HOUSTON (Reuters) - Colombia’s Ecopetrol SA will look for assets to buy this year, and bid in oil auctions in the United States and Latin America, after emerging from a period of deep budget cutbacks, Chief Executive Felipe Bayon told Reuters on Monday.
Low crude oil prices had forced Ecopetrol and other oil companies in Latin America to tighten their belts in recent years, cutting exploration investment or delaying key projects, and severely hitting output and refining.
Colombia’s state-run Ecopetrol halted production at 12 oilfields as it reduced spending. But its operations started expanding again last year, when it reached a $2.2-billion net profit, the highest in the last four years.
Last year “was a very good year for us. Analysts were expecting a lower profit,” Bayon said on the sidelines of the CERAWeek energy conference in Houston.
The company expects its oil and gas production to remain flat or to rise slightly this year to 725,000 barrels of oil equivalent per day (boepd), under an investment budget of $4 billion almost completely focused on exploration and production.
Part of that spending will go to projects aimed at replenishing the firm’s energy reserves, including a pilot program to explore unconventional resources at the Magdalena Medio basin, where Ecopetrol estimates there could be up to 7.4 billion barrels, more than triple Colombia’s proven reserves.
Another part of the investment plan could go to bidding rounds in the U.S. Gulf, where it currently participates in two blocks, as well as Mexico, Brazil and Argentina, which plan oil and gas auctions this year.
One of Ecopetrol’s main refineries - the recently expanded Cartagena - has increased crude processing to 154,000 barrels per day (bpd), while reducing the proportion of imported oil it needs to 30 percent versus 55 to 60 percent a year ago, Bayon said.
The cost of Cartagena’s modernization doubled to $8 billion compared with the $4 billion originally planned, but it has made the company less dependent on imports while leaving a small fuel surplus for export.
Ecopetrol is also reducing the volume of imported naphtha it needs to dilute its heavy crude output by making changes at its transportation system, according to Bayon.
Using alternative transport has allowed it to avoid frequent declarations of force majeure on its crude exports when its Cano Limon-Covenas pipeline is attacked by rebels, which has happened 17 times this year alone.
Bayon also said that tighter controls by the Colombian government at the Venezuelan border had cut gasoline imports, increasing the domestic need for gasoline and other fuels in about 20,000 bpd.
Ecopetrol’s Barrancabermeja refinery, where workers recently went on strike due to a salary dispute, is expected to restart its cracking unit in seven to 10 days after completing maintenance work, he said.
Reporting by Marianna Parraga; Editing by Rosalba O'Brien and Lisa Shumaker