Page 13 - LatAmOil Week 18 2020.pdf

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 The Ecuadorean government has taken similar measures. In mid-April, it struck a deal with sov- ereign bondholders to postpone $811mn worth of payments until August. Officials in Quito have indicated that they hope the delay will help government free up cash for efforts to combat the coronavirus (COVID-19) outbreak.
So far, Ecuador has been hit hard by the
pandemic. Infection rates and death tolls have been higher there than any other Latin Amer- ican state.
But the country is also sustaining significant economic damages because of its dependence on oil sales. Since crude accounts for a majority of Ecuador’s exports, low prices have an adverse impact on budget revenues.”™
COLOMBIA
ANH chief sees Colombia producing less oil than expected in 2020
COLOMBIA’S state oil regulator, the National Hydrocarbons Agency (ANH), says that the country is set to produce less crude than antici- pated this year.
Armando Zamora, the head of the agency, told reporters in Bogota last week that domestic output was certain to suffer this year as a result of the decline in world oil prices. ANH had pre- viously anticipated that Colombia would extract 900,000 barrels per day (bpd) of liquids, but this number is no longer viable, as the coronavirus (COVID-19) pandemic has brought global oil demand down even as supplies have increased, he said.
According to Zamora, production levels will depend on the oil market’s overall performance this year. If Brent crude prices average $35 per barrel in 2020, Colombia will be able to extract around 850,000 bpd, he said. But “[if] prices were to fall drastically to an average of around $30 this year, well then we would be talking about average production close to 790,000- 800,000 barrels a day,” he commented.
ANH sees an average price of $35 per barrel as the most likely outcome, he added.
He went on to say that low oil prices would also have a negative effect on investment in exploration projects in Colombia. ANH had previously estimated that upstream operators would drill about 42 new wells this year, but that figure was based on the assumption that Brent prices would average $65 per barrel, he explained. If average crude prices drop into the $25-45 range, the number of new wells will only amount to 20-33, he said.
Oil companies have already informed ANH that they intend to postpone the spudding of nine new wells, Zamora stated. These drilling programmes will be executed in 2021 or 2022 instead of this year, he said.
The ANH chief was speaking several days after Colombia’s national oil company (NOC) Ecopetrol said that it expected unfavourable market conditions to have an adverse impact on its financial performance in 2020.
Industry analysts appear to concur; several of them told Reuters earlier this week that the company was likely to report a substantial drop in profits when it released its first-quarter earn- ings report.™
Low oil prices will hit Ecopetrol’s production and profits this year (Photo: Colprensa)
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