Ecopetrol

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Type Public Limited Company
Founded 1921 (as Tropical Oil Company), 1951 (as Ecopetrol S.A)
Headquarters Bogotá (Colombia)
Key People Javier Gutiérrez Pemberthy (CEO)[1]
Products Oil and gas exploration, production, refining, transportation.
Revenue US $21,742.9 million (2010)[1]
Net Income US $4.22 billion (2010)[1]
Total Assets US $35.91 billion (2010)[1]
Total Equity US $21.58 billion[1]
Employees 6,744 (2011)[1]
Website www.ecopetrol.com.co

Profile

The majority state-owned EcoPetrol is Colombia's largest oil company, and was formerly also its regulator.

Formerly known as the Empresa Colombiana de Petróleos, it previously served as the state oil regulator, until it was part-privatized and began floating shares on the Colombian stock exchange in November 2007.[2]

In 2011 Ecopetrol controlled 40% of the exploration land in Colombia and 54% of the proven energy reserves. The company produced two thrids of the country's crude oil output and owns three-fourths of the pipeline capacity, as well as Colombia's two largest refineries. However Ecopetrol has also expanded its reach and in 2011 60% of its total revenues came from outside the country.[3] Outside of Colombia, the company is involved in upstream activities in Brazil, Peru and the US Gulf Coast.[4]

It is the largest company in Colombia and one of the largest integrated oil firms in Latin America.[5] In the 2011 Fortune Global 500 rankings of companies by market capitalization, Ecopetrol was ranked at number 445.[1]

History

Origins

Ecopetrol started life as the Tropical Oil Company, which began activities in 1921 with operations at the Cira-Infantas field. In 1951 the reversion of the 'Mares Concession' from the Tropical Oil Company [6]to the Colombian state gave way to the Empresa Colombiana de Petroleos. The company was subsequently in charge of administrating the nation's hydrocarbon resources.

In 1961 the company assumed direct management of the Barrancabermeja Refinery and in 1974 purchased Colombia's Cartagena Refinery.

In 1970 the company came under the control of the Ministry of Mines and Energy, fiscally supervised by the General Comptroller of the Republic of Colombia.

In 1983, the Caño Limón field was discovered in partnership with international oil company Occidental, a reservoir with estimated reserves of 1.1 billion barrels. During the 1990s Ecopetrol continued its advance with the discovery of the Cusiana and Cupiagua fields, in partnership with British BP.[7]

Part-privatization 2007

Ecopetrol's transformation from state to private company began with a 2003 decree establishing the National Hydrocarbons Agency (ANH). This released the company from its function as the administrator of oil sources.[7] In 2007 Ecopetrol floated its shares for the first time in an Initial Public Offering worth US $2.8 billion, in which 10.1% of the company was sold to shareholders.[8]

According to industry advisor Luis E. Giusti, the partial privatization of Ecopetrol was the "fourth pillar of a strong platform for Colombia in facing its oil and gas future".[9] However in response to the privatization plans, 5,000 members of Colombia's United Syndicalist Workers (USO) picketed at Ecopetrol facilities in Cartagena and Bogota in August 2006.[9]

Since debuting on the stock market, Ecopetrol has posted impressive growth, as well as completing on a string of takeovers, including the purchase of 51% of BP's Colombian operations for $0.9 billion.[10]

A leaked 2008 US diplomatic cable suggests that Ecopetrol has increasingly looked to Brazilian Petrobras as a model for the development of a "technically sophisticated parastatal hydrocarbons company with private investment and corporate governance standards." Direceu Abrahao, president of Petrobras in Colombia acknowledges this fact and commented that Ecopetrol asked Petrobras officials to assuage Colombian Members of Congress on Petrobras' private capitalization process before Colombia's Congress approved the successful 10% privatization.[11]

In August 2011 further shares in Ecopetrol were sold domestically, raising $1.3 billion for the Colombian government.

In January 2012 Mining and Energy Minister Mauricio Cardenas announced that the government would sell another batch of share representing up to 3% of its 88.5% stake in the company, mainly targeted at overseas investors and sovereign investment funds. The sale was hoped to raise $3 billion for the state, which they proposed to use to finance reconstruction works following severe winter weather conditions. However as of early 2012 the sale was still to be approved by Congress.[12]

Activities

Ecopetrol is involved in crude oil and natural gas exploration, production, refining and transportation projects.

