Page 7 - LatAmOil Week 17 2020

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Cenit went on to say that it was offering these favourable terms to all customers making use of the Oleoducto Central (OCENSA), Oleo- ducto de Colombia (ODC) and Oleoducto de los Llanos Orientales (ODL) pipeline systems. Companies do not have to transport minimum volumes of oil in order to qualify for the special arrangements, it said.
Hector Manosalva Rojas, Cenit’s CEO, said the company was taking these steps in order to take some of the pressure off oil producers. Since the coronavirus pandemic has depressed global energy demand and crude prices, “[we] are convinced that it is necessary to support producers and shippers in general with financ- ing initiatives,” he was quoted as saying in the statement.
He also stated that the new measure would not replace the discounts that Cenit had begun offering pipeline users in early April. Instead, he said, eligible customers may take advantage of the discounted tariffs as well as the financing arrangements.
Under pressure
The pipeline operator unveiled its new plan sev- eral days after a local industry group, the Colom- bian Petroleum Association (ACP), urged the government to revise the policies governing oil transportation tariffs.
The group warned in a report published last week that Colombia’s privately owned oil producers might have to cut investment budg- ets and production targets if the price of Brent crude remained below $25 per barrel. It called on Colombian authorities to lighten the burden on these companies by reducing tariffs, which account for about 45% of their upstream costs.
Francisco José Lloreda, the president of the ACP, told reporters on April 22 that the govern- ment ought to do more to support the indus- try, especially since it was aware of producers’ concerns about tariffs. “Important measures have been taken, but an urgent intervention in pipeline transportation rates [is needed], as they are excessively high compared to the cost of production, are not internationally compet- itive and are the main obstacle to companies in this difficult situation,” he declared, according to
ECUADOR
Finance Colombia.
Lloreda added: “Pipeline transportation is
the only link in the chain of the sector whose cost in recent years has remained practically the same, representing around half of production costs. [It] is not manageable by E&P companies because it is regulated by the Ministry of Energy, and various studies show that it is excessive. So it is essential that the tariffs be reviewed, not only for the moment of price crisis and for the sus- tainability of the industry in the short term, but the current methodology should be structurally reformulated towards the future.”
Ecopetrol bonds
In related news, Ecopetrol announced on April 27 that it had succeeded in raising $2bn via a new issue of 10-year bonds. The securities will mature on April 29, 2030 and carry a coupon of 7%, the company said.
The NOC went on to say that the issue had been oversubscribed. More than 250 investors had submitted offers for the purchase of $5bn worth of bonds, it said.
The company intends to use the proceeds of the sales to shore up its finances. It has already signalled that it intends to reduce investments this year in light of the turmoil on world crude oil markets. ™
Quito may try lifting fuel subsidies again
Cenit’s offer will apply to three pipeline systems (Image: Ocensa)
ECUADOR is considering the possibility of lifting its costly fuel subsidies once again in response to the recent plunge in global oil prices, according to the country’s energy minister.
“It’s just a question of making the decision,” Energy Minister Rene Ortiz told a local televi- sion channel last week. According to a Reuters report, Ortiz said that if subsidies were lifted,
consumers would not be adversely affected because market-driven fuel prices would be just as cheap.
Even so, if any sections of the population do still require support, the government would continue to help them, said Ortiz. Poorer Ecua- doreans would start to receive compensation if prices rise above a certain set level, he explained.
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