Jorge Posada of Parra, Rodriguez, Cavelier outlines now government objectives for the oil industry.

The National Development Plan (Plan Nacional de Desarrollo) has set exploration and production of oil as one of the country's main objectives in the near future. The goal to be achieved is to avoid Colombia having to become an importer of crude, something that will happen if exploration activities are not intensified and current extraction activities are not maximized. The plan contemplates various possibilities as means to this end:

1. Downstream activities are to receive incentives so that private sector participation in storage and transport of crude is possible, refining activities and private participation in the petrochemical industry are also goals of private downstream participation;

2. Exploration goals are to localize reserves of 2000 Mbls from 1999 to 2002 and an additional 4000 Mbls from 2002 to 2007;

3. Ecopetrol should deliver to exploration companies at least 50 "bloques" for exploration per year;

4. Government take should be reduced to levels competitive with other countries;

5. Local, security and legal situation of the country should be considered and all licensing must be reviewed;

6. International pricing of crude must be considered;

7. Current association contracts may be reviewed and amended to include other possibilities and formulas;

8. Ecopetrol participation and royalties paid must also be reviewed, and application of the R Factor must continue, although the formula will also probably be reviewed so differential rates are applied to suit different fields;

9. Incremental production is the main goal in the short term, and different formulas are under study to allow for additional exploration in already existing fields;

10. Exploration company recovery of costs would be improved by not having Ecopetrol participate until 50% of exploration costs have been recovered;

11. Conditions are to be created that will make production in fields with less that 200 Mbls reserves feasible; and,

12. The granting of environmental licenses must be a condition precedent to the initiation of exploration activities and Ecopetrol must be willing to assume the risk of public policy.

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