What are some of the initiatives ANH has under way in 2012?

CABRALES: The main initiative that ANH has planned for 2012 is the Colombian bid round 2012, which we launched in the third week of February of this year. This process takes approximately 9 months. It will be completed by the end of this year with the signature of the E&P contracts.

How has ANH organized the 2012 Bid Round? What impact will this structure have on smaller companies?

CABRALES: The 2012 bid round is divided into three tiers: Type 1, Type 2 and Type 3. Type 1 includes areas that are mature areas with smaller blocks. Type 2 includes larger areas with new information about the potential prospects of those areas. Lastly, Type 3 includes areas that are frontier areas with very little known information. By dividing this year’s bid round as such, we ensure that we can have the participation of different types of companies. Both small and large companies have the ability to participate. Personally, I have noticed that smaller companies remain interested in Colombia and I have seen the same level of interest that we've seen over the last 7 or 8 years. Further, I have seen interest from the larger companies particularly in the unconventionals, and in our offshore, which is largely unexplored. There is also increased interest in heavy oil, which is an area with great potential; although we've taken many steps to further develop the potential in heavy oil, there is still much that remains.

What level of interest have you seen in the 2012 Bid Round? What incentives are in place for investors?

CABRALES: I have seen a great deal of interest from investors for this bid round. It is the first time that the Government of Colombia takes specific steps towards encouraging investment into the unconventionals. We have developed basically two fiscal incentives and contractual incentives for investors in the unconventionals. The first one is a discount, a forty percent discount, on our oil deal law. The second one is a new, what we call a new, p-zero, which means we have a high price participation formula in the contracts, which is a type of windfall tax, it’s not strictly speaking a tax. But the p-zero is the trigger from which the Government starts participating in the upside when international prices are high. So we have increased that p-zero, that trigger, up to $81 per barrel. So those are two specific measures that we have taken on the unconventionals. Again, I have seen a great deal of interest from different companies in the unconventionals. I think that investors are looking at Colombia today as the best opportunity after Argentina among other South American economies. Argentina is, in my view, ahead of us because they have developed more activity with regards to the unconventionals. However, we are comfortable and confident that we will see activities increase in that area in Colombia as a result of this bid round.

What does Colombia specifically offer investors that they cannot find in other countries?

CABRALES: What Colombia offers to the investors is basically I would say three things. The first one is a country which is friendly to foreign investment. It is a country that sees foreign investment not only as a flow of capital but also as a flow of ideas, technology, know how, and a different way to do things. So we consider foreign investment as a key component to our development. So that is the first part. The second part is that we do offer clear rules for investors, stable and clear rules for investors, and an attractive regime, very attractive fiscal and economic terms. That is the second part. The third part I would say is Colombia’s tradition of what it has been doing in terms of contract stability. We do respect contracts. Colombia has never in its history made any interventions into E&P contracts. We have made some oil policy changes in the past but always pulling forward never with retroactive effects. So it is a country that provides clear rules of the game.

What level of success have energy companies had in the decade following the implementation of institutional reforms in the energy sector?

CABRALES: I would say within the past 7 or 8 years in Colombia, the 1st success story is our state oil company, Ecopetrol. What you've seen with Ecopetrol is a huge transformation from being a state regulator to becoming a truly oil and gas company. Ecopetrol has transformed itself over the last 7 or 8 years as a result of the institutional reforms the country made back in 2003. In these reforms, the role of the regulator was separated from Ecopetrol, and that is when ANH was setup to assume that regulatory role. A second good example is Pacific Rubiales, which is a Canadian company managed mainly by Venezuelans, many of whom are former PDVSA (Petróleos de Venezuela) employees with a great deal of expertise, specifically in heavy oil. They have brought into Colombia knowledge of how to develop a heavy oil field, which has resulted in a great success story for Pacific Rubiales. There are many examples of smaller companies as well; Parex is one example of a small company that has been very successful. They have great social and environmental programs and they’ve also been able to increase production significantly over the last several years. There are of course many success stories in Colombia in recent years, but those are three cases by way of example that I chose to highlight.