Colombia Warns of Emergency Decree for Pipeline Standoff

Members of a Colombian indigenous group blocking essential repairs to the country’s second-largest pipeline say they’ll peacefully oppose any government attempts to fix the oil duct using force.

The forest-dwelling U’wa want the Cano Limon-Covenas pipeline partially re-routed and a cessation of oil exploration activities by state-controlled Ecopetrol SA (ECOPETL) at the Magallanes site in the eastern Norte de Santander province.

“We will resist, but only using words,” U’wa Association Vice President Heber Tegria said in a telephone interview yesterday. “We are not optimistic the government will accept our requests.”

Paralysis at the Cano Limon pipeline following an attack by Marxist rebels March 25 has cut Ecopetrol exports by 2.7 million barrels so far, the company said in an e-mailed response to questions. The U’wa are also blocking the entrance to the Magallanes site, Tegria said.

Government, Ecopetrol and U’wa representatives are scheduled to meet May 1 after earlier attempts to end the standoff failed.

State of Emergency

The month-long confrontation at the Ecopetrol-owned pipeline is threatening Colombia’s ability to meet oil export targets and may force the government to declare a national emergency, Mines and Energy Minister Amylkar Acosta said.

“This almost merits a declaration of emergency by the national government,” Acosta told local radio station Caracol yesterday. “There are reasons of state, and there’s a public interest that takes precedence.”

An emergency declaration would give Colombian President Juan Manuel Santos powers to rule by decree for 30 days and would potentially overrule standard protocol when dealing with the indigenous group. Royalties from oil, Colombia’s biggest export, are a key source of revenue for the government, which is currently battling farmer protests ahead of presidential elections in four weeks.

The Cano Limon pipeline takes oil from eastern Colombia to the Caribbean coast. The U’wa demand the duct’s path be partially altered to bypass ancestral lands that have suffered repeated oil spills and a rising military presence.

’Social Debt’

“The Colombian state has a historic social debt with the U’wa nation for ethnocide, genocide and ecocide,” the group said in an April 25 statement, demanding two trillion pesos ($1 billion) in compensation.

The president’s office and Ministry of Mines and Energy didn’t respond to an e-mail request for comment on the genocide claims.

As well as blocking the pipeline repair works, the indigenous group has halted gas exports from the Gibraltar field, Acosta said.

“The government has a very difficult balancing act,” James Lockhart Smith, Latin America analyst with risk consultants Maplecroft, said by phone from London yesterday. “It wants to ensure companies can invest efficiently while making every attempt to be respectful of indigenous rights.”

Colombian pipeline explosions have surged over the past year as the government holds peace talks in Havana with the country’s largest rebel group, the Revolutionary Armed Forces of Colombia, or FARC. There were 33 pipeline attacks in the first three months of this year, and a total of 259 in 2013, according to Defense Ministry data.

Biggest Loss

Paralysis of the Bicentenario pipeline, which feeds oil into Cano Limon from Colombia’s Llanos plain, is exacerbating the situation, Acosta said.

In a first-quarter operational report April 23, Pacific Rubiales Energy Corp. (PRE) said Bicentenario interruptions had contributed to higher transport costs. The company’s shares have tumbled 15 percent since the report.

Ecopetrol shares have fallen 12 percent in the past month, making it the worst-performing stock among global peers tracked by Bloomberg. The pipeline outages are weighing on the stock, Maria Velasquez, an analyst with brokerage Serfinco, said by phone from Medellin.

“People are taking these infrastructure attacks into consideration,” she said. “They’re generating a loss of confidence. In the end, without pipelines it’s hard to export.”

To contact the reporters on this story: Andrew Willis in Bogota at awillis21@bloomberg.net; Oscar Medina in Bogota at omedinacruz@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net Iain Wilson, Keith Gosman

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