Venezuelan oilmen behind Colombia's boom

<div class="separator" style="clear: both; text-align: center;"><a href="http://1.bp.blogspot.com/-WmpavCH0sHA/ToinN3WCaBI/AAAAAAAACUk/TFtRJx3wBBE/s1600/oil+boom+good+morning+colombia+news.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="123" src="http://1.bp.blogspot.com/-WmpavCH0sHA/ToinN3WCaBI/AAAAAAAACUk/TFtRJx3wBBE/s200/oil+boom+good+morning+colombia+news.jpg" width="200" /></a></div><div style="text-align: justify;">"I don't have any problems firing everyone I need to fire," Venezuelan President Hugo Chávez thundered in 2.002 as he began purging state oil-company executives who had mounted protests against him.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Months later, nearly 20,000 oil workers, from petroleum engineers to geologists and managers, had been fired. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">But with the company under the president's tight control, production has swiftly fallen and Venezuela has slipped from the world's fifth-largest oil exporter to the 11th.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">The oilmen who were banished have taken their experience drilling for Venezuela's tarlike oil to countries as varied as Iraq, Nigeria and Canada. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">But the presence of Venezuelan petro-scientists has been most vital in neighboring Colombia, where they have helped oil companies sharply increase the production of crude, much of which is exported to the United States.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"Chávez has been a huge help for the petroleum industry in Colombia," said Humberto Calderon, a former Venezuelan mining minister who now runs Vetra Energy in southern Colombia.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Colombia is now on the verge of achieving what just a few years ago was unthinkable pumping 1 million barrels of oil a day, up from 540,000 barrels daily in 2005. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"This is practically doubling production during the last four or five years," said Javier Gutierrez, president of Colombia's state oil company, Ecopetrol. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"It's a spectacular development."</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">The new El Dorado is here in Colombia's stark eastern plains, a wild land known for its horsemen and harp-based folkloric ballads.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Across 700 square miles, Pacific Rubiales Energy, which is listed on the Toronto stock exchange, jacked up production from 14,000 barrels a day as recently as 2007 to 224,000 a day this month. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Although 12,000 Colombians work here, the company's top directors and those overseeing exploration and production cut their teeth at the Venezuelan state oil company, Petroleos de Venezuela, known worldwide as Pdvsa.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"The top management of Pdvsa is now the top management of Pacific Rubiales," said Ronald Pantin, chief executive and founder of the company and a former high executive at Pdvsa (pronounced peh-deh-veh-sah). </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"All the people we brought from Venezuela have more than 25 years of experience, so people with a huge knowledge of all this geology."</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;"><b>A new reality</b></div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">That experienced oilmen are now considering Colombia as a destination is a testament to a new reality on the ground in this once-chaotic country and what oil analysts call Venezuela's mismanagement of its oil sector.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Once terrorized by leftist rebel groups that often bombed oil pipelines, much of rural Colombia has been pacified after a long army offensive supported by U.S. aid. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Colombia's previous government, led by President Alvaro Uribe, also introduced financial incentives that lured scores of oil companies, said Ramon Espinasa, senior oil and gas specialist at the Inter-American Development Bank.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Ecopetrol's Gutierrez said 65 percent of the basins that may hold oil have now been awarded to oil companies; eight years ago 13 percent of the potential oil fields were being developed.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">In Venezuela, meanwhile, Chávez has entrusted Pdvsa with not only producing oil but also overseeing the importation of food and the construction of housing. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">The workforce ballooned from 40,000 before the mass firings in 2003 to an estimated 100,000, and those workers have been publicly pressured by Pdvsa's president, Rafael Ramirez, to embrace Chávez's socialist ideology or lose their jobs.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Production declined from 3.4 million barrels daily in 1998, the year Chávez was elected, to less than 2.4 million a day in 2010, according to the U.S. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Energy Information Administration and independent oil analysts. Exports have fallen from 2.2 million in 1998 to less than 1.3 million in 2009, most of which is shipped to the United States. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Countries including Mexico, Canada, Kuwait, Iraq and Kazakhstan have overtaken Venezuela and become more important exporters.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;"><b>Tales from WikiLeaks</b></div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">In cables written out of the U.S. Embassy in Caracas and released by WikiLeaks, diplomats reported how Venezuelan oil officials manipulated the price of their country's petroleum products, failed to invest in oil production and owed billions of dollars to foreign oil-service companies. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Among the sources for cables in 2.009 and 2.010 was an unnamed Pdvsa executive with access to detailed financial information.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"It is hard to envision a scenario where Venezuela maintains or increases crude oil production in 2010," said a memo written early that year.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Among those who had sharply criticized Chávez and are now in Colombia is Calderon, who had led Pdvsa and been president of OPEC. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">In 2.002, when oil workers rose up to try to oust Chávez, Calderon gave a speech in Caracas in which he said that "this can only end with the president resigning."</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"This is about him or us," Calderon said at the time.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">In an interview in his Bogotá office, Calderon recalled how after Chávez put down the protests, a small group of former Pdvsa workers met regularly at a Caracas hotel and came up with the idea of starting a company, Vetra Energy. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"We thought, 'Where could we go?' There had to be oil, had to be a country that needed our services, a country where Chávez couldn't affect us," Calderon said.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">With their links to the oil industry and investors, Calderon and his associates were able to raise enough capital to begin operations in Colombia. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"Colombia has thousands of square kilometers of basins that have not been explored," he said. "So we said, 'There's great potential. We have to go there.' "</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">The most successful player, though, has been Pacific Rubiales. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">The company took a region that had failed to live up to its potential after an Exxon affiliate discovered oil in 1.981.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Pantin said he and his associates knew the underground formations were similar to those in Venezuela. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"When we came from Venezuela, we were looking for the continuation of the Orinoco oil belt," said Pantin, referring to the rich oil swath in the center of Venezuela.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">The Venezuelans introduced technology used in their country but uncommon here in Colombia's Meta state, such as the use of horizontal wells, which scoop up more oil. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Pacific Rubiales is hoping to introduce a system to heat the heavy oil that is underground, improving recovery from 15 percent of the reserves to 50 percent.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"It will be 2.1 billion barrels in only one field," said Pantin, who like other executives at the company received Colombian citizenship from the Uribe administration, which frequently clashed with Chávez. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;"><b>"That is more than the rest of the reserves in Colombia, so it is huge."</b></div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">In a visit to Rubiales, a vast field the company operates here with Ecopetrol, roughnecks manned 12 drilling platforms and oversaw 340 production wells. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">Construction crews were busy building storage tanks that could each hold as much as 100,000 barrels. Facilities included an airport, housing for workers and a church.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">German Hernandez, a Colombian who oversees operations, is among those who have been working here for a decade.</div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"We were fewer than 20 people, practically living in tents with mosquito netting," he said, recalling operations a few years ago. </div><div style="text-align: justify;"><br /> </div><div style="text-align: justify;">"Today we are the number one project in the petroleum industry in Colombia."</div>

Venezuelan oilmen behind Colombia's boom

"I don't have any problems firing everyone I need to fire," Venezuelan President Hugo Chávez thundered in 2.002 as he began pu...

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