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Colombia Oil and Gas Report Q1 2012
Business Monitor International, Jan 2012, Pages: 79
Business Monitor International's Colombia Oil and Gas Report provides industry professionals and strategists, corporate analysts, oil and gas associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Colombia's oil and gas industry.
BMI View:
Colombia’s oil sector has seen impressive levels of growth since the mid-2000’s, and BMI expects that positive trend to continue throughout the 10-year forecast period, with oil production expected to surpass 1mn b/d in 2013. This growth will be driven by an improving security situation, which should allow expanded exploration activities, improved transport infrastructure and an attractive fiscal regime.
Main trends and developments BMI highlights for Colombia’s oil and gas sector are:
- An improving security situation and the country’s attractive fiscal regime continue to attract significant levels of foreign investment into Colombia’s oil sector. Production has grown by more than 70% since the mid-2000s, and BMI expects that upward trend to continue. BMI forecasts oil output jumping from 982,000 b/d in 2012 to just over 1.1mn in 2013, surpassing the government’s 1mn b/d target. By 2016, BMI forecasts production topping 1.33mn b/d, making it one of Latin America’s top oil producers.
- Although most investment has been aimed at tapping Colombia’s oil reserves, the effect of rising investment is being felt in the gas sector. Gas production has nearly doubled in the last decade and BMI sees scope for strong growth in the years ahead. Output is forecast to rise from 11bcm in 2012 to 11.5bcm in 2013, before hitting 13.5bcm in 2016.
- Production will continue to outpace consumption, leaving room for growing levels of exports. The bulk of these exports will continue to flow via pipeline east into Venezuela. However, BMI is now forecasting small-scale LNG exports starting in 2013. Pacific Rubiales, operator of the country’s largest oil field, will lead the LNG export charge. The company plans to build a 0.7bcm per annum export facility on the Caribbean coast, where it will target regional markets such as Panama, the Dominican Republic and Puerto Rico.
- Rising oil demand is fuelling investment in the downstream sector. Ecopetrol’s Bolivar refinery in Cartagena, the country’s second-biggest facility, will be upgraded over the course of 2012 and 2013. The expansion project, which received a US$2.84bn loan from the US export-import bank, will see the plant’s capacity rise from 80,000b/d to 140,000b/d. BMI assumes that the project will be completed by 2013, taking the country’s total refining capacity from 285,850b/d to 345,850b/d.
- Although the country has been successful attracting rising foreign investment, state-run Ecopetrol will remain the engine of growth. The company plans to spend a total of US$8.5bn in 2012 as part of a broader capital expenditure plan that will see it invest over US$80bn between 2011 and 2020. In 2012, nearly half of the total capex will be channelled into production activities, with a further US$2.025bn going towards transport infrastructure and US$1.4bn earmarked for new exploration.
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