Accord 4 of May 4 2012, issued by the National Hydrocarbons Agency (ANH), amended the award of contracts for oil and gas areas in Colombia (for further details please see "ANH issues new regulation for contracting of oil and gas blocks").

Chapter 3 of the accord deals with the award of areas. In addition to the existing exploration and production and technical evaluation agreement contracts, the accord introduces a new type of contract, known as a special contract. The contract minutes are proposed by the president of the ANH and adopted by its board.

When awarding areas, the general rule is to solicit open or closed competitive bids. However, in certain circumstances it is also possible to award areas directly.

An open competitive bid is a public procedure available to any party wishing to participate according to the principles of equality and objectivity. Such procedure is based on the terms of reference, which provide the capacity requirements. The ANH chooses the most favourable proposal.

A closed competitive bid is carried out by invitation only. It is also structured according to the terms of reference, which set out the capacity requirements to be met by the invited participants, The ANH then chooses the most favourable offer.

Through the direct award procedure, the ANH assigns the selected area directly. This procedure is exceptional and must be authorised by the board of the ANH. The criteria for using this method are related to aspects of the areas to be awarded, namely:

  • the area's particular nature and geographical location;
  • particular geological characteristics, according to technical studies;
  • social and environmental constraints;
  • technical information available about the sub-soil and the required exploratory coverage;
  • grounds of public interest, national security or public order; and
  • special considerations of economic or energy policy.

The procedure is based on the rules regarding fulfilment of the capacity requirements, terms and conditions by the bidder and contractor on the one hand, and negotiable issues on the other. The issues under negotiation should be more favourable than those obtained in competitive selection processes concluded in the previous two years, according to the characteristics of the area.

The bidder that fulfils the capacity requirements, negotiates exploratory programmes and economic investments and abides by the legal requirements and model contracts will be awarded the area.

Individual bidders or members of joint bidders cannot submit more than one proposal for the same area, either individually or jointly. However, they can seek to be awarded numerous contracts if they can satisfy the requirements established in the law, the accord and the terms of reference.

For further information on this topic please contact Gabriela Mancero Bucheli at Peña Mancero by telephone (+57 1 640 1355) or email ([email protected]).