Colombia Extractive Industries 2014
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Colombia Extractive Industries 2014 Colombia Extractive COLOMBIA EXTRACTIVE INDUSTRIES 2014 Economy | Metals and Mining | Oil and Gas | Finance | Services Dear readers, Upon landing at Bogota’s El Dorado International Airport weary travelers are imme- diately cognizant of the two Colombias. My first impression was made through a sleek, efficient, modern airport that quite frankly outclassed my departure destina- tion of Los Angeles International Airport. The airport is representative of a Colombia that surprises uninitiated visitors, like myself at the time, by the sheer progress the • GROWING RESERVES AND PRODUCTION country has made in the last decade and a half. While some of its Latin American neighbors have tacked towards protectionist policies that have deterred interna- - Targeting light oil and producing more than 5,600 bopd tional investment, Colombia, once a risky Latin American destination for foreign in fi rst half of 2013 capital, appears to have gained an upper hand over neighboring jurisdictions. - 2012 reserves growth of 68% year-over-year Through the oversized windows in the international terminal the traveler’s attention is drawn to a smaller, decrepit terminal building that now only handles domestic • Active drilling program in exploration, appraisal and development flights. The paint is peeling, the sidewalk looks deserted and the lettering is fading • Looking to build on success to become one of the dominant light oil from the sings. The sleek, h-shaped terminal surrounds this building, as if the air- port’s planners desired for the old terminal to simply be swallowed up by the much producers in Colombia more impressive new building. Nevertheless, the old terminal stubbornly remains and, consequently, the interior gates of the new terminal appear to sit incomplete and its potential underutilized. Colombia’s extractive industries face a similar story at present. A marked turn- around in the country’s security situation has enabled Colombians to once again control their future, and thus far few can argue that progress has been made. In- vestment dollars from abroad, like the terminal that welcomes international busi- ness travelers, have sprung up quickly and have outdone many expectations. How- ever, the vestiges of the old Colombia – characterized by dysfunction, inefficiency and insecurity – remain. Their days appear numbered, but like the old terminal build- ing they remain stubbornly present in the form of a dragged out peace process with insurgent groups, unclear regulatory processes and oftentimes unnecessarily tenuous community relations. With these challenges creeping back into the consciousness of Colombians and foreign stakeholders alike, plus difficult international market conditions, some fear the extractive’s locomotora para el desarrollo has stalled. While this is certainly the case for some in these industries, the insights expressed in these pages also tell a different story. Despite issues, whether related directly to Colombia or external, the extractive industries are persevering. Through our research one overarching theme is strikingly apparent: Colombia is not a country for the undetermined. Those who are convoluted in their focus will not thrive. Colombia is for those who are hands-on and determined: as Paul Dias of Minatura conveyed in our interview with him, “successful mining companies in the next decade will need active boards that get out from behind their desks and gather intelligence on the ground.” The new Colombia wants to arrive at its full potential and there are Colombians and foreigners alike who can make it happen. They are willing to come out from behind their desks in order to advance their aspirations and the country’s stated aspirations simultaneously. The question is: when and how will the old Colombia leave for good? Petroamerica Oil Corp. ranked second out of the top 10 performing oil & gas companies on the 2013 TSX Venture 50®. TSX Venture 50 is a trade-mark of TSX Inc. & is used under license. Andrew Mason, Alice Pascoletti, Caroline Stern, Chloe Dusser, Suite 700, 520 – 5th Ave SW, Calgary, Alberta, Canada T2P 3R7 Joseph Hincks, Ramzy Bamieh CALL: (403) 237-8300 E-MAIL: [email protected] and Josie Perez TSX-V: PTA VISIT: PetroamericaOilCorp.com CONTENTS Industry Interviews Exclusive interviews with the leading industry figures in Colombia’s extractive industries, including the Minister of Energy and Mines, Petrominerales and Gran Tierra FREEDOM AND ORDER REVVING UP OF OUT OF STEAM Energy Colombia. An Introduction to Colombia and its Colombia’s Mining Locomotive Chugs Extractive Industries Uphill 8. An Introduction to Colombia: A brief 48. Unclogging the Backlog: Colombia’s 10, 20, 22 overview of the country and economy mining industry 10. Interview with the Minister of Mines 50. Interview with Agencia Nacional de and Energy Mineria Analysis 11. Geological Wealth: The extractive 51. Interview with Arce Rojas Consultores industries in Colombia 52. Interview with EXSA Colombia An in-depth look at the role Venezuelan Interview with Control Risks 12. 