Colombia: guerillas, popular mobilizations threaten pipeline expansion
Colombia is enjoying an oil boom, its output of crude having nearly doubled in the past six years, from 525,000 barrels a day in 2005 to a daily average of 914,000 last year. But as exploration expands in the country's eastern lowlands, oil companies continue to confront armed groups. In February, the ELN guerrillas kidnapped 11 workers in Casanare department who were building the Oleoducto Bicentenario, slated to be Colombia's largest oil pipeline. The 11 were released in early March. Simultaneously, Interior Minister Germán Vargas Lleras warned that he was "not going to tolerate" more road blockades in the region. Local peasants and residents have in recent weeks repeatedly blocked arteries through the region to protest the lack of benefit to their communities by the oil operations, facing down troops of the elite National Police riot squad, ESMAD. Leaders have denied government claims that the guerillas are behind the protest campaign.
The Bicentenario pipeline is to follow the route of the existing Caño-Limon pipeline, with a new leg extending down to the new oil fields at Araguaney, Casanare. Colombia's parastatal Ecopetrol has a 55% stake in the pipeline. Canada-based Pacific Rubiales Energy, the country's largest private oil firm, controls 33%, with Canadian partners Petrominerales and Canacol controlling the rest.
Although political violence in Colombia is said to be on the decline, attacks on oil infrastructure more than doubled between 2008 and 2011, according to the Center for Security and Democracy at Bogotá’s Sergio Arboleda University. In January and February there were 13 separate attacks on the Caño-Limón line, which was able to pump oil for only 20 days in that period.
FARC guerillas are meanwhile attacking Emerald Energy, a British subsidiary of China's Sinochem, at its new Ombú field in Caquetá department. Security officials in the area say the FARC is demanding $10 for each barrel of oil. Because the company refused to pay, three of Emerald's Chinese staff, together with their translator, were kidnapped last June. After a bomb attack on a well, Emerald announced on March 6 that it would suspend operations "until security conditions improve." After receiving assurances from military commanders, production resumed the next day, but six days later oil tankers carrying crude from Ombú came under guerilla fire, leaving two civilians dead. The trans-Andean pipeline in the south was attacked 51 times last year.
The oil boom has followed a liberalization of the industry. The governments of Álvaro Uribe, president from 2002 to 2010, licensed large areas of the country for exploration and offered tax breaks. Private firms were no longer required to form partnerships with Ecopetrol, and the government also sold shares in Ecopetrol, allowing it to increase its capital spending four-fold since 2007. Foreign investment in the oil industry jumped from $278 million in 2003 to $4.3 billion in 2011. Many of the new investors are start-ups, listed in Canada but run by technicians sacked from PDVSA, Venezuela’s state oil company, after a strike in 2003. Some new fields are in Caquetá and Putumayo, where few foreign firms dared venture before. Production at the Rubiales field, discovered in 1981, has risen from 8,000 b/d in 2007 to 165,000 last year. The spate of attacks on oil installations, however, meant that output fell short of the government’s forecast of 1 million b/d by the end of last year.
The unrest in the region is in part a reaction to a reform of royalties by President Juan Manuel Santos. Most used to go to mayors in oil areas—and the government charges were often stolen by guerillas or paramilitaries. Royalties now go to the central government, which then distributes them to local communities. So more armed groups have switched to extorting from oil companies rather than mayors, while localities protest they get even less in compensation for the presence of the oil industry on their lands. (The Economist, March 17; El Espectador, Bogotá, March 7; Dow Jones, March 6)
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