In November, ExxonMobil announced a deal with the Colombian government to drill for oil in South American waters.
The government, under President Juan Manuel Santos, has been struggling to come up with a solution to its oil shortage, with production cuts totaling about 30 percent in recent years.
ExxonMobil says it expects to complete the drilling program within the next two years.
This agreement will allow the company to drill a 1,000-foot (305-meter) oil well in the Santa María province in the state of Parana.
Exxon is paying a $25 million upfront fee, and the Colombian authorities will also pay $1 million per year in royalties, and Exxon will get a 5 percent share of royalties on the revenues generated.
The deal is one of the largest in the world, and is likely to benefit the Colombian economy.
The company says the Santa Martínegas will be the largest oil and gas field in Colombia and one of Colombia’s largest offshore resources.
This will allow for the development of new fields, especially in the region of La Palma, and allow for further exploration of new reserves.
The deal comes just days after a separate deal was signed between ExxonMobil and a Venezuelan state oil company, PetroCaribe, that would have allowed Exxon to drill in the South American country’s Arctic waters.
Venezuela is facing an economic crisis due to a devastating drought that has reduced the country’s oil output to near zero.
Exxon says the new agreement will support the oil industry in the country.
“We’re very excited to continue to expand our partnerships and work with Venezuela, and we hope to further develop our partnership in the coming years,” said Jim Scales, President of ExxonMobil Americas.