Two developing countries are taking a turn to produce more oil and gain a bigger stake in the oil industry. Both Columbia and Venezuela hope to double oil production in upcoming years. Columbia hopes to reach 1.2 million barrels a day by the end of 2012 and Venezuela plans to increase oil production from the current 3 million barrels per day to 6 million barrels by 2016. If these numbers hold true it looks like both countries will become imperative to the oil industry.
As one of the world’s richest hydrocarbon resources, Venezuela’s heavy oil is undeveloped. On February 10, 2010, the country announced that an oil auction gave way to new oil developments that invested $15 billion in the oil industry. These projects are planned to begin in 2013 and reach their potential in 2016. There has been criticism that this work pace may be unrealistic, but so far there have been great strides to begin production. You might be wondering where this oil is coming from? The oil in Venezuela has always been there, it is just a recent decision to recover it. The recoverability used to be around 10% but has now risen to around 40%, which is a great improvement.
As for Colombia, the increase in oil production will make this country the region’s fourth largest oil producer. Because the demand for output is increasing, it is necessary to build a large pipeline, which will transport the heavy oil to the Caribbean oil depot. Why has Colombia’s heavy oil production jumped so quickly? The answer lies in the fact that Colombia has a very open policy for drilling and also has low taxes and royalty rates. Also many employees have come to Colombia from Venezuela which has increased the amount of oil workers that can begin production. Another reason oil production is able to increase is that under the current President Alvaro Uribe armed conflict has improved, which used to be a problem because constant fighting would cause pipelines to explode and petroleum workers to be kidnapped.
As the developing economies of the world grow, they will demand more and more oil, which is good news for the oil industry in nations such as Colombia and Venezuela.