News and AnalysIs for

The popular press likes to report on the movement of WTI and Brent as benchmarks for Colombia crude prices. In the worst cases, they only report WTI often calling it “the price of oil”. The reality is that Colombian crude spans a number of grades and qualities based on viscosity and sulfur content. The global benchmarks are relevant but quality and transportation cost against such benchmarks are what determines price. The graph shows the distribution of API (viscosity) by volume as measured by the Ministry of Mines and Energy.

Caracol Radio reports that in the sector’s “Rendering of Accounts”, Minminas Federico Renjifo referred to 2012’s oil production delays. According to Renjifo: “Although there have been days we’ve been above 980,000 barrels and production for over a million barrels is achievable, sometimes we have had problems in pipelines, we have had licensing issues, but the number of barrels produced surpass 980,000 barrels on some days”.

The OECD will be in Bogotá this week to study Colombia’s environmental policy. The investigation is part of a larger study to identify best practices but the government is taking it as a way of validating its current strategy and showing off to the world its implementation. MinAmbiente also plans to make a major gesture in environmental management of the sensitive and emblematic Amazon region by expanding the Chiribiquete Park. From a MinAmbiente press release, translated and with commentary by Hydrocarbons Colombia.

According to a MinMinas press release, natural gas service this year reached 550,000 new users and electricity subsidies for economic stata 1, 2 and 3 will total CoP$ 2.3B (US$1.3B). This was announced on Monday by MinMinas, Federico Renjifo, as part of the mining and energy sector Accountability Public Hearing.

We recently attended a lively and interesting session on this topic, organized by national news magazine Semana and sponsored by the National Hydrocarbons Agency (ANH).

We recently attended a lively and interesting session on this topic, organized by national news magazine Semana and sponsored by the National Hydrocarbons Agency (ANH). There was much lively debate on the royalties issue and much agreement about the need for Corporate Social Responsibility. But we were left with the impression of Bogotá elites talking to Bogotá elites. There was little scope for the communities themselves to contribute.

The Colombian Armed Forces recently encountered an antiaircraft battery belonging to the Farc. However the Air Force commander assures that the equipment is old and unlikely to function well. We did not know the Farc had antiaircraft batteries old or otherwise. From a MinDefensa press release with commentary by Hydrocarbons Colombia.

Incidents were down this week, right about the average for the past several weeks. We calculate a 4-week moving average to smooth out weekly variations and although that rose significantly in the run-up to the first round of peace talks, it dropped almost as rapidly to settle at about 40 incidents per week. This value has held for the last four weeks and appears to be the “new normal”. Once again the vast majority of these were the Army continuing to discover camps, minefields and weapons caches so perhaps the Farc are keeping up their truce commitment.

Ecopetrol guarantees that all diesel fuel from January 1st, 2013 will have only 50ppm sulfur. From an Ecopetrol press release with comments by Hydrocarbons Colombia.

Monday December 10, 2012 was the regular “Rendering of Accounts” for the Ministry of Mines and Energy. These sessions are important for the public to understand what has been accomplished and they provide an opportunity for feedback and questions. Unfortunately we struggled to stay awake because MinMinas had virtually nothing new to say about the sector that had not been said at the National Hydrocarbons Agency (ANH) “Rendering of Accounts” session on November 30. We were disappointed.