December 02, 2008

Royalty increase would start at USD 90 per barrel - AHN

BNamericas quoted Mr Armando Zamora director of hydrocarbons regulator ANH as saying that the potential royalty increase in Colombia would begin when oil prices are USD 90 per barrel or above.

According to Mr Zamora, the potential increase would give the government an additional 1% share at USD 90 per barrel and go up to a maximum 5% increase if oil prices were to hit USD 180 per barrel.

Mr Zamora said "It would be a marginal increase for very high prices, increasing the government's take gradually.” He added that the increased stake would go up by 1% in increments of USD 30 per barrel.

Mr Zamora said that the government has not approved an increase and that discussions are ongoing.

Colombian authorities have been evaluating a possible royalty hike to help subsidize the rising cost of fuel on domestic markets. But some analysts and local producers are worried that any such increase could stain the country's positive image with E&P investors.