*Ecopetrol likely to take over Colombia’s largest oil field from Pacific Rubiales in 2016
*In-situ combustion tests successful, but technology is ‘rare and considered relatively high-risk in South America,’ says analyst
07 November 2013, LONDON, UK — As Pacific Rubiales’ contract to operate Colombia’s largest oil field, Rubiales, is set to expire in 2016, Colombian senators have been encouraging Ecopetrol to take over the field; however, amid concerns that Ecopetrol won’t be able to operate efficiently without Pacific Rubiales, the Canadian firm must act cautiously in exploring enhanced oil recovery in the field, says an analyst with research and consulting firm GlobalData.
Mike McCormick, GlobalData’s Analyst covering Latin America Upstream Oil & Gas, says: “Early tests of Ecopetrol’s patented in-situ combustion technology were successful, but it’s unlikely that the company will be interested in risking Colombia’s largest producing field to unproven technology.
“In-situ solutions are rare and considered relatively high-risk in South America. Even if Ecopetrol chose to implement in-situ technology, other companies have equally effective proven technology with considerably more experience.”
If Pacific Rubiales does fail to renew its contract, McCormick says the company will lose an estimated $7 billion from a further 24 years of field operation.
However, GlobalData expects Pacific Rubiales to complete a pending complimentary acquisition of light oil producer Petrominerales, which will reduce heavy oil dilution costs. Although the acquisition is part of the company’s larger diversification strategy, it could also increase its margin per barrel of heavy oil produced from Rubiales field.
Still, Pacific Rubiales has a tenuous labor relation history in the country, which has given rise to public denouncement of the company by Colombian politicians. This in turn could undermine the firm’s desire to continue exploiting Colombia’s largest oil field and further increase the chances of Ecopetrol taking over in 2016.