A WILLING PRODUCER
September 19, 2008
Colombia is a rising energy producer that has just discovered huge new oil deposits in its Meta jungle, more than doubling its reserves to 4 billion barrels overnight. An official reserve count is pending, but this first estimate equals official U.S. figures on federal offshore proved reserves, or the oil in Brazil's offshore Lara field. If Congress won't permit oil drilling in U.S. waters, the United States must have access to nations that will, says Investor's Business Daily (IBD).
Nothing would help more than a partner with a permanent trade agreement -- as Colombia ought to have -- instead of a petrotyrant, says IBD:
- Like Brazil, Colombia is an increasingly important energy supplier to the United States; it consistently makes the Energy Department's top-15 supplier list, selling the United States about a quarter of its 600,000 barrels of annual oil production.
- It's auctioning off 151 blocks around the country and offshore, in a bid to double output by 2020 and raise exports, says Colombia's ANH licensing agency.
- Unlike its neighbors Venezuela and Ecuador, Colombia wants to be a reliable partner and supplier to the United States to attract the investment it needs to develop.
The U.S.-Colombia free-trade accord, stalled in Congress by House Speaker Nancy Pelosi since April, would promote investment and production. The United States benefited hugely from 1994's NAFTA deal, which made Canada our No. 1 oil supplier. A deal with Colombia would solidify its energy ties to the United States, too, says IBD.
Foreign investors poured $5 billion into Colombia's energy sector in 2007. But with rough terrain -- mountains, huge rocks and lack of roads -- much more investment is needed to get what's there.
Free trade will not only end tariffs on capital goods that extract energy, reducing costs, but will contribute a critical legal framework for big investment projects, lowering both their risk and cost, says IBD.
Source: Editorial, "A Willing Producer," Investor's Business Daily, September 18, 2008.
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