Ecopetrol Cuts 2012 Output Target on Rebel Attacks
Colombian rebels have more than tripled attacks this year on state-run Ecopetrol SA (EC)’s southern pipeline as part of a strategy targeting energy infrastructure in the fifth decade of armed conflict, a police official said.
Saboteurs blasted the Transandino oil pipeline 37 times so far this year, including last weekend, compared with 10 incidents in all of 2011, said the official, who refused to be identified because of government policy. Blasts caused a fire and spill earlier this month on the pipeline, which carries crude 307 kilometers (191 miles) over mountains to the port of Tumaco.
Ecopetrol, the best-performing major oil company this year, trimmed its annual production forecast in July as assaults forced temporary pipeline shutdowns. Rebels are targeting installations in remote areas as the government counts on oil revenue to boost income that helps fund the military.
“Rebels are focusing attacks there because it’s a key part of the economy,” said Omar Escorcia, a Medellin, Colombia-based analyst for brokerage Asesores en Valores SA. “It generates instability.”
Rebels also have set explosives along Ecopetrol’s Cano Limon-Covenas pipeline in eastern Colombia and attacked transmission lines, knocking out power this month to a swathe of the western region. The nation is South America’s third-largest crude supplier.
The Transandino pipeline carries crude for Ecopetrol and Calgary-based Gran Tierra Energy Inc. (GTE), which said in July that sabotage cut its output. Gran Tierra Chief Executive Officer Dana Coffield was unavailable to comment today because he’s traveling, according to his secretary.
The government and armed forces are working to protect the nation’s oil industry, Bogota-based Ecopetrol said in an e- mailed statement today. Security issues have affected but not “put at risk” Ecopetrol’s operations, it said.
The assaults pose a risk to Ecopetrol’s target to produce an average of 780,000 barrels a day of oil this year, Escorcia said. Ecopetrol, Colombia’s largest oil supplier, cut its production goal from 800,000 barrels a day in July, the same month rebels killed five oil workers at a company well in southern Colombia.
The Revolutionary Armed Forces, or FARC, may be using the attacks to strengthen their negotiating position with President Juan Manuel Santos, said Daniel Velandia, head of research at Correval SA in Bogota.
“There is a perception that security has deteriorated,” Velandia said. Santos said this week his government has held “exploratory talks” to end the armed conflict.
Ecopetrol shares have returned 41 percent in U.S. dollar terms this year, the best performance among global producers with a market value of more than $50 billion, according to data compiled by Bloomberg.
Attacks on pipelines, energy towers, roads and bridges jumped last year to 196 incidents from 113 a year earlier, the first gain since 2008, according to government figures. Assaults have fallen from 917 in 2002 as the military increased strikes against the FARC.
Venezuela and Brazil are South America’s largest crude suppliers.
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