* Investments in Colombia, Peru, Iraq likely
* New norms, more stability seen encouraging investments
* Newer entrants seen getting lucrative projects as well
* Junior explorers to likely sell projects at a profit
By Aftab Ahmed & Adveith Nair
BANGALORE, June 22 (Reuters) - Emerging markets will be the major growth drivers for Canadian junior explorers, with even the late entrants set to gain from growing energy needs and increasing political stability in those regions.
Brazil, Colombia, Peru, Iraq, India and Indonesia will see a lot of interest from Canadian junior explorers, given the cheaper costs of acquiring land and the opportunity to sell the property at a huge premium later, analysts said.
"There is a lot of opportunity in emerging markets," Raymond James analyst Rafi Khouri said by phone.
Canadian companies are welcomed in emerging markets, given the technological edge they bring to those regions.
"They bring technology and the tie-ups bring the political relationships and financial strength...they are the technology leaders," Maison Placements analyst Josef Schachter said.
Among junior explorers, Petrodorado Energy <PDQ.V> has operations in Peru, Colombia and Paraguay, Sea Dragon Energy <SDX.V> has operations in Egypt, while Longford Energy <LFD.V> and WesternZagros <WZR.V> are active in Iraq's Kurdistan region.
"The junior explorers are not spending too much, and if they are successful they will be bought by larger companies," BMO Capital Markets analyst Christopher Brown said by phone.
"So that's going to be the model. Buy the land make it attractive to a senior company and sell it off."
Petrominerales <PMG.TO>, Pacific Rubiales Energy <PRE.TO>, Gran Tierra Energy <GTE.TO> and Niko Resources <NKO.TO> are some larger Canadian explorers that depend on emerging economies for a big chunk of their revenue.
These companies posted relatively strong results through the financial crisis, given the ever-increasing energy requirements in emerging economies. Analysts say newer entrants are also likely to grab lucrative projects.
"There is always a next entry," BMO's Brown said.
The Canadian Senate's approval of a free trade deal with Colombia, South America's No. 4 oil producer, will also come as welcome news for explorers bidding for oil blocks there.
Colombia is auctioning off over 200 exploration and production blocks in a move that could draw hundreds of millions of dollars of investment. <ReutersLink ID='ID:nN22129618' />
REWARDS OUTWEIGH RISKS
As lucrative as they might seem, some emerging markets pose concerns about social and political unrast for the North American companies, but analysts say improving conditions offset those woes.
"The companies believe that potential rewards outweigh any risks," Raymond James' Khouri said. "You cannot eliminate risks, but you can definitely manage them."
"Is there risk in being in Kurdistan? Well, there is risk in being anywhere."
Maison Placements' Schachter said Canadian companies will try to get in early into the attractive basins in Kurdistan.
"Hopefully, by the time (they) start producing, the Kurdistan and the Baghdad governments will reach a resolution, and then the companies can make good money."
Newer, more transparent norms will also help.
Colombia, for instance, is enjoying a boom in oil and mining given its geological and mineral promise and a new political and legal stability, which analysts peg as a big positive for the country's oil and gas industry.
"Colombia has become really transparent in propositioning international companies for investment. They have done very well at growing production," BMO's Brown said.
Emerging nations now understand the need to encourage international investments.
"Places with high levels of poverty, like Peru, will gain from the opening up of potential investment especially for oil and gas exploration, which will also help the economy," Brown said. (Reporting by Aftab Ahmed & Adveith Nair in Bangalore; Editing by Prem Udayabhanu)