In accordance with article 3 of Decree 714 of 2012, the National Hydrocarbons Agency (“ANH”) must promote investment in exploration and production activities of the country's hydrocarbon resources.
Therefore, in order to promote the exploratory investment in Colombia and incorporate new reserves that can be exploited in the short term, it is necessary to establish new criteria and rules to overcome the transfer of exploration investment or activities between Contracts or Agreements.
Hence, on March 27, 2020 the ANH issued Agreement 01 of 2020 “By means of which the rules for the Transfer of Exploration Activities or Investments between Contracts and Agreements executed with the ANH are established” (the “Agreement”), which regulates the transfer of exploration activities or investments between Technical Evaluation Contracts, Hydrocarbon Exploration and Exploitation Contracts, Hydrocarbon Exploration and Production Contracts, Hydrocarbon Exploration and Exploitation Agreements, or other Hydrocarbon Contracts or Agreements in order to explore and/or produce hydrocarbons.
The Agreement includes 19 articles, which provide, among others, the following:
- Prior Approval. Transfers of exploratory activities or investments must have the prior, express and written authorization of the ANH, which will verify that at least one of the grounds for transfer is met, as well as the compliance with the rules and requirements included in the Agreement, in order to determine the legal, technical and economic viability of each transfer.
- Grounds. Transfers of exploration activities or investments will proceed when:
- Withdrawal to contracts or agreements in which there are remaining exploration investment or activities, or investment spending of execution.
- The contractor decides not to continue the performance of the exploration program or the subsequent exploration program (PEP) of contracts or agreements in which there are any pending exploration activities or investments and there is, at least, one area under evaluation or in production.
- Supervening events arise in areas of the contracts or agreements in which there are remaining exploration investment or activities pending of execution, which prevent or seriously affect the execution of the exploration program or the PEP.
- Phase. Transferred activities or investments will be part of the minimum or additional exploratory program of the current phase of the recipient contracts or agreements. In the transferred activities belong to the evaluation program or the PEP, then they will be transferred to the minimum exploration program of the current phase of the recipient contract.
- Free Areas. It is possible to transfer exploration activities or investments to the free areas proposed by the contractor, which shall be subject to the terms of the relevant permanent process for assigning areas (PPAA), only in case of supervening circumstance in the original contract, and provided e proposed areas are marked as free in the Land Maps existing prior to the request.
- Evaluation and Production Areas. The ANH may authorize transfers of activities or investments to areas under evaluation, exploration, or production, as long as the proposed activity seeks to identify additional unknown deposits and thus add new reserves.
- Recipient Contractor. For the purposes of the transfer of investment, the recipient contract´s contractor can be an affiliate, subsidiary, parent company or company of the same business or corporate group of the original contractor.
- Amendment. Once the transfer of an exploratory activity or investment is approved the ANH and the contractor must execute an amendment to the respective contract or agreement, which will include the contractual consequences of the breach of obligations, the guarantees regarding the new obligations and the economic rights of the recipient contracts or agreements.
- Economic Rights. There are strict rules in respect to the economic rights. In principle, applicable economic rights for the transferred activities shall be subject to the recipient contract terms.
- Second transfer. Contractors may not carry out a second transfer of the same activity or investment, unless supervening circumstances arise.
- Decision Term. The ANH has three moths to determine the technical, economic and legal feasibility of the requested transfer and adopt the corresponding decision. Lack of response by ANH in this term shall be considered as rejection of the request.
The Agreement is available in the following link: http://www.anh.gov.co/la-anh/sobre-la-anh/normatividad/Paginas/Acuerdos.aspx