Government Cancels Oil Exploration Contract with Harken
Monday, April 26 2010 @ 10:10 AM EDT
Contributed by: Don Winner
Urriola said the Ministry of Mines and Energy of Colombia confirmed the discovery of the existence of oil on the medial Pacific side to the South of the border with Panama. Although Colombia made geophysical and seismic studies, Panama will also conduct tests and studies to verify the existence of oil in the Darien area. In 2007, the director of Harken, Stephen Voss, said there was evidence that "there are both gas and oil in Panama and what has to be determined is whether it is commercial." Harken operates in Colombia, where they have more than eight contracts to produce oil and gas.
According to the financial terms established in the contract during the first five years of operation, or if the initial investment is recovered earlier, the state would receive 20% of the net from the production of hydrocarbons. During the remainder of the contract, for 20 years, the State would receive 50% of the net production of hydrocarbons, and if extended, 60% of the net production of hydrocarbons. Urriola says it is necessary to draft a model contract and to do so they have hired the company OTS as a consultant. (La Prensa)
Editor's Comment: To this move indicates the government of Panama is serious about getting other companies involved in efforts to explore for and exploit gas and oil in Panama. If Harken has had the contract since 2007, what results have they achieved in the past three years? Now, Panama will open the process up to general bidding to any company from around the world that might be interested. Obviously, this could develop into a very good thing for Panama, if it's done responsibly.