Colombia's Ecopetrol seeks 63 pct production rise 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.Castellanos 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.

As Colombia carries out the refinery conversion projects, itwill need to continue importing refined fuels from U.S. refinersto meet the nation's daily fuel demands, Gutierrez told Reutersin a brief phone interview on Friday.

Ecopetrol currently imports around 40 percent of its fuel,including 40,000 bpd of low-sulfur diesel and 65,000 bpd ofgasoline, he said. The company plans to maintain those levels in2014, but will "significantly reduce" imports by 2015 as therefinery upgrades are completed.

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.

Ecopetrol's pipeline infrastructure in Colombia, includingthe export-oriented, 780 km (485-mile), 80,000 bpd Cano Limonline from Covenas to the Caribbean Sea, has recently been besetby increasingly frequent attacks from guerilla groups, includingone last month.

According to Ecopetrol executives, the attacks remain aconcern but have only reduced by 8,300 bpd the country's oilproduction this year on average, or around 1 percent of thetotal. However, that is up from 6,000 bpd in 2012.

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