News and AnalysIs for

With so much doom and gloom around the Colombian hydrocarbons industry it’s nice to celebrate some good news. The graph shows MinMinas reported gross production (before royalties and working interest) the Las Maracas field and Petroamerica’s recently reported November figure. Production is up over 500% since July.

In our Inner Circle Exclusive Monthly Report for November we published MinDefensa figures that showed hydrocarbons infrastructure attacks were down to 196 in 2011 from 917 in 2002. The graph shows the importance of picking your measurement dates to make your point. The Defense Minister implied (but did not say) that there had been a steady decline from 2002 to 2011. We obtained this data for attacks on Ecopetrol and they clearly show a rather dramatic increase since 2010 – the start of the Santos presidency – from about 30 during the later years of Uribe’s second term to 150 as of the end of October 2012.

Last Friday, November 30, 2012 the National Hydrocarbons Agency (ANH) presented its “Rendering of Accounts”, a kind of public performance review in which citizens are invited to listen and openly question and criticize if they wish. The session lasted about four hours and covered a wide range of the agency’s activities. Hydrocarbons Colombia was there and we noted the following items (with our commentary).

MinHacienda Mauricio Cardenas announced that the government intends to introduce three amendments to royalty budget management. The budget for the next two years totals CoP$17.7 billion (US$9.7B). The changes are designed to tighten control on projects even further and to make royalty funding available to the central government for capital projects. The changes do not address community frustration over the changes to the system already introduced this year. We comment on the changes and the royalty system in general.

Villavicencio residents are upset about all things hydrocarbons it seems. They marched on city hall to complain about Ecopetrol and on the Llanogas distribution company offices to protest high prices. These are not isolated incidents in the same week. They would seem to be fomented by community leaders for broader political purposes, but which tap into a vein of discontent.

The MinMinas press report was rather muted and full of reminders that the figures were preliminary etc. There was no mention of the fact that this was in fact a milestone for Colombian oil production – the highest month on record. Likewise the 1Mbpd goal was nowhere to be seen in the text. It must be the difference in personality between Minister Renjifo and ex-Minister Cardenas.