Colombia plans big oil, gas bid round for 2010

LA JOLLA, Calif., May 13 (Reuters) - Colombia will auction off 96 blocks of oil and gas exploration acreage next year as it seeks to build on recent success reversing its falling oil output, the head of the national hydrocarbons agency said.

The Andean nation will offer blocks both in areas where some government-backed exploration has taken place and others in under-explored areas, including the Pacific Coast and the Caribbean Sea, Armando Zamora said at a conference organized by the Institute of the Americas.

Colombia has seen a resurgence in interest in its oil and gas industry after fiscal reforms loosened investment terms earlier this decade. Foreign investment in the sector topped $3.5 billion in 2008 and spending is expected to hold at that level this year despite a much lower oil price environment that has scaled back the ambitions of some smaller companies.

"Only one company that participated in the latest bidding round said it couldn't provide a bank guarantee," Zamora told reporters.

"We have been listening. So far we have managed to sign all contracts except for one."

Colombian oil production is expected to rise to 650,000 barrels per day this year, up from about 580,000 bpd last year as new investments bear fruit. The country's proved oil and gas reserves, while small at only 1.5 billion barrels of oil equivalent, are growing, which bodes well for the future, Zamora said.

Colombia currently exports natural gas to Venezuela and some investors see the country having enough gas potential to become a major supplier to Central America through a pipeline to Panama.

Approximately 10 of the blocks that are expected to be offered in the 2010 bidding round are in waters claimed by Nicaragua.

However, Colombian officials are confident Bogota's claim to sovereignty of over the waters has been strengthened by a ruling by the World Court upholding the validity of a treaty that underlies the basis of Colombia's claim over the area. (Reporting by Robert Campbell; Editing by Christian Wiessner)