Colombia's Ecopetrol aiming for 63 pct rise in production by 2020

Reuters

By Joshua Schneyer and Daniel Bases

Nov 8 (Reuters) - Ecopetrol, Colombia's publiclytraded, state-controlled oil company, said on Friday it willspend as much as $75 billion by 2020 to lift oil and gasproduction to 1.3 million barrels of oil equivalent per day(boed).

The investment, outlined in a presentation to investors andthe media in New York, would represent a rise of more than 60percent over output levels of 800,000 boed in the third quarter.

The company said it plans to concentrate on new explorationand production projects in Colombian onshore and offshorefields.

Javier Gutierrez, chief executive officer of Ecopetrol, saidthat around 85 percent of the capital expenditures would bededicated to exploration and production projects.

"We have five hydrocarbon discoveries in Colombia ... withan 83 percent success rate in exploration," Gutierrez said.

"The challenge for the next year is to consolidate the new(operating) model," he added.

Ninety percent of the new projects will occur in Colombia,and are expected to mainly be funded through internal cashgeneration.

In a shift, Colombia has been sending a greater portion ofits oil exports to Asian markets, said vice president ofmarketing and sales, Claudia Castellanos.

The biggest export destination for Colombia's mostlyheavy-sour crude is the U.S. Gulf Coast, she said, but shipmentsto Asia have risen to 34 percent of exports this year, up fromaround 20 percent last year, Castellanos said.

"That number is projected to keep rising," she said.Castellano said Ecopetrol's "refineries face structuralchallenges. The crude oil has turned heavier and sourer."

However, she said that Colombia is "open to receive a newinvestment" in its refining industry. She added that Ecopetrolis converting its refineries to process more heavy crude.

A conversion project at the country's Cartagena refinery,which will be mostly done by the end of 2014, should allowEcopetrol to increase its per-barrel gross refining margins toas much as $15-20, up from around $5 at present, executives saidFriday. The project will allow the plant to process up to 95percent heavy crude, up from around 70 percent now.

In areas where the company has put resources for exploratorydrilling, Rafael Guzman, vice president of E&P technicaldevelopment, said the company now expects to add production fromnew fields such as Cano Sur and Acacias.

Guzman said the company was close to declaring themcommercially viable, but did not offer figures on reserves ateither field. He added that each could start output of oil bylate 2014, producing up to 25,000 barrels per day each in 2015.

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