blocks within the pre-salt region.

Other companies that won bids at today’s pre-salt block auction include Exxon Mobil and Qatar Petroleum International (joint winners of the Tita Block in the Santos Basin), Royal Dutch Shell and Chevron (joint winners of the Saurno Block in the Santos Basin) and Petrobras (winner of the Tartaruga Verde Block in the Campos Basin).

The Shell/Chevron group and the Exxon/Qatar group each agreed to pay some $750 million USD initially to the Brazilian government for their rights, per Reuters.

When the pre-salt discovery off the Brazilian coast was made in 2006, it immediately became one of the biggest the world had seen in decades. It gets its name from the ancient nature of the fossil fuels that sit below a geological layer of salt located very deep underground and dating back some 160 million years.

Extraction of the oil had been quite expensive early on, but costs have fallen in recent years, making the massive discovery much more commercially lucrative and enticing for Brazilian state oil company Petrobras and the wide range of global companies that have been acquiring an interest.

READ MORE: Ecopetrol Agrees to Deal to End Labor Dispute with Petroleum Workers Union

Widespread corruption and political scandals, as well as the country’s upcoming presidential election, have created a climate of uncertainty that has clouded the Brazilian oil industry. But these auctions continue to bring in billions of dollars for the nation’s government as the investment opportunities remain compelling to many of the world’s top oil firms.

(Main photo credit: Catmoz / Pixabay)

“I am deeply sorry and ask forgiveness from Colombians for this shameful act that should never have happened and that I have just learned about,” said Santos in a statement.

Though he didn’t mention the source of the financing by name, the statement came amid blowback over the ongoing and expanding region-wide corruption scandal surrounding Brazilian construction firm Odebrecht SA that has ensnared politicians throughout Latin America.

Despite the recognition, Santos also stressed that, while violating the ethical and accounting norms of the campaign, this transgression cannot be presumed to have stemmed from acts of corruption in his administration. He further called on authorities to “investigate all the decisions of my administration and sanction those responsible for any act of corruption.”

In an interview yesterday with Bogotá’s Blu Radio, former Santos campaign manager Roberto Prieto, while saying that the president had no knowledge of any payment and “absolutely nothing to do with it,” did acknowledge that Odebrecht had paid for some two million election posters during the 2010 campaign.

The admission comes a little over a month after the nation’s attorney general revealed in February that some $1 million USD may have been paid from Odebrecht to Santos’ subsequent presidential campaign for re-election in 2014. Following that announcement in February, Prieto denied the claims, saying that “never have I even shared a coffee” with the man alleged to have taken the bribe from Odebrecht. Camilo Enciso Vanegas, secretary of transparency for the Santos administration, also denounced the allegations at the time as being rooted in an attack by political opponents.

Other high-profile fallout in Colombia over the Odebrecht scandal has included: the arrest the two officials charged with receiving some $11 million USD in bribes, former senator Otto Nicolás Bula and former deputy transport minister Gabriel Garcia Morales; the government terminating two major contracts awarded to Odebrecht, a massive dredging effort on the Magdalena River and a large highway project; calls for Odebrecht to sell its operations and leave the country altogether; the attorney general investigating the possibility that Odebrecht gave funds to Santos’ 2014 election opponent Óscar Iván Zuluaga; and allegations that Odebrecht has been making payments to Colombia’s largest guerrilla group, perhaps dating back more than two decades, to operate in territory controlled by the Revolutionary Armed Forces of Colombia (FARC).

Politicians in Brazil, Peru, and the Dominican Republic, among other locations, have faced backlash over Odebrecht repercussions in their countries, and at least 11 nations have signed an agreement to ramp up their investigation into the company’s widespread bribery. Major projects awarded to the firm, including multi-billion-dollar plans in Peru and the Dominican Republic, are also now in limbo.

In December, following a long-term and sweeping investigation that began with officials digging into massive corruption at Brazil’s state-controlled oil company Petrobras, Odebrecht agreed to a settlement of some $3.5 billion USD with the U.S. Department of Justice. Facing charges of handing out some $800 million in bribes to win contracts throughout a dozen countries since 2001, the company agreed to pay the penalty to various governmental agencies in the United States, Brazil, and Switzerland.

In Brazil, the scandal has recently accelerated yet again as a prosecutor revealed that still-sealed testimony from Odebrecht executives will lead to hundreds of new investigations that will further expand the so-called “Car Wash” case in the country. According to Reuters, the revelations from these statements “expanded the probe far beyond expectations and would ensnare top congressmen, senior members of the executive branch, and other powerful figures.”

The Brazilian construction and engineering firm has admitted to issuing $11 million USD in bribes in Colombia dating back to last decade, and prosecutors have claimed that Otto Nicolás Bula Bula took a $4.6 million USD bribe to ensure Odebrecht won a bid to build a second section of the country’s Ruta del Sol highway.

ANI said that, “given the unlawful acts that gave rise” to the contract being award, it will ask the arbitration court to nullify the agreement and reopen the bid to other interested parties. The agency added that, “we vehemently reject the actions of the firm Odebrecht and the deplorable strategy that they executed through Mr. Otto Nicolás Bula to influence in a corrupt way the decisions of the ANI.”