Upstream, Ecopetrol dominates the oil and gas industry in Colombia. In early 2010, Ecopetrol and its partners produced more than 700,000 barrels per day (bpd) of a total production output of less than 900,000 bpd. However since that data many independent firms have pledged investments.[10]

As of late 2011 Ecopetrol produced almost all of its oil onshore and any drilling offshore had been exploratory, rather than for production.[10] In 2008 the company unveiled an ambitious $80 billion capital programme for the rest of the decade with a target output of over 1 million bpd, more than double its production in 2008. [10]

In July 2011 the company reported that it had found evidence of crude oil deposits in four test wells in its Cano Sur block in the Llanos Orientales basin, Meta province[10] and at the end of 2011 Ecopetrol's proven net reserves stood at 1.86 billion barrels of oil equivalent (boe), an 8.3% increase on the previous year.[13]

Downstream, Ecopetrol owns two refineries at Barrancabermeja and Cartagena, from where it supplies the domestic market and exports oil and oil products to the US.[5] According to London-based publication the Petroleum Economist, the company's centrepiece infrastructure project is the $4.2 billion Bicentennial Oil Pipeline, a venture for which it was seeking private-sector partners in 2010.[10]

Pipeline Explosion 2011

In December 2011 the Salgar-Cartago pipeline, controlled by Ecopetrol, suffered an explosion which resulted in the death of 11 people, the injury of 99 people and the destruction of dozens of homes. The company said that the explosion was a result of sever winter weather and landslides.[14]

Corporate Social Responsibility

Environmental Measures

In November 2011 Ecopetrol was named on the Dow Jones Sustainability Index as the 12th oil or gas company to be admitted, as an indication of its commitment to mitigate the environmental impacts of its activities.

Ecopetrol claims it looks to comply with all environmental laws, reduce spills, emissions and solid waste, to reduced greenhouse gas emissions and promote biodiversity. According to Reuters reports, this strategy is driven partly by the company's overseas expansions plans and the subsequent need to comply with stringent environmental laws in other countries.

The company spent $517 million on environmental programs in 2010, a figure which was expected to more than double in 2011. This figure represented a 617% increase on 2005 figures.

Ecopetrol's measures include:

  • projects to capture and market methane gas released at drilling sites.
  • the capturing of natural gas escaping at well sites and conversion to electricity for further production.
  • Operations to dismantle retired oil wells.
  • Drilling of relief wells to mitigate blowouts and other disaster.[10]

Interaction with Indigenous Communities

Ecopetrol have faced long-standing opposition to their exploration operations among the U'Wa indigenous group in the Boyaca department, who object to the company's presence on their ancestral lands.[15]

For further detail, see article on Environmental Impact of Colombian Oil Industry.

References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Ecopetrol" Fortune Global 500, retrieved 19 January 2012
  2. Colombia’s Oil and Gas sector: Boosting output through reform" Deloitte, 10 February 2011.
  3. Ecopetrol, Colombia’s Quiet Energy Giant" Investor Place, 21 January 2012.
  4. Colombia’s Ecopetrol: A Legacy of Principles" AAPG, retrieved 19 January 2012
  5. 5.0 5.1 Ecopetrol Profile" Hoovers, retrieved 18 January 2012.
  6. 1951: Colombia" As They Saw It, retrieved 19 January 2012
  7. 7.0 7.1 Our History" Ecopetrol, retrieved 19 January 2012
  8. Our History" Shearman & Sterling, 19 September 2008.
  9. 9.0 9.1 What is the Outlook for Colombia's Oil Sector?" Inter-American Dialogue, 1 August 2011.
  10. 10.0 10.1 10.2 10.3 10.4 10.5 10.6 Ecopetrol Continues Acquisition Binge, as Colombian Oil Rebirth Rolls On" Petroleum Economist, 30 September 2010.
  11. Colombia's Oil & Gas Outlook: Investors Bullish, Predict Prolonged Exporter Status" Wikileaks, 12 February 2008.
  12. Colombia targets Ecopetrol shares at foreign investors" EnergyPedia, 15 January 2012.
  13. Colombia Oil Co Ecopetrol's Reserves Rose 8.3% In 2011" Fox Business, 31 January 2012.
  14. Fuel pipeline blast kills 11 in Colombia" Reuters, 23 December 2011.
  15. Colombia's U'wa Reiterate Opposition to Ecopetrol Gas Drilling in their Ancestral Territory" CENSAT, 15 October 2009.