Colombia’s Ecopetrol plans $75bn spend by 2020

Oil rigs10 November 2013, News Wires -Colombia’s Ecopetrol said it plans to spend as much as $75 billion by 2020 to boost oil and gas output to 1.3 million barrels of oil equivalent per day.

The spending plan would represent an increase of more than 60% over production levels of 800,000 boepd in the third quarter.

The company said it plans to concentrate on new exploration and production projects in Colombian onshore and offshore fields, according to a Reuters report.

Chief executive Javier Gutierrez said that around 85% of the capital expenditures would be dedicated to E&P projects.

“We have five hydrocarbon discoveries in Colombia … with an 83% success rate in exploration,” Gutierrez told investors. “The challenge for the next year is to consolidate the new (operating) model.”

About 90% of the new projects will be developed in Colombia, and are expected to mainly be funded through internal cash generation.

In a shift, Colombia has been sending a greater portion of its oil exports to Asian markets, said Claudia Castellanos, Ecopetrol’s vice president of marketing and sales.

The biggest export destination for Colombia’s mostly heavy-sour crude is the US Gulf Coast, she said, adding that shipments to Asia have risen to 34% of exports this year, up from around 20% last year.

“That number is projected to keep rising,” Reuters quoted her as saying.

On the exploration front, Ecopetrol expects to add production from new fields such as Cano Sur and Acacias, said Rafael Guzman, vice president of E&P technical development.

Guzman said the company was close to declaring those fields commercially viable, but did not offer figures on reserves at either field. He added that each could start oil output by late next year, producing up to 25,000 barrels per day each in 2015.

Ecopetrol’s pipeline infrastructure in Colombia, including the export-oriented, 780-kilometre (485-mile), 80,000 bpd Cano Limon line from Covenas to the Caribbean Sea, has recently been beset by increasingly frequent attacks from guerilla groups, including one last month.

According to Ecopetrol executives, the attacks remain a concern but have only reduced by 8300 bpd the country’s oil production this year on average, or around 1% of the total. However, that is up from 6000 bpd in 2012.

Ecopetrol posted a quarterly net profit of nearly 3.9 trillion pesos ($2.1 billion), up 19.6% from the third quarter of 2012.

The rise came as revenues jumped 9.5%, from nearly 16.6 trillion pesos a year ago to more than 18.1 trillion pesos during the recent quarter.

– Upstream

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