In 2003 the restructuring of the Colombian hydrocarbon sector was consolidated with the creation of the Agencia Nacional de Hidrocarburos - National Hydrocarbons Agency - as a response to the critical situation Colombia went through due to the decline in oil reserves, which eventually lead the country to import crude oil. See Decree 1760 of 2003.
This restructuring included the decision to make Ecopetrol more competitive when separating its dual role of regulator and Oil Company. For this reason it was arranged that ANH would only explore, produce, transport, refine and market hydrocarbons, i.e., working exclusively in the oil business at all stages of the chain, competing on equal terms with other companies in the sector.
In this way, the National Hydrocarbons Agency acquired from Ecopetrol its role as administrator and regulator of the national hydrocarbons resources, and began the transformation of Colombia in a prospective and attractive country for foreign and domestic investors. However, Ecopetrol continued with all the areas that had under direct operation and with Association Contracts signed until December 31, 2003. (http://www.ecopetrol.com.co/)
Another fundamental change was the adoption of the new royalties contract, taxes and rights that replaced the Contracts of Association. This model considers three (3) separate and different stages: exploration, evaluation and exploitation, whose duration is aligned with international standards with a State participation of 50% and 60%.
The economic terms of the new form of contract make Colombia one of the most attractive countries in the world both as government participation as well as in profits for investors; and areas are assigned through modern, transparent and efficient procedures through appropriate management and monitoring mechanisms ensuring processes with high international standards.
The model is also suitable for projects and large companies as well as small and medium-sized enterprises opening up a wide range of opportunities for all investors. On the other hand, the Technical Evaluation Agreement (TEA) contract was introduced through which you can assign a large area to carry out surface work in order to obtain better information about the presence of hydrocarbons in a specific area, and which can last up to 18 months. The contractor of a TEA has the first option to sign a contract for exploration and production in that area.
During 2003 all the efforts of the Agency were oriented to design strategies that return the competitiveness of the sector, including once again the country in the world oil map, increase the rate of prospectivity and attract private investors.
As result of this important work the Agency has signed a number of contracts since the adoption of the new contractual scheme in June 2004. In addition, the implementation of the new contract has brought to the country large companies such as BHP Billiton and ExxonMobil, which had been more than 10 years without exploring in the Colombian territory.
The exploratory activity has increased after a drastic fall seen until year 2000. Since the establishment of ANH, exploration has increased, the number of E&P contracts signed, the equivalent kilometers 2D seismic acquired and wells drilled. Also significant resources have been invested in the acquisition of geological information to identify opportunities in mature fields and border areas.
Today Colombia has an attractive regime, economic and political stability (among the best in Latin America), a fully operational Agency, high trust between investors and a large geological potential; considering the proven, probable and possible reserves and prospective resources identified in areas in evaluation, exploration and production, it will reach the 10,400 MBO (millions of barrels of equivalent oil). In relation to the potential it is approximately between 9,000 and 140,000 MBO (millions of barrels of oil equivalent).