Batista’s OGX May Start Colombia Oil Output in 2012, CEO Says

http://www.businessweek.com/news/2010-06-23/batista-s-ogx-may-start-colombia-oil-output-in-2012-ceo-says.html

By Heather Walsh

June 23 (Bloomberg) -- OGX Petroleo & Gas Participacoes SA, the oil company controlled by Brazilian billionaire Eike Batista, may begin producing crude in Colombia in 2012 as government efforts to reduce guerrilla attacks on pipelines and other infrastructure lure investment.

There is “very great” potential for crude and natural gas reserves in areas once dominated by rebels, Chief Executive Officer Paulo Mendonca said yesterday in an interview in Cartagena after the company won five of six blocks it bid for in a government auction.

Batista, the world’s eighth-richest man according to Forbes magazine, is investing in mining and energy projects in Colombia after President Alvaro Uribe used military strikes to weaken rebel forces since taking office in 2002. President-elect Juan Manuel Santos, a former defense minister, pledged to sustain Uribe’s security policies to free the nation from a “nightmare of violence” after winning the presidential election on June 20.

“People still know that’s the most important thing for the country,” Mendonca said. “Santos will continue with the path Uribe found.”

The rights that OGX won to explore blocks in Colombia include northern areas near the border of Venezuela, where little exploration has been undertaken, according to the government. South Korea’s SK Energy Co. and a unit of Royal Dutch Shell Plc were also among the companies that won blocks yesterday.

Other Investments

MPX Energia SA, an energy company controlled by Batista, plans to spend $1.9 billion in a decade to tap Colombian coal deposits. Bastista also plans to raise as much as $1 billion in a public offering of AUX, a gold-mining company he’s creating in the Andean nation.

OGX, based in Rio de Janeiro, will spend most of its planned investment of $1.4 billion this year in Brazil, Mendonca said.

Oil will rise to about $100 per barrel by the end of the year and may keep rising as demand outpaces supplies, Mendonca said.

--Editors: Carlos Caminada, Jessica Brice.

To contact the reporter on this story: Heather Walsh in Cartagena or at hlwalsh@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net