Monday, September 25, 2023

Colombia aims to be investment oasis

Reuters) – Colombia aims to become an investment “oasis” as leftist Latin American nations expropriate foreign assets, China’s economy slows and investors seek alternatives to crisis-wracked Europe, the country’s top energy and mining official said.

Once an investment pariah as drug-funded rebels kidnapped and killed oil workers and seeded rural areas with bombs, Colombia has seen a dramatic turnaround, attracting record foreign investment that has fueled the economy and bolstered its capital markets.

Energy Minister Mauricio Cardenas is trying to lure more foreign partners to help develop the nation’s potentially large copper deposits and create a world class gold mining business.

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Crude output is likely to meet its delayed target of 1 million barrels of oil a day within two months, he said.

“Colombia is a kind of oasis in a convulsing and unpredictable world,” said Cardenas during an interview last week for the Reuters Latin America Summit.

The government expects foreign direct investment into mostly oil, mining and financial services industries to jump by a fifth to about $16 billion this year compared with 2011, up from just $2 billion in 2002.

Global markets have been rattled by signs of slowing growth in China, the world’s second biggest economy, which could curb its enormous demand for Latin American commodities.

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“We are conscious of how very volatile and risky the world is today, not just because of China, but also because of Greece and Iran,” Cardenas said.

“Colombia gives investors guarantees … It has never failed to pay its debts and always honors its contracts.”

His comments came just weeks after Argentina nationalized oil assets owned by Spain’s Repsol, then Bolivia nationalized the local unit of Red Electrica Espanola.

Colombia’s neighbors, leftist-led OPEC members Venezuela and Ecuador, have both ordered state takeovers of foreign assets in recent years.

Colombia has been able to become Latin America’s fourth biggest oil producer over the last decade in great part because of a U.S.-backed military offensive that halved the numbers of Revolutionary Armed Forces of Colombia, or FARC, guerrillas.


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But the Marxist rebel group, which has fought successive governments for almost 50 years, remains a threat in some regions. Oil output is 970,000 million barrels per day (bpd), and the government failed to achieve its target of 1 million bpd last year partly due to FARC attacks.

Cardenas says that goal could now be met within two months.

“We will increase production as soon as we get environmental permits on two important oil fields,” Cardenas said, without naming them. “It’s a matter of weeks.”

He said his government would auction 109 oil blocks in the coming months, aiming to boost exploration while also prolonging the life of mature fields so Colombia can pump at least 1 million bpd for a decade. A record 205 wells could be drilled this year versus 124 last year.

Cardenas also hopes to attract foreign copper miners to help develop Colombia’s mineral resources.

Colombia has invited Chile’s Codelco, Britain’s Anglo American (AAL.L) and Canada’s Teck (TCKb.TO) to “increase geological know-how” and search for copper in Cauca, Tolima and Antioquia — three mountainous regions that until recently were too dangerous to work in because of the rebels.

“This a strategic mineral and we have reason to be optimistic,” said Cardenas.

“But we have to be careful and until we have proven reserves we can’t say that Colombia is an important copper producer. We will have a better idea in two or three years.”

Ongoing exploration could let the country become a world class gold producer much sooner, the minister said. Colombia currently produces about 56 metric tons (61.7 tons) of gold annually.

In comparison, China, the biggest producer, churned out 300 metric tons of gold last year and Peru, the sixth biggest, mined over 146 metric tons.

“We’ve got mines that could be among the world’s biggest if they move into the next development stage,” Cardenas said.

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