Page 5 - LatAmOil Week 22 2021

LatAmOil COMMENTARY LatAmOil

Other observers, meanwhile, have made pre- Vaca Muerta’s example
dictions of disaster. On May 18, for example, In some ways, this disruption mirrors recent
OilPrice.com published a story with a headline events in Argentina, where striking healthcare
trumpeting that Colombia’s oil and gas sector workers blocked roads leading to fields in the
was “on the brink of collapse.” Two days later, it Vaca Muerta shale formation to draw attention
reported that oil producers working in the South to their demands for higher wages. As in Colom-
American state were “desperate for protests to bia, those blockades disrupted traffic, prevented
end.” deliveries to and from the oilfields and led to
local fuel shortages.
Production problems One key difference, though, is that the dem-
The truth appears to be somewhat more onstrators in Argentina did not have as much
complicated. popular support as the protesters in Colombia.
Per se, the industry is not exactly teetering The Argentinian healthcare workers did attract
on a precipice. Rather, street protests and road sympathy from truck drivers, who eventually
blockades have caused it to lose access to trans- joined them at the roadblocks. However, the
port routes that companies use to bring workers demonstrators in Colombia are coming from Street protests
to the fields, to bring new parts and equipment a much broader cross-section of society. There and road
to production and processing facilities and to have been labour actions and protests across the
bring petroleum products from refineries to country, with student groups and civil society blockades have
buyers and consumers. organisations joining unions in demonstrations
This has, in turn, caused fuel inventories in and a general strike. caused oil and
Ecopetrol’s pipelines and wholesale storage facil- As such, Colombia’s government is not in
ities to rise to high levels, according to the NOC’s a position to follow the example of Argentina. gas operators to
May 25 statement. In the latter country, local authorities negoti- lose access to
Likewise, they have complicated water man- ated a deal with protesters, who agreed to take
agement operations at oil and gas deposits and their roadblocks to different locations so that transport routes
have reduced consumer demand for refined truckers could bring fuel and other necessities
fuels and industrial demand for gas. As Eco- to the communities near Vaca Muerta fields. In
petrol noted in its press release: “In commercial the former country, by contrast, frustration with
and marketing, there has been a decrease in the government policies (including the tax proposal
national demand for diesel (-33%), gasoline that sparked the initial protests in late April) is
(-15%) and jet fuel (-1%) as compared to the so deep and so pervasive that more time and
expected demand levels for May. In addition, effort will be needed to facilitate negotiations
the demand for Ecopetrol’s gas from the ther- and restore calm.
mal and industrial sectors has decreased [by] Colombia is therefore likely to see oil pro-
approximately 16% month-to-date and the duction drop even further in the short term. If
demand for LPG [by] 41% in the same time so, Ecopetrol will have to rethink its decision to
period.” leave its performance targets in place. As a result,
In short, the protests do not appear to be Pemex has been turning out more refined petro-
causing any physical damage to the oil and gas leum products than the country can consume,
fields as such. Rather, they are disrupting the and it is dealing with the surplus in ways that
transport routes and infrastructure that com- are definitely not in line with the IEA’s net-zero
panies use to move their production to market. scenarios. ™

Ecopetrol was producing 651,000 boepd as of May 25 (File Photo)

Week 22 03•June•2021 www. NEWSBASE .com P5