A Review of the Nigerian Energy Industry

Ecopetrol plans $10.6bn spend

File of oil rig pumpjacks extracting crude from the Wilmington Field oil deposits area where Tidelands Oil Production Company, which is owned by Occidental Petroleum Corporation, operates near Long Beach, California15 December 2013, News Wires – Colombia’s state-run oil company Ecopetrol, which produces most of the country’s one million barrels per day output, said on Friday it would invest $10.6 billion in 2014, two thirds of which will be spent on exploration and production, according to a report.

The 11% increase in investment over 2013 will help the country boost crude reserves and will be spent partly on the drilling of 20 exploratory wells mostly onshore, geological studies and revamping one of its two main refineries, Reuters reported.

The 2014 investment plan forecasts average production of 770,000 barrels per day of oil equivalent in Colombia, and 819,000 barrels when subsidiaries the company holds a stake in are included, a summary of its investment plan showed.

The most recent data available show Ecopetrol and its share of production in subsidiaries it owns jointly, averaged 791,000 barrels per day in the January to September period of 2013, a 5.4% increase from the same period of 2012.

Downstream investments will include funds for the modernization of the Barrancabermeja refinery which produces refined petrochemicals for the domestic market.

The budget does not include any cash for acquisitions the company may make.

Ecopetrol’s wholly-owned projects will receive 61% of the budget while 39% will be invested in others it owns a partial stake in.

Most of the new exploratory wells will be drilled in the Andean nation’s Llanos Orientales or Eastern Plains, a promising oil region where the company this week announced 35 million barrels of proven reserves in an area it has been drilling together with Toronto-listed Talisman Energy.

The previous week it announced proven reserves of 22.4 million barrels in the same region in the Cano Sur Este block it owns in full.

The Bogota-traded company plans to spend $75 billion by 2020 to increase oil and gas production to 1.3 million barrels of oil equivalent per day.

Financing needs for the 2014 budget would depend on oil prices, Ecopetrol’s own cash generation, the pace at which it makes its investments and whether or not it acquires other companies during the year.

It said it had ample capacity to borrow and take on more debt with its access to variable and fixed income markets helped by its ‘investment grade’ rating.

Ecopetrol said it was continuing with projects to explore for and turn productive its non-conventional oil and gas resources, better known as shale oil and gas.

Colombia’s oil sector has expanded output helped by improved security gained from a decade-long US-backed military offensive against the country’s guerrilla movements.

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