Colombia's National Hydrocarbons Agency implements blockchain technology to manage the permanent process of allocating areas of operation

April 19, 2021

The Colombian oil industry has been in recent years the engine of the country's economy. Oil is the first export product, at 55.4% of total exports, and the main contributor to the State's finances. The regions’ fiscal resources benefited from the influx of royalties worth 5.9 trillion pesos in the last 4 years.

The government's commitment is to work to guarantee that the sector will have the agility necessary to secure energy sustainability and make Colombia a competitive country. In addition to exploration, it is important to increase production, not only from new fields but also through the reactivation of discovered fields that remain undeveloped.

The need for improvement and transparency of the Permanent Process of Allocation of Areas (PPAA)​​ for exploration and production is one of the pillars of the plan to reactivate the industry in Colombia. With the aim of achieving this key improvement in the process, the National Hydrocarbons Agency (ANH in Spanish) evaluated different options and technologies and determined that the use of blockchain technologies was a viable alternative given its immutability, security and availability.

Thus, the ANH―aligned with the policy of reactivating investments in the energy sector―implemented a new process for the allocation of areas of operation through the use of this technology, effectively implementing a secure, digital alternative to the traditional physical model of offers and counter-offers.

On October 23, 2020, the ANH issued Addendum No. 18 of 2020, which sets out a series of modifications to the Terms of Reference of the Permanent Process of Allocation of Areas (PPAA) in Colombia. The most important change introduced by the Addendum is the implementation of blockchain for the submission of bids by the Qualified Participants and Initial Bidders, which, according to the ANH, “constitutes a driver for the improvement of the Entity's processes.”

Implemented Solution

The solution implemented for the management of the Permanent Process of Allocation of Areas (PPAA) is composed of different technologies; significant among them is the use of blockchain technology, as it allows for the safeguarding and certification of the documentation involved in the submission of bids as well as the certification of the opening and selection process.

The ANH chose Grupo Sabra, a technology company with experience in the implementation of blockchain projects in companies and government agencies in the region, for the implementation of this first version of the solution, which will include new features in future versions to be implemented by the agency. “For our team, this first project with the ANH is an enriching experience, as it allows us to demonstrate in a real case the benefits of this technology in simple but high-impact processes such as the allocation of oil extraction areas, enabling concrete investments in a transparent and safe manner,” said Esteban Musso, CEO of Grupo Sabra.

Benefits and Results of the First Implementation

In December 2020 the first process of allocation of areas of operation was run using, on the one hand, the physical submission of documents, but registering all the information in the platform mounted on blockchain. The experience proved to be simpler and more transparent, both for the bidders and for the members of the ANH who had to certify the bids for their selection.

“For us incorporating new digital tools that allow us to provide efficiency and transparency to key processes represents a strategic objective. This new platform will allow us to boost the objective of attracting more investments to an industry that is key for our country,” expressed José Armando Zamora Reyes, president of the ANH.

Grupo Sabra

Grupo Sabra is a software application development company based in Argentina. It focuses on integrating traditional technology with blockchain technologies and smart contracts. The company has a team of blockchain experts that have over six years of experience implementing solutions in industries such as Energy, Government, Healthcare, Banking and Capital Markets.

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Extrimian is a joint venture between IOVlabs and Grupo Sabrathat focuses on building blockchain platforms as a service for enterprises and government agencies. The RSK Enterprise Cloud platform is used to deploy Blockchain network infrastructures, connect different networks, and integrate blockchain architecture with organizations' systems in a simpler way, lowering implementation times and development and maintenance costs.

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The RSK network is the world’s safest smart contract platform, secured by the incomparable hashing power of Bitcoin, through merged mining.

RSK’s goal is to add value and functionality to the Bitcoin ecosystem by supporting smart contracts, near-instant payments, and greater scalability.

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