US-based Occidental Petroleum has decided to “freeze” its investments in Colombia until a definitive solution is reached regarding leftist guerrilla attacks on the Cano-Limon Covenas pipeline.
Guimer Dominquez, president of Occidental de Colombia, said the “revision of operations” is being undertaken on the advice of Oxy headquarters in Los Angeles, in light of the alarming increase in sabotage against its infrastructure. Losses so far this year due to the relentless bombing of the pipeline and the consequent near-halt in crude production amount to $330 million.
The 485-mile pipeline, which links the Cano Limon oil field with the Caribbean port of Covenas, has been bombed an unprecedented 107 times this year – already surpassing last year’s total – by the National Liberation Army (ELN) leftist subversive group (see story,p7). Operations have been virtually paralyzed since February, according to state oil firm Ecopetrol.
The drop-off in Cano Limon oil production – to below 3,000 barrels per day from well over 100,000 b/d – has hurt Colombia’s economy, trimming oil exports by 27% to $842 million in just the first three months of the year.
Rumors are circulating that Oxy may pull out of the country altogether, since its operations are paralyzed, according to the local economic daily Portafolio. The implications of such a departure would add to Colombia’s mounting problems. The central provinces, which benefit greatly from Oxy’s royalty payments, would see an important source of regional income vanish, according to analysts.
Such action could have the impact of shelving potential future projects such as development of the lucrative Samore block, where the way was cleared recently for Oxy to drill only after a long and arduous legal battle with the U’wa Indian community.
Senior state officials believe, however, that Oxy is prepared to weather the current storm given its long-term prospects in Colombia. Last year, Oxy signed two new association contracts with Ecopetrol.
Separately, Colombia’s main pipeline, Ocensa, which carries 354,000 b/d of crude from the Cusiana-Cupiagua complex to the northwestern port city of Covenas, was bombed earlier this week.
A spokesman for Ocensa, however, said that operations continue as usual, although operations on a separate, 110,000 b/d pipeline that runs parallel to Ocensa were interrupted as authorities investigate the circumstances surrounding the bombing.
The attack, perpetrated in the northwestern province of Antioquia, is widely believed to have been committed by one of the two major leftist guerrilla groups that operate in the country.
