News and AnalysIs for

The graph shows the destinations of Ecopetrol’s crude oil exports since early 2011. This is not the whole picture obviously – other companies do not provide this helpful detail – but it is illustrative. From a peak of 77% of exports in 3Q11, the US has diminished as an export destination to less than half, 46%. The US Gulf of Mexico alone has shrunk from 68% to less than 30%. Finally in 4Q11 a new top destination was crowned, the Far East, driven by deals in India and China (although the US as a whole remains the largest customer overall).

We showed a version of this graph in our November Inner Circle Monthly report which shows the two most common global benchmars, WTI and Brent and the Average Realized Oil Price in Colombia, as measured by those operators which report pricing. The Unweighted Average lies almost perfectly between average WTI and average Brent. The production-weighted Average is heavily pulled by Ecopetrol and shows more variation. The dotted lines show our estimate of these values for 4Q12 and our (admittedly early-days) projection of the numbers for 1Q12.

Multiple sources in the Colombian news media reported that Ecopetrol awarded business group Empresas Públicas de Medellín (EPM) a contract to build, maintain and operate two power lines that will transport electricity to the Barrancabermeja refinery. In the coming days, EPM will begin environmental procedures for the construction project, which will have a 230,000-volt substation and 250-MW-capacity lines 10-kilometers long .

National business paper Portafolio reports that Ecopetrol is preparing an analysis of the delivery date and costs of the Cartagena Refinery (Reficar) enlargement. Initially the company approved a US$4.9B budget; however, costs could exceed th US$5B. Ecopetrol expects to complete four of the fourteen units that make up the enlargement this year, which will become operational only when the entire set is ready, as the units are part of a complete refinement cycle.

El Espectador reports that governor of La Guajira, Juan Francisco Gomez Cerchar, requested that PDVSA be in charge of importing and distributing fuel in this department. To this, the Ayatawacoop indigenous cooperative, which distributes fuels in La Guajira, expressed its opposition and questioned the understanding of the governor and his staff on the issue, as this is not feasible under the law 681 of 2001.

According to DANE (as reported by national business newspaper La Republica), exports fell 8.2% in November 2012. Part of this decline was due to a 13% drop in exports of fuels and other extractive industry products, and the decline in the export of beverages, food and agricultural products.

Orlando Díaz Montoya, manager of Ecopetrol’s Barrancabermeja refinery, spoke to national business paper La República about the modernization project that is moving forward there. According to Diaz, in 2012 the project advanced 12.3% and is now being engineered to join new systems to existing ones. To start this phase requires the purchase of land, logging permits, permits for the connection to the national interconnected system, an Environmental Management Plan and a Port Concession.

Local news website NoticiasDeVillavicencio quotes Alan Jara, governor of Meta, saying that the process of building a refinery in Meta continues. To this end the government created the company Llanopetrol which is associated with the U.S. company, Structural Solution. The name of the refinery will be Llasol and, according Jara, the land for the construction is available, there is oil to be refined and the project has the support of Colombian President Juan Manuel Santos.

If one were confronted with the simple question: “What is the price of a barrel of oil?” you would need to reply in turn with many other questions: “When?”, “Where?”, “A physical or a ‘paper’ barrel?”, “What quality?”, “To be sold/bought by whom?”, etc.

Despite the wild swings of global benchmarks, most Colombian producers managed to keep their prices steady, losing only US$1 or so from their 2Q12 prices. But Ecopetrol’s average realized price was down over US$4 and C&C Energy’s price was down nearly US$5.