April 29th, 2022
ANH proposal for modification of Agreement 002 of 2017

The ANH published a draft agreement that modifies the selection criteria for the execution of hydrocarbons exploration, evaluation, and exploitation agreements in Colombia.

ANH proposes certain modifications to the procedure and the determination of the criteria for the selection of contractors for the execution of hydrocarbon exploration, evaluation, and exploitation contracts. Among the main changes, we highlight the following:

(i)    It is proposed to expressly include the principles of private law to rule the exploration, evaluation, and exploitation contracts entered into between the ANH and the interested parties.
(ii)    The ANH reserves the autonomy to determine the specific rules of the pre-contractual, contractual, and post-contractual activities in each of the adjudication processes of the aforementioned contracts.
(iii)    The classification of areas for the development of hydrocarbon exploration, evaluation and production activities will be:
a)    based on its geographical location: continental or offshore.
b)    depending on its geological characteristics and available technical information: Mature, Emerging and frontier areas.
c)    depending on their legal and contractual situation: Reserved, Available, or Assigned. The Assigned will be classified as: Evaluation, Exploration or Production.
(iv)    The areas that the ANH is studying for their eventual offer through a specific competitive process, will be classified as Reserved Areas.
(v)    ANH will prepare, periodically update, publish, and keep available to interested parties, a Land Map in which the areas are identified according to their classification and contractual status, if applicable.
(vi)    For the determination, delimitation, and classification of areas for hydrocarbons exploration, evaluation and exploitation, ANH will design and apply the principles of coordination and concurrence between the territorial and national entities.
(vii)    The requirements that the interested parties must comply to be contractors are maintained: (i) Legal Capacity, (ii) Financial, (iii) Technical and Operational, (iv) Industrial Safety, Environmental and Corporate Social Responsibility. Bear in mind that the Operator must comply and maintain the Legal, Financial, Technical, Operational, and Industrial and Environmental Safety Requirements, while the Investors must comply with at least Legal and Financial Capacity requirements.
(viii)    It proposes the general legal, economic, and technical criteria for the selection of contractors, but the ANH reserves the power to determine special requirements in the terms of reference for each future selection process.
(ix)    The Bid Evaluation and Qualification Factors will be established in the Terms of Reference or in the rules of the Process, depending on the nature and scope of contracts and the number of potential bidders. 

These factors may include:

a.    Carbon Management
b.    Greater Exploratory or Minimum and Additional Work Program
c.    Greater Economic Value of Exclusivity
d.    Higher Percentage of Participation in Production (X%)
e.    Higher Percentage of Participation in Shared Production
f.    Higher offer of investment in Community Benefit Programs
g.    Higher offer of contracting of local, regional and national goods and services.
h.    Signing bonus.

(x)    Apparently, new forms of contracting are possible, since it is indicated that the ANH will have freedom to include or exclude provisions in accordance with what the law and the Good Practices of the O&G Industry , taking into account criteria such as types of area, hydrocarbon and exploration or production techniques; market conditions and prospects; or circumstances surrounding the operations. These modalities may consist of “those known and commonly used in the international industry”, including technical evaluation, exploration and evaluation, hydrocarbon production, and provision of services with or without risk.
(xi)    If direct adjudication procedure for discovered, developed and undeveloped reservoirs, fields in production, areas under technical evaluation or exploration or similar takes place, it is proposed to eliminate the restriction of participation of the same contractors that returned the areas, fields, or reservoirs.

It is important to note that the permanent process of allocation of areas (PPAA) will continue to be governed by the terms of reference and guidelines adopted in Agreements 2 of 2019 and 6 of 2021 until these are modified. 

Likewise, this regulation would not apply to those contracts signed prior to the entry into force of this regulation, unless the parties agree to avail themselves by it, after an assessment of convenience by the ANH. 

The agreement proposal will be open for comments until May 2nd  and can be consulted at the following link: https://www.anh.gov.co/documents/4498/1._Proyecto_nuevo_reglamento_de_asignacion_13_abril_202224.pdf


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