Oil in Latin America? Colombia Deserves a Look

This post was originally published in the Washington Business Journal’s WBJBizBeat Blog. | Washington Business Journal

Two months ago in our series of blogs on oil, I highlighted Canada and its oil sands as a niche area showing great potential. With the recent pullback in oil prices, there is another region, often overlooked by investors, that offers potential.

Over the past few months, I have written about the investment potential of South America. Once ignored because of security concerns, one area that is undergoing a renaissance in terms of oil exploration is Colombia. As stated in a recent study by the Americas Society and Council of the Americas Energy Group: “… In many ways Colombia could be considered a model for energy management in the region. Changes to the investment framework for oil and gas have resulted in greater investment in a sector that was on the decline just a decade ago and now boasts growing reserves and production.” As the U.S. Energy Information Agency points out, Colombia is an important petroleum and coal exporter. It is predicted that oil production in Colombia will double over the next five years.

Historically, most of Colombia’s oil production has centered on the Rubiales field in the southeastern part of the country. However, recent discoveries in areas like the northern Meta province and in the largely unexplored Huila province demonstrate the long term potential for oil production. This fact that has not been lost on China which earlier this year announced talks to build a rail line across Colombia to link the Atlantic ports with the country’s Pacific ports in order to access Colombian raw materials without having to use the Panama Canal. With today’s concerns about future oil supplies, Colombia appears to be a good place for investors to look.

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