Colombia has set its sights on developing renewable energy sources - such as solar, wind and geothermal - as part of President Gustavo Petro's goal to wean the major regional coal and oil producer off its dependence on fossil fuels.
However, the country has struggled to take certain projects over the line, including onshore wind farms in the La Guajira province, which have been met with resistance from local Indigenous communities.
Geothermal power produces electricity by taking advantage of the earth's heat.
"Parex, as the holder of the exploitation permit, will carry out all activities at its own expense and risk and all the necessary steps for the development of the project will be (the company's) responsibility in accordance with the resolution," said the resolution, which was signed by Energy and Mines Minister Andres Camacho.
Parex Resources did not immediately respond to requests for comment.
The project is located in Colombia's Casanare province at a site where Parex is currently undertaking an oil and gas project, according to the resolution by the ministry of mines and energy.
The project is expected to produce between 15 and 60 kilowatts of electricity, with potential to expand to 120 kilowatts, the document said, adding that the license will run until September 2041.
The license follows an earlier geothermal pilot project developed by Parex Resources elsewhere in Casanare in 2021.
The company must comply with all technical and environmental requirements that are included in awarding the license, the resolution added.