The president of the Colombian Federation of Municipalities (Fedemunicipios) is concerned about the effect of falling oil prices and what that means for municipal budgets. But royalty distribution and the national government’s ability to use falling prices as a negotiating tool are also high on his list of concerns.
The former Ministry of Mines and Energy, Amylkar Acosta, says considering the decrease in oil prices Ecopetrol (NYSE:EC) and the industry must lower costs and guarantee a functioning pipeline system in this new scenario.
Government officials have taken a new tone this week, insisting that Colombia is prepared for lower oil prices and that the fiscal budget’s long term fundamentals remain strong.
The president of the Chamber of Oil Goods and Services (Campetrol) Rubén Darío Lizarralde called on the national government to maintain a policy of constant development with the oil industry, in order to keep building and strengthening the sector as a strategic economic pillar.
A proposed bill to make modifications to the two year old royalty system has provoked responses from a number of Senators who are demanding the changes, and accusations from others that recent promises from the central government have already been cast aside.
Another quarter passes, and still no decision from Ecopetrol (NYSE:EC) on the future of the Rubiales field. Meanwhile political pressure from an alliance led by the oil workers union (USO) and Senator Jorge Robledo mounts to return the field to Ecopetrol control.
The Ministry of Mines and Energy (MinMinas) announced lower prices for both gasoline and diesel, while the transportation sector called for the changes to be implemented over a longer period of time, and called for more attention from the state.
After the local environmental agency Corporinoquia questioned whether access routes for a Geopark drilling platform in Llanos 62 would affect the water table and local animal species, the company has agreed to halt one of two platforms.
Ecopetrol has released its earnings report for the third quarter 2014, which showed a drop in profits for the quarter both sequentially (17.3%) and year-over-year (40.3%). The drop comes due mainly due to the drop in oil prices. The news left the Finance Minister (MinHacienda) Mauricio Cárdenas calling for the NOC to ramp up its production.
After defending the decree which restructures the process and deadlines to grant licenses against environmentalists and critics in the Senate, the Minister of Environment Gabriel Vallejo met with members of the oil industry to calm company concerns on the process.
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