Bogota – Occidental Petroleum Corp. has stopped looking for oil in the Siriri block in eastern Colombia and plans to withdraw from the zone, a local company spokesman said Tuesday.
Occidental’s activities in the zone sparked fierce protests from the U’Wa indigenous group, backed by international rights groups. But the spokesman said these didn’t influence the decision.
“We made an evaluation of the results of the drilling and the investment we’ve made, and it didn’t justify continuing,” he said. “The reasons were fundamentally technical and economic.”
Occidental plans to return rights over the block — once considered Colombia’s most promising — to state oil firm Empresa Colombiana de Petroleos SA (E.ECO), known as Ecopetrol, the spokesman said.
He added that Occidental has spent roughly $100 million on Siriri, which covers 208,934 hectares in the Norte de Santander, Boyaca and Arauca provinces. Most of that expenditure was on seismic studies and drilling the controversial Gibraltar-1 exploration well.
Occidental’s departure is a setback for Ecopetrol, which is on a drive to find more petroleum reserves, as production from the country’s major fields declines.
But a spokesman for the state company said it isn’t giving up on Siriri.
“It could be by us or by another company, but exploration will continue,” he said.
The spokesman said Ecopetrol is evaluating its options and will announce its plans for the block in a few days.
Occidental halted drilling at the Gibraltar-1 well in July, after finding only gas and condensates.
Ecopetrol has estimated potential reserves at Gibraltar — Siriri’s main prospect — at up to 1.4 billion barrels.
The block also includes that “Campo A” prospect, which could hold 900 million barrels, according to Ecopetrol.
Occidental and Ecopetrol in March, 2000 signed the Siriri contract, which replaced the 1991 “Samore” deal, and eased terms for Occidental.
Drilling only started in November 2000, delayed by contractual wrangling, regulatory issues and local and international protests. The U’Wa claim the area as sacred land, even though the it is outside their official reserve.
The group threatened mass suicide if drilling went ahead, but did not go through with this.
Repeated guerrilla sabotage at the site, including the destruction of some equipment, also disrupted operations.
Rebel violence has plagued Occidental’s other major Colombian project, the operation of the Cano Limon oil field, which is the country’s second largest.
The Cano Limon pipeline, which transports the oil from the field for export, was blown up a record 170 times last year by suspected leftist rebels. Attacks appear to have slowed this year, but Ecopetrol and Occidental declined to give figures.
The Cano Limon pipeline would probably transport any oil that Siriri yields, as it runs within two kilometers of the Gibraltar prospect.
Despite everything, Occidental remains committed to Colombia, the spokesman said. The company is participating in three exploration projects in the central Llanos region, and is studying other possibilities, he said.
“We see that there are opportunities in the country, despite the difficulties that we have had… and we trust that things will get better,” he added.
Oil and its derivatives are Colombia’s principal legal export, generating 25 percent of total 2001 revenues.
But without new discoveries, the country risks becoming a net importer of oil by late-decade, with potentially severe economic consequences.
Occidental, Ecopetrol and most other oil companies in Colombia request that their spokespeople not be named, due to security concerns.
