Colombia must learn from Chavez gaffe

Cartagena: Colombia should learn from the mistakes of neighbouring Venezuela if it wants to make the most of booming investment in its crude oil sector, oil industry executives told a conference on Friday.

"Colombia is doing all the right things. Venezuela is doing all the wrong things," Alange Energy President Luis Giusti told the World Petroleum Council's regional meeting here.

"Colombians should be very pleased about what is happening here."

Colombia drew $1.3 billion (Dh4.77 billion) in financing pledges from energy companies when it put more than 200 oil blocks up for auction last week, building on dramatically improved security and new political and legal stability.

Giusti, a former executive at Venezuela's state oil company PDVSA, is one of scores of ex-PDVSA employees who left the company after President Hugo Chavez came to power. They are now working in Colombia.

The business-friendly approach of Latin America's No 4 crude producer is in sharp contrast to the stance of Chavez's socialist administration in Venezuela, where output has stagnated because of the country's efforts in recent years to nationalise many industries.

While Colombia hopes to double its reserves from a modest 3.1 billion barrels, Opec member Venezuela has said its Orinoco belt alone holds about 26 billion barrels of recoverable oil.

Caracas signed deals with foreign companies this year to exploit new heavy crude projects in Orinoco that are slated to add more than two million barrels per day (bpd) of new production at a total investment cost of some $80 billion.

But foreign oil executives have said there is doubt about when the projects will come online due to loss of expertise in PDVSA, which has a majority stake in each project, and political uncertainty about investing in Venezuela.

"Processing that extra heavy crude requires a lot of capital and equipment, and the climate is not good for that there at the moment," said one analyst.

Chavez fired half of PDVSA's workers in 2003 after a massive strike, and in the past four years he has frightened off potential investors by nationalising stakes held by majors like ConocoPhillips and Exxon-Mobil.