News and AnalysIs for

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.

Led by the Finance Ministry (MinHacienda) Mauricio Cárdenas, the central government brought a series of proposals before a joint economic session of congress that it says would increase direct royalties to producing regions to CoP$4.1T (US$1.998B) in 2015-2016 from the previous figure of CoP$1.9T.

Community Action Committees (JACS) from Casanare have organized themselves to reject labor reforms proposed by the Labor Ministry that would sideline their role in local hiring in favor of government-run agencies. In a letter, the JACS said the reform is just as bad as the royalty reform.

Senators and environmentalists continue to scrutinize a change in expedited environmental licenses, making accusations that the decree is a reworking of protected areas and will weaken conservation efforts. MinAmbiente Gabriel Vallejo meanwhile responded in a Senate debate and to the general press.

The government’s fiscal plans are being squeezed by the downward trend of the WTI and Brent oil prices. Estimates are that for every dollar the price drops, the fiscal impact in revenues amounts to CoP$420B (US$220.8M) over the year.

The General Royalty System (SGR) continues to generate conflict between the central government and regional leaders. Departmental governors from the major oil producing regions say a budget crisis is looming due to the new royalty system as congress mulls changes.