Petrominerales Ltd. has agreed to acquire a 5% stake in Colombia’s 830 km Oleoducto Central SA (Ocensa) crude oil pipeline from Total E&P Holdings for $281 million.
The Ocensa pipeline, which starts at the Cusiana and Cupiagua fields and terminates at Colombia’s Caribbean Sea port of Covenas, carries 560,000 b/d of oil from the Llanos basin, representing 60% of the country’s total oil production.
Petrominerales said it expects to transport about 25,000 b/d of oil through the Ocensa line and expects to realize average cost savings of more than $10/bbl.
"Our first quarter total operating netbacks would have been at least $5 higher than the $69.34/bbl of oil operating netbacks reported, due to lower trucking costs and higher realized pricing," the company said.
Petrominerales said the acquisition, which is expected to close July 20, reduces the firm’s exposure to higher trucking costs.
“Transportation of Llanos basin production on the Ocensa pipeline enables cost savings of over $20/bbl of oil when compared to the cost of trucking production to export terminals on the Caribbean coast of Colombia,” Petrominerales said.
Ocensa is the most strategic pipeline for Llanos basin production as it is the lowest cost transportation alternative to international markets, the company said.
Ocensa is one of six major pipelines in Colombia, four of which connect production fields to the Covenas export terminal.
The other lines include the Cano Limon, Alto Magdalena, Colombia Oil, Llanos Orientales, and the Transandino.
Last November, Colombia’s state-owned Ecopetrol said it is partnering with an international consortium to develop the 450,000-b/d Oleoducto Bicentenario pipeline, a $4.2 billion project