The oil production in Colombia is poised to drop below the target of one million barrels per day in 2016 following the slowing down of drilling activity and ageing of major oil fields.

The drilling activity fell over 23 percent this year and is posing a major challenge to the Colombian government's target of one million barrels per day through 2022.

Oil producers in Colombia have slashed down their spending in the wake of falling oil price. The Colombian government may hike investment in the oil industry to $15 billion per annum in addition to offering some tax sops to the industry.

The oil producers in Colombia drilled just 19 exploratory wells during nine months of 2015 registering 23.75 percent drop from the 80 well drilled in 2014. The significant drop in drilling activity is indicating further slump in oil production in the days to come.

Oil experts, oil producers and even industry body are clueless about how long the current bleak situation continues. Francisco Lloreda, President of Colombian Oil Association, said, "It will start to be below 1 million barrels per day from next year. But exactly when, we can't say."

Considering the limited life of oil reserves, Lloreda further explains, "We have a larger challenge than other countries because we have limited reserves. We need to incorporate more barrels and this is done with intelligent exploratory activity."

The Colombian government is planning to lower tax rates for oil companies engaged in drilling and offshore blocks. The Colombian Mines and Energy Minister Tomas Gonzalez said in a statement said that the government was committed to encouraging oil exploration amid falling global oil prices. 

The Government may slash 25 percent Income Tax on offshore contracts and will also exempt them from Value-added Tax (VAT) and other customer duties. Gonzalez further said, "We have seen the potential of the Colombian Caribbean for the future of hydrocarbons.

That is why we are making an investment in offshore more attractive, taking measures that will allow us to incentivize exploration and production."

Colombia's average oil output was 1.007 million barrels per day in September. The State-run Ecopetrol accounts for over half of the Andean country's oil production. Canadian oil firm Pacific Exploration and Production Corporation is a major private player in the Colombian oil industry. 

The Colombian government may hike investment in the oil industry to $15 billion per annum as against the current investment ranging from $5billion to $7 billion.

The Colombian government's measures helped oil producers overcome the challenges and early impact of oil price drop. However, Colombia needs more policy support to attract foreign investment. 

Colombian state-run Ecopetrol SA and Pacific Exploration and Production Corp and other oil producers have started lowering their budgets on spending in drilling activity. The slump in oil prices globally is forcing oil producers to minimize their activity.

The reduced oil exploration in Colombia assumes significance considering the Andean nation's reserve life of 6.4 years from the end of 2014.