Ecopetrol S.A. : Colombian Oil Output Declines in June as Pipeline Attacks Rise
07/19/2012| 01:15am US/Eastern
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BOGOTA, Colombia--Colombian oil production fell slightly in June, to 934,000 barrels a day, hampered by rebel attacks on oil pipelines that are putting the government's output goal of 1 million barrels a day further out of reach.
June's total, released by the Mines and Energy Ministry, was 0.5% less than the 939,000 barrels a day produced in that month of 2011 and 0.2% less than the 936,000 barrels a day produced in May of this year.
Colombia's oil sector went through a boom period between late 2007 and the end of last year, nearly doubling production to reach a record monthly average of 962,000 barrels a day in November. It is now Latin America's fourth-largest oil producer.
The oil boom was attributed mainly to a military offensive against leftist guerrillas, who for decades stymied oil exploration in the country's vast, remote regions. With the military pushing the rebels back and reducing their capabilities, oil companies were once again able to begin exploring and drilling for oil in areas once viewed as too dangerous to set up shop.
But starting in late 2011, the country's oil boom started to stall as Marxist guerrillas began a resurgence that has included attacking oil pipelines with greater frequency.
The attacks can cause serious slowdowns in production because the rebels not only bomb the pipeline, but often set land mines in the area before retreating. This forces the military to spend days clearing the minefield before repair crews can enter the zone and patch up the damaged pipeline.
Some observers speculate the reasons for the rise in pipeline attacks go beyond a rebel resurgence. They say, for example, that the government's threats to expel any foreign oil companies that pay extortion money to rebels has forced some firms that were being extorted to stop the practice, which then puts them more at risk of attack.
Another theory says new government rules on how oil royalties are paid to local governments has made it more difficult for the rebels to squeeze money out of small-town mayors, and that the rebels are acting out against this change by attacking pipelines.
Strikes by oil workers and protests by communities that surround oil fields have also played a role is reducing production potential during the past year.
Pipeline attacks have continued this month, including one on the country's second-longest pipeline, the Cano Limon, on July 3 that forced pumping to be halted. The pipeline can carry 220,000 barrels a day to the Covenas port, but for the past year or so has been averaging closer to 80,000 barrels a day.
Write to Dan Molinski at dan.molinski@dowjones.com
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