RE:From the Top Idea article: AMER.L versus PTA.V And this excerpt is also from that Top Idea article:
" Geopolitical Risk: It is an indisputable fact that Colombia's bureaucracy, social stability and business security continues to lag behind that in the US or Canada. But Warren Buffett has said: "Fear is the foe of the faddist, but the friend of the fundamentalist." In addition, Colombia ranks low on my country risk spectrum, and things are way better than in Kurdistan, Nigeria, Argentina or Venezuela.
The current government under President Santos have restored operational security and have really cleaned up Colombia over the last years. Former President Uribe received billions of dollars in US aid, and the security risks have diminished consistently over the last years. The Army is regularly deployed at well heads, oil fields and pipelines to provide security against terrorist attacks.
Moreover, the political landscape is very friendly from an investment standpoint, and the Colombian government has created a business environment that is conducive for foreign investors. This is why, Colombia's oil production has been increasing consistently since 2008, as shown below:
CHART
Colombian oil production rose to over 1 million bbl/d in 2013 and will continue to rise over the next years. According to a recent government study, Colombia has a striking potential to produce 13 billion barrels of oil over the next 20 years.
In addition, officials from several ministries will hold meetings every two weeks to execute a plan to lift daily production by 43,000 barrels by the end of the year, Deputy Energy Minister Orlando Cabrales said two days ago in an interview in his Bogota office. "We're all rowing in the same direction to carry out these steps," Cabrales said. "This shows the importance the government is placing on oil production."
In addition, the geopolitical risk factor impacts all the other Colombian players with much higher key metrics than Petroamerica. And given that Petroamerica will fall prey to a bigger producer over the next couple of years, the intermediate and major energy producers in Colombia (i.e. Pacific Rubiales, Ecopetrol, GeoPark, Parex etc.) have never faced any significant or long-standing problems due to security-related issues. They have strong local ties and extensive knowledge of the country in order to navigate successfully through such problems, once they arise.
That being said, the geopolitical risk cannot make the slightest dent in my investment principles. So I can't refrain from participating in Colombia's oil boom, even if the country's risk is higher than Canada's or Australia's. "