53. Interview with Continental Gold Ltd experts have played in building Colombia’s Interview with Downing Teal & 13. 54. Interview with Sector de la Mineria de oil industry, and opinions on how to Estrategia Humana Gran Escala continue this collaboration, from our weekly 55. Interview with Suárez Zapata & Partners newsletter the GBRoundup. 54. Interview with Innoventé 56. In the Hot Seat: Coal Mining in Colombia 58. Interview with Golder Associates COLOMBIA’S HYDROCARBONS 59. Interview with Carbhid SAS 42 Continuing an Impressive Decade 60. Interview with John T. Boyd Company 61. Interview with Atico Mining Corp. 16. Maintaining the Million: Colombia’s oil and gas industry 18. Interview with Southern Cross Energy DIFFICULT TIMES Challenges 19. Leading the Push: An overview of the The Challenges Facing Colombia’s Two sections dedicated to exploring the main players Mining Industry 20. Interview with Petrominerales Ltd specific issue facing investors in Colombia’s hydrocarbon and mining industries 22. Interview with Gran Tierra Energy 64. Re-strategizing Investments: Colombia’s respectively, from bureaucratic processes to Colombia Ltd industry adapts to the market infrastructure concerns. 24. The Future: Unconventional and 66. Interview with Antioquia Gold Inc. offshore resources 6 7. Interview with Cordoba Minerals Corp. 25. Interview with Industrial Consulting Interview with B2Gold Corp. Group (ICG) 68. The Challenge of the Unofficial: Tackling 69. illegal mining 26, 62 70. Interview with Minatura 71. Interview with Gran Colombia Gold Corp. 72. Interview with Antiquia & Gecoisa Quantitative A UNIQUE COUNTRY 73. Interview with Jacobs Data Challenges and Opportunities in Colombia’s Hydrocarbon Industry The most relevant quantitative data presented in the most easily accessible AMOUNT (IN MILLIONS OF PESOS)280,000 BOLSA DE VALORES DAILY AVERAGE VOLUME AND 28. The Bottleneck: Environmental DAILY AVERAGE NUMBER OF TRANSACTIONS Source: BVC 240,000 MAGICAL REALISM format, allowing you to NUMBERview OF TRANSACTIONS economic 5000 permitting in Colombia 200,000 and market statistics, identify4500 trends and Business Travel in Colombia 160,000 4000 31. Interview with Omega Energy Colombia 3500 visualize infrastructure. 120,000 3000 80,000 32. Freedom to Produce, Freedom to 2500 76. Travel 2000 40,000 Protest: Community relations in 1500 2014 1000 2013 78. Events & Media 2012 2011 500 2010 2009 Colombia 2008 2007 80. Hotel Directory 2006 S 34. Interview with SAExploration ISSUERS WITH LARGEST STOCK EXCHANGE CAPITALIZATION Source: BVC 35. Monumental Backwardness Moving 9, 17, 37, 49 ECOPETROL S.A. 81. Index & Company Guide GRUPO AVAL ACCIONES Y VALORES S.A. BANCO DE BOGOTA S.A. Forward: Infrastructure constraints for BANCOLOMBIA S.A. 82. Credits GRUPO INVERSIONES SURAMERICANA GRUPO ARGOS S.A. 150 140 3.0 130 Colombia’s industry 120 EMPRESA DE ENERGIA DE BOGOTA S.A. E.S.P. 10 1001 90 80 70 ALMACENES EXITO S.A. 60 50 40 30 20 10 COP$ 38. Interview with Petroamerica Oil Corp. millions ) 39. Interview with Estrella International MOST TRADED STOCKS OF THE YEAR (IN COP MILLIONS Source: BVC Energy Services Travel ECOPETROL PREC PFCEMARGOS 40. Interview with Vertical de Aviación This research has been conducted by Caroline Stern, Chloe Dusser, ISAGEN Hotel guides, places to see, whereCEMARGOS to eat, Alice Pascoletti, Ramzy Bamieh, Joseph Hincks, Josie Perez, EXITO 41. Interview with GeoPark PFAVH 800 GRUPOSURA 750 700 Andrew Mason, Katie Bromley, Alexander Corbeil events to attend and other useful travel tips 650 600 PFBCOLOM 50 5005 450 400 350 42. A Place Like Home: Expelled PDVSA CLH 300 250 and Harry Thompson 200 50 1001 50 for the business travellers, takenCOP$ from our staff become a integral part of Edited by Mungo Smith and Barnaby Fletcher millions Graphic Design by Gonazalo Da Cunha on-the-ground teams own experience. Colombia’s hydrocarbon growth 43. Paying for Progress: Financing A Global Business Reports Publication For more information, contact [email protected] Colombia’s oil and gas projects follow us on Twitter @GBReports 45. Interview with PwC or check out our blog at gbroundup.com 76, 78, 80 COLOMBIA EXTRACTIVE INDUSTRIES 2014 Industry Explorations Freedom and Order: An Introduction to Colombia and its Extractive Industries “Colombia is a country that had been sleeping for 20 years. During those decades we have lived in this country, but we have not had a country because of our internal problems. While the rest of the world was hard at work, it was considered too unsafe and impossible to develop large projects here. In the last 10 years this has changed. For the first time in my memory we look at the future as better than the past. I personally believe business will come to Colombia. What other countries in Latin America have taken 20 years to ac- complish we will have to accomplish in five years if we want to be on the same level as other countries. If Colombian companies wanted to take advantage of the opportunity in front of us compa- nies such as Global Motor should have started to think differently five years ago.