News and AnalysIs for

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.

Portafolio.co reports that, according to a study by Central Bank, despite the last 20 years’ worth of investment, exploration and successful drilling, it has not been possible to find oil fields with reserves as large as those of the Cupiagua (Casanare), Cusiana (Llanos) or Caño Limón (Arauca).

National newspaper El Tiempo reports that the royalty system reform recently passed by Congress was endorsed for a second time by the Constitutional Court. According to the court, Legislative Act 5 of 2011 amending Articles 360 and 361 of the Constitution, which determine the conditions for the royalties’ distribution, does not overstep the law nor go against regional autonomy.

The graph shows Operating Income Margins (averaged over the previous four quarters) fell in 3Q12 for all companies except Suroco and have been falling for two quarters except for Suroco and Parex. The companies shown are the largest producers who are specialized in Colombia and who publish sufficient financial detail for us to do the calculation. The trailing four quarter average (MA 4) smooths out some of the variation but does not do justice to Gran Tierra which has actually had rising margins this year but these are lower than the corresponding quarters in 2011.

Chilean oil and gas company GeoPark produced its first set of quarterly results for the nine-months ending September 2012. The company says it plans to produce quarterly results from this point forward. In 2012, GeoPark acquired Colombian producers Winchester, La Luna and Hupecol all of which contributed to a nearly 50% year-over-year increase in oil and gas production and a 147% increase in revenue. The company produces gas in Chile but with the new Colombian assets its revenues from oil have climbed to 87% of total.

The most important issue in the USO report this week is an action by Pacific Rubiales transport workers for better pay and working conditions. The National Transport Workers Union (SNTT for its initials in Spanish) wants to recruit more workers to the cause and then pressure the company for meal allowances, housing and education subsidies. Most of the company’s crude is transported by pipeline but it still needs tanker trucks especially for diluents. Other companies would be far more affected if relations with drivers became confrontational. We estimate 61,000bd of crude are transported by truck, just from the department of Meta.