RE: Why is Colombia oil...set to runThey've had a good run, expect a second round of profits with the growth there. Some good points in the article below.
Colombian Oil Stocks Are Set ToRun
But government forces under President Alvaro Uribe have largely subduedleftist guerrilla groups that for years blew up pipelines and kidnappedpetroleum workers.
Foreign oil companies now feel safer sending employees and equipmentinto an oil-rich region of Colombia that, until recently, was undercontrol of the Revolutionary Armed Forces of Colombia (otherwise knownas FARC).
Investing in Colombian Oil
Colombia now has 240 active oil contracts and 120 public and privateoil companies working in the country.
In June, the Colombian government will auction off 255 oil and gasblocks covering 130,000 acres, and is preparing to invest $3.8 billionto expand infrastructure for oil transport and shipping. The auctionsincludes acreage in frontier areas as well as more-established parts ofthe country. In addition, the auctions will include offshore blocks inboth the Caribbean Sea and the Pacific Ocean.
Already, 83 companies are registered to take part in bidding to takeplace in Cartagena.
It's one of the world's fastest growing and most important energydevelopment stories...
And yet virtually nobody is paying attention to it.
With tens of billions of dollars expected to be invested in thecountry's energy sector over the next several years, oil production inColombia is forecast to skyrocket.
For investors, this means huge opportunities for easy profits.
Colombia's Energy Sector
Since 1999, Colombia's government has taken aggressive steps tostimulate foreign investment in the country's energy sector.
New initiatives include allowing foreign oil companies to own 100%stakes in oil ventures; the establishment of a lower, sliding-scaleroyalty rate on oil projects; longer exploration licenses; and forcingnational oil company Empresa Colombiana de Petroleos (ECOPETROL) tocompete with private operators.
These measures have been a resounding success.
According to Colombian government officials, the oil sector received$2.95 billion in foreign investment in 2009 — up from just $1.7 millionin 2003. This year, foreign investment is anticipated to increaseanother 19% to $3.5 billion.
Over the next six years, the government expects almost $40 billion tobe invested in Colombia's energy sector.
The oil sector will see the largest amount of energy investment, as$24 billion will be invested through 2015 on new exploration andproduction activities. The remaining investment will go toward theexpansion of refineries, new pipeline infrastructure, power generation,and testing and development projects.
As a result of the growth in financing, Colombia's crude oilproduction is expected to hit a record 825,000 barrels per day thisyear.
By 2015, Colombia's oil output could double from current levels to1.5 million barrels per day, including 1.2 million barrels of crude oiland 300,000 cubic feet of natural gas.
Colombia's crude production was up 18% to an average 763,000 barrelsper day in March, up from 647,000 bpd in the same month last year. ThisMarch production level is the highest average monthly figure sinceDecember 1999, when output stood at 767,000 barrels a day.
An increase of Colombia's oil production would strengthen thecountry's status as the region's fourth-largest crude producer and boostoverall GDP.
In 2009, Colombia's oil exports rose to $10.27 billion and accountedfor just over one-third of total foreign trade.
The oil industry's share of the GDP reached 3.2% last year, up fromthe 1.78% share it had in 2006.
One of the most important factors in boosting crude oil production inColombia has been improved security after more than 40 years of armedconflict in the Andean country.
Colombia once reported 100 guerrilla attacks a year on its oilinfrastructure.
Junior oil companies are rushing into Colombia. The success ofcompanies like Petrominerales (TSX: PMG), Gran Tierra Energy(AMEX: GTE
: 5.18, -0.26),and Pacific Rubiales (TSX: PRE: 75.96, 0.73)has spawned the creation of several new small companies, including:
- Petroamerica Oil Corp. (TSX-V: PTA)
- Canacol Energy (TSX-V: CNE)
- Cap Link Ventures (TSX-V: CAV)
- Alange Energy (TSX-V: ALE)
Small exploration companies that discover unknown oil resources cansee their share prices rise exponentially.
My colleague, Keith Kohl, recently discovered a new oil explorationfirm that's already being touted as the #1 oil play in the UnitedStates.
Keith recently said of this play:
Since being upgraded this stock hit a high of nearly $15 —including a 233% gain in just over one year. We cashed out with a gainof over 103%... and now we're ready to take our second round of profits.
You can learn more about how to get started investing inthis stock today.
Good Investing,
Luke Burgess
Editor, Energyand Capital
Investment Director, Hard Money Millionaire