Interview: Federico Renjifo Vélez
What is being done to facilitate foreign direct investment (FDI) in the energy and mining sectors?
FEDERICO RENJIFO VELEZ: In the past few years, the country has proved that it welcomes foreign investment. The mining and energy sectors, in particular, received more than $12.5bn in FDI in 2012, which is indicative of the welcome these investments receive. Fortunately, most legislative efforts involving the provision of platforms for FDI inflows have been viewed favourably by congress in the past decade. However, investors should know that while we want to be competitive at the international level, we will not neglect our social and environmental responsibility. The combination of these elements is precisely what will make Colombia a country of great interest to foreign investors in the following years.
In what way is the ministry attempting to mitigate security threats to natural resources?
RENJIFO: We cannot deny that the sector has been constantly threatened and attacked. We are making huge efforts in coordinating with the Ministry of Defence, which has provided five additional battalions for the hydrocarbons sector. That means a total of 80,000 people are working for the security of hydrocarbons infrastructure. Preventive and repair work has also multiplied, yielding excellent results in the reduction of attacks and their impact on domestic production. We are also aware of the efforts made by private companies to anticipate and prevent being attacked, and we encourage them to continue to maintain such preventive measures as long as this situation remains.
How are infrastructure needs being addressed?
RENJIFO: The creation of Cénit, a hydrocarbons transportation and logistics subsidiary specialising in the development of pipelines under the umbrella of Ecopetrol, is a significant step. Meanwhile, the construction of the Bicentenario pipeline is coming to an end (though it will need to be expanded later), and the private sector is working on developing oil pipelines, such as the Pacific Rubiales line connecting Cobeñas and Cartagena.
As these are private and competitive investments, we must ensure we have the capacity to amortise the investment. For now, the facilities we have are sufficient to transport what we produce, and we hope to increase capacity to 1.3m barrels per day shortly. The transportation of coal produced in the centre of the country will depend on five public-private partnerships for the construction of railways.
What measures are ongoing to increase oil reserves?
RENJIFO: Increasing oil reserves is our greatest challenge. In 2012, we succeeded in increasing net reserves by 464m barrels. This enormous exploration effort – with 135 exploratory blocks granted in 2012 and high expectations for new blocks in 2013 – allows us to be optimistic. A vast majority of the country has yet to be explored, and that is our top priority.
How is the sector working to capitalise on the potential of unconventional and offshore oil?
RENJIFO: We are fully aware that Colombia has great potential in unconventional hydrocarbons, but we also know that this is a long race and we need to consider certain priorities first. We must begin by acknowledging that ours is an unexplored country and exploration should be the priority. We have been working with the Ministry of Environment and the Autoridad Nacional de Licencias Ambientales (ANLA) to gather information. Five blocks have been awarded to some of the largest companies operating in the country, which are already working on unconventional oil. The ANLA is developing an operating manual for unconventionals, given that requirements are higher. We will, however, ensure that unconventional oil’s potential is maximised in the medium-term and meets rigorous standards.
The Ministry of Transportation is studying various solutions, including dredging the Magdalena River for carrying coal, as well as coal ports on the Atlantic coast.
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