We start this month with a long and important essay by Luis Ernesto Mejía Castro, HCC contributor and ex-MinMinas, on the current anxieties of the industry in Colombia.
This week the United Nations held its second regional summit of Latin American leaders in Havana, Cuba and the peace talks in Colombia were a recurrent theme, while back in Colombia some question whether a fissure in the Farc’s organization is already taking place.
Following accusations that its contracting process of transportation firms is excluding local, small and medium sized companies Ecopetrol (NYSE:EC) has suspended the contract process for two months while it reviews the terms and conditions.
This Friday, January 31 Pacific Rubiales (TSX:PRE) and Ecopetrol (NYSE:EC) will meet to review the future of the production contract on the Rubiales field, which is set to expire in May 2016 and has been a lightning rod for political grandstanding in the last few months.
The National Hydrocarbons Agency (ANH) has issued a resolution that will alter the distribution of royalties so that oil producing receiving regions will receive a greater amount for royalties generated towards the end of the prior, direct payment system.
GasWe already published news of increased reserves for natural gas, which the Colombian Association of Natural Gas (Naturgas) says are now out to 15 years, but here are figures detailing the natural gas market in 2013 published by the association.
A Bloomberg article, press releases by Pacific Rubiales (TSX:PRE) and Ecopetrol (NYSE:EC) and radio appearances by members of Colombia’s comptroller’s office took PRE on a rollercoaster. At one point on Monday it was down nearly 10% before recovering on somewhat on Tuesday and finishing Wednesday only a little more than 1% down.
The accumulated losses from multiples strikes and protests in 2013 cost the Colombian economy a total of CoP$1.8T (US$893.9M), with the largest loss coming from the August 2013 general strike. The oil industry has felt the effect due to reduced transportation options, and frozen fuel prices have eaten into Ecopetrol (NYSE:EC) revenue.
A local newspaper in Putumayo published an opinion piece from a local community representative that questions the department’s ability to handle increased oil production, with doubts surrounding the authority’s ability to react to spills and its limited infrastructure.
Continued security problems have the Arauca Department authorities and law enforcement officials scrambling to properly assign personnel and resources to the task of protecting the strategic Coveñas / Caño Limón and Bicentennial pipelines.
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