Panama's Minister of Trade and Industry, Ricardo Quijano, said this morning it will take about two to three years to learn if there are exploitable oil reserves in the Darien because there are many tests have have to be done as part of the process. Quijano made his statements after the MICI announced yesterday, Tuesday, 13 September 2011, that they would hold a bidding process open to international bidders later this year for a government contract to explore for oil deposits in the province of the Darien, on Panama's border with Colombia. Although Quijano admitted that he did not know the details, he explained they have to conduct studies to find out what areas can be exploited, whether or not those assets should be exploited, and to determine what would be the cost to the country. He added while speaking on Telemetro if it is possible to extract oil in the Darien, they would have to analyze how to export it, because right now there is no refinery in Panama. "I do not think we can be producing oil during this administration," he said this morning on the news. Yesterday, Tuesday, the Director of Hydrocarbons, Renza Samudio, said the explorations based on the bidding process will be done in the Garachiné-Sambú zone, in the waters of the Pacific coast, and in the area of Bayano-Chucunaque-Atrato, on land, outside of natural protected zones. The Ministry of Energy, another entity that handles the issue, announced last month that there are approximately 900 million barrels of oil in the Darien. (Prensa)

Editor's Comment: During the administration of Martin Torrijos (2004 - 2009) there was a big interest for awhile in building a refinery in Panama. At one point there were no less than seven different projects in different phases of development. All of them folded their tents and left. The corrupt government officials were trying to charge the businessmen tens of thousands of dollars, for nothing more than to schedule meetings with low level government officials. All of them said "screw this, the government of Panama is too corrupt to deal with" and they left. The oil is there, a fact which has been known for a very long time. What remains to be seen is if the government (of the day) has the political will to put through a win-win deal and make it a reality. Very cheap gas in Panama would be great, someday. And by the way, Ricardo Quijano stepped up to take over the MICI, after Roberto Henriquez stepped up to take over the Foreign Ministry, after Ricardo Martinelli fired Vice President Juan Carlos Varela from that post. Follow?

The veins of oil recently discovered in Colombia cross the from that country into Panama, indicating there is "black gold" in Panamanian territory, says the Secretary of Panama's National Energy Secretariat, Juan Urriola. The presumed oil is located in the Southern part of the Darien province, but experts in the field say the existence of oil can only be confirmed with the drilling of wells and study. "Everything else is speculation," says petroleum engineer Harry Quinn. Of 36 exploratory wells that have been drilled in the country since 1919, 18 have showed signs of hydrocarbons. (La Prensa)

The Panamanian government decided to cancel a concession granted for the exploration and exploitation of oil that was given to a company called Harken de Panama Limited, a subsidiary of the Global Energy Development PLC group, to begin a process of reorganizing oil concessions in the country. The government signed a contract with this company in 2007, when Alejandro Ferrer was the Minister of Trade and Industry, and the concession allowed the company to search for and exploit gas and oil in the Gulf of San Miguel, in Panama's Darien province. Energy Secretary Juan Manuel Urriola said the government sat down to talk with representatives from Harken to to cancel the concession and to start a new process involving other companies.

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.