News and AnalysIs for

The dispute between the USO and Oxy is grinding away. On the one hand, the USO continues to complain that management is not listening and on the other, holding out the olive branch to continue to extend the dialogues. Last week between a holiday on Monday and then the traditional Colombian Easter holiday from Wednesday noon, the negotiating teams no doubt did not accomplish very much.

As reported by Dinero, the Sustainable Integrated Management Report 2012 presented by Ecopetrol during its shareholders meeting was qualified, for the second year running, with an A+ (the highest rating) by Global Reporting Initiative (GRI), a sustainability reporting rating company.

The USO reports this week that workers at Reficar and with Oxy are getting closer to strikes, the union says because local management refuses to talk. In the Reficar case, the USO claims that executives from Bogota have contacted the union but Reficar management will not set up the mechanisms to start negotiating. In the case of Oxy workers in Arauca, the union has presented demands but the company will not budge.

It came as a tweet inviting contractors and providers to review the company’s Corporate Code on Conduct and Ethics. But Pacific makes it clear as early as page 7 that “the principles listed in this Code form part of your contractual agreement with Pacific Rubiales Energy and its subsidiaries”. Having been burned at least once by ethical lapses on the part of its contractors, the company does not want it to happen again.

We find the USO’s embracing of environmentalism incredibly cynical but they have seized on this as a way to connect with the broader public and justify their strategies. Ecopetrol understands this and so we have a recent detailing of their environmental investments. Pacific Rubiales also highlights its environmental record, but principally it seems for ethical investors.

As reported by Semana, Ecopetrol has decided to remove control of the Colorada field (located in San Vicente de Chucuri, Santander) from the Universidad Industrial de Santander (UIS), which the company had given to the university in 2006 for training its students until 2016. At the time, the field was producing 14bd but it has been estimated that it could produce as much as 3,500bd.

Business magazine Dinero reports that 500 truckers threatened to go on strike and, to avoid it, asked companies like Ecopetrol and Pacific Oil Tech help them to find a solution to the problems that left them paralyzed in the Cartagena free trade zone, fact that made them lose about US$800 a day per truck.

The annual report of this prestigious organization reveals an increasing perception that bribery is a taking place in Colombian business. The graph above shows the frequency of response for various types of bribery comparing 2012 responses to 2010. Uniformly, 2012 responses are higher than 2010 indicating the perception of corruption has worsened. More concerning, and more easily addressed is the result that, despite this increased perception, Colombian businesses seem to take few steps to mitigate such practices. From the Transparency Colombia press release, translated and with commentary by Hydrocarbons Colombia.

While it may seem that the USO’s campaign to discredit the mining and energy industries is self-destructive, one must keep in mind that their goal is not to close the industry but to force multinationals to leave. They want to go back to the days when Ecopetrol ran everything and thus 100% of the jobs were USO jobs. Terpel workers settle for about 4% (which is only slightly over the inflation rate) and Cartagena refinery workers vote to go on strike. If the union manages to stop construction as well, that will delay the Cartagena refinery upgrades even more than they have been.

Ecopetrol continues its publicity campaign about local employment and procurement. This time it is the turn of employment, highlighting how many jobs the company creates and how many are filled with local people. With local hiring being a developing community issue, this Ecopetrol press release is timely. Translated and with commentary by Hydrocarbons Colombia.