The agency also plans to carry out an audit of the budgets and the financial model associated with the addition of this Ocaña-Gamarra section of the highway to see if they contain any “irregularities.” ANI will also investigate “individuals within the ANI who may have participated in this criminal plot.”

Bula, who was not a senator at the time but was reportedly included in the bid process due to his knowledge of the firm and the planned project, was detained and charged with bribery earlier this week. He pleaded innocent.

The attorney general alleged that, in August 2012, the Colombian branch of Odebrecht contracted with Bula for the purpose of winning the contract for the Ocaña-Gamarra section of the Ruta de Sol road project, one of the many major roadway contracts awarded in recent years as part of Colombia’s massive so-called “Fourth Generation” infrastructure improvement plan. The arrangement — the company paying the former senator million of dollars — was predicated on the Brazilian company winning the bid.

According to the public prosecutor, Bula was also required to ensure that certain stipulations sought by Salvador-based Odebrecht were included in the final project approval, including the specific number of tolls and a price hike for existing tolls. Both of these provisions were included in the contract that was awarded in March 2014. “For this management, Odebrecht made payments from Brazil for $4.6 million USD,” said the office of the attorney general in a statement.

Former deputy transport minister Gabriel Garcia Morales is the official who was charged with taking the other major bribe in the nation’s Odebrecht scandal.

Garcia allegedly was paid $6.5 million USD by the company to ensure that the Brazilian company won a contract awarded between 2009 and 2010 to build an earlier section of the Ruta del Sol. He was also detained earlier this week and pled guilty to charges including bribery.

While the revelation that Odebrecht paid $11 million USD in bribes in Colombia has sent shockwaves through the country’s political world, the scandal runs much deeper elsewhere.

Odebrecht and its affiliate agreed to a mammoth settlement that could include up to $4.5 billion USD in fines to authorities in the United States, Brazil, and Switzerland late last year. In all, the firm admitted to handing out nearly $440 million USD in bribes over more than a decade while trying to expand its international operations.

The scandal, which linked Odebrecht to rampant corruption within Brazilian oil company Petrobras, was a major factor in the ouster of former Brazilian President Dilma Rousseff.

The Salvador-based company, whose former CEO Marcelo Odebrecht was sentenced to 19 years in prison last March for corruption, money laundering and conspiracy, admitted to violating the Foreign Corrupt Practices Act by paying what Justice Department documents show as nearly $800 million in bribes throughout a dozen countries since 2001 to win bids that have generated more than $3.3 billion in profits.

Much of the illicit activity centered around corruption that led to lucrative contracts with embroiled state-run Brazilian oil company Petrobras in a scandal that has shaken the nation’s political world. The firm also won almost $1.5 billion USD in contracts from Mexican energy giant Pemex.

Some $11 million USD in bribes were made in Colombia, where government officials have responded by threatening to void tainted project awards. Even before the settlement, the nation began looking for a new suitor to take over a $857 million USD project to make the Magdalena River more navigable that had previously been won by Odebrecht.

A bulk of the bribes in Colombia took place during the administration of former President Álvaro Uribe, including an alleged $6.5 million illicit payment to a government official in charge of awarding a large constuction project. According to local media, Gabriel García Morales was the one who took the bribe for his role in awarding a bid for a large section of the country’s Ruta del Sol roadway project.

On Twitter, Uribe acknowledged that “primary indications” suggest that García had taken bribes during his administration. He urged for the “most severe sanction” for anyone found guilty of receiving bribes, both on his watch or since Santos took over.

Other contracts awarded to Odebrecht more recently, including the the Magdalena River renovation as well as the Puerto Boyacá-Chiquinquirá and Ocaña-Gamarra highway projects, have come during the administration of President Juan Manual Santos, who took office in August 2010.

Uribe, who is now a senator and the chief political rival to Santos, is urging for the president to reveal all information, including the possibility of a meeting with the firm in Panama last year, related to how such bids were won by Odebrecht. “Tell the country everything you know about these bribes,” said Uribe this week.

Odebrecht has said that it can only afford to pay $2.6 billion USD of the imposed fine from a settlement that also includes Braskem SA, an Odebrecht affiliate. The São Paulo-based petrochemicals manufacturer may pay as much as $632 million USD to the Justice Department and $325 million USD to the Securities and Exchange Commission (SEC) in the United States. The final penalty sums are expected to be determined in an April 17 hearing.

“Odebrecht has admitted that for more than a decade it operated an off-books internal financial structure whose sole purpose was to facilitate bribery on a massive scale,” said Sung-Hee Suh, a deputy assistant attorney general on a media call, per the Miami Herald. “This was a hidden but fully functioning Odebrecht business unit — a department of bribery so to speak — that systematically paid hundreds of millions of dollars to corrupt government officials in countries on three continents.”

This article has been edited and updated to include more information about projects in Colombia.

Photo Credit: Rogério Reis