Boston, MA -- (SBWIRE) -- 03/05/2013 -- BMI View: There is growing optimism with regard to the future of Colombia's energy sector; particularly as improving security dynamics and a more liberal business environment have led to increased investment in exploration and production (E&P). The late 2012 licensing round will also bring increased foreign investment and exploration into the sector, leading to further growth in proven reserves and brightening an already robust long-term production picture.

Main trends and developments for Colombia's oil and gas sector are:

- An improving security situation and the country's attractive fiscal regime are likely to continue to attract significant levels of foreign investment into Colombia's oil sector. Production has grown by more than 70% since the mid-2000s and we expect that upward trend to continue. Production will come close to achieving the government's 1mn b/d target in 2012 at 982,200b/d before surpassing that target in 2013. By 2016, we forecast production topping 1.33mn b/d, making it one of Latin America's top oil producers.
- Although most investment has been aimed at tapping Colombia's oil reserves, the effect of rising investment is also being felt in the gas sector. Gas production has nearly doubled in the last decade and we see scope for strong growth in the years ahead. Output is forecast to rise from 11.0 billion cubic metres (bcm) in 2012 to 13.5bcm in 2016 and 2017.
- Production will continue to outpace consumption, leaving room for growing levels of exports. The bulk of these exports will continue to flow via pipeline east into Venezuela. However, we are now forecasting small-scale liquefied natural gas (LNG) exports starting 2013. Pacific Rubiales, operator of the country's largest oil field, will lead the LNG export charge. The company plans to build a 0.7bcm per annum export facility on the Caribbean coast, where it will target regional markets such as Panama, the Dominican Republic and Puerto Rico.
- Rising oil demand is fuelling investment in the downstream sector. Ecopetrol's Bolivar refinery in Cartagena, the country's second biggest facility, will be upgraded over the course of 2013 and 2014. The expansion project, which received a US$2.84bn loan from the US export-import bank, will see the plant's capacity rise from 80,000b/d to 165,000b/d. Furthermore, the 50,000b/d expansion of Ecopetrol's Barrancabermeja refinery should bring the plant's capacity to 300,000b/d. We see the country's total processing capacity rising from 336,000b/d in 2011 to 466,000b/d by 2017.

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