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Colombia's hopes for great oil field find likely dashed

BOGOTA, Colombia - With the nation's proven oil reserves continuing to fall, investment and exploration sagging and sabotage from a 40-year old civil war enduring, the Colombian government and its oil company, Ecopetrol, have been desperate to ballyhoo any find, small though it may be.

"Ecopetrol bet and won," the Ministry of Mines and Energy loudly proclaimed this week, after Ecopetrol said it had found 15 million barrels of crude and a small deposit of natural gas at a northwest oil field known as Gibraltar.

But what exactly had it won? Ecopetrol has spent $30 million exploring Gibraltar and just last year declared that the field held 200 million barrels. Now it's promising that this is only the beginning. Skeptics abound.

"The only thing you can say for sure is that Gibraltar will produce natural gas," said Sen. Hugo Serrano, a longtime critic of his government's oil policy.

Nor has Gibraltar been the only disappointment. Last year, British Petroleum said it would have to reassess possible reserves at the Niscota field, just south of Gibraltar. Original projections for Niscota had hovered near 900 million barrels. No one dares project anything any more.

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For years, Colombia has been portrayed as the region's great untapped potential. With 530,000 barrels per day of production, it is Latin America's fifth-largest oil producer. The government estimates that there are 40 billion barrels of reserves, of which the country has used just 7.5 billion.

But since peaking at 845,000 barrels per day in 1999, Colombia's wells have begun to dry up. Current proven reserves are near 1.5 billion barrels and declining rapidly.

The government says that, without more discoveries, Colombia will become a net importer of crude before the end of the decade. When that time comes, Gilbraltar, once thought to contain as much as 1.4 billion barrels of oil, may be the symbol of everything that went wrong. Its demise came from a combination of factors, among them bad luck, war and geology.

The test well drew headlines for nearly a decade because of its location along U'wa indigenous lands, near the Colombian-Venezuelan border. The U'wa threatened to launch themselves like lemmings over cliffs if Gibraltar's original investor, the California-based Occidental, moved forward on plans to drill on land the tribe held sacred.

The government eventually settled the squabble by drawing strict limits on the drilling area. Occidental then sank $100 million into the area and, when its search came up empty, sold the rights to Ecopetrol. But Ecopetrol's search, too, remained limited to the area outside U'wa lands, leading many to anticipate Monday's disappointing announcement.

Throughout, rebel groups operating in the region have attacked the oil installations. Guerrillas burned Occidental's equipment near Gibraltar and bombed a pipeline pumping oil from the company's other field hundreds of times. In the south, rebels bombed an Ecopetrol installation and untold numbers of contractors, engineers and prospectors were kidnapped.

If "security in Colombia does not get better, it's going to be impossible for upstream investment to increase," said Margarita Mena, a former Minster of Mines and Energy who is writing a book on the nation's oil industry.

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President Alvaro Uribe has sought to calm investors by launching military offensives in various guerrilla strongholds, but in oil-producing regions near Gibraltar, that has only made the problem worse.

Colombia's biggest problem, however, may be geology. Analysts say the land does not have the geological makeup that leads to the type of large discoveries that oil companies treasure.

Ecopetrol seems to understand the factors working against it. In recent years, it has successfully sought to increase interest in offshore natural gas.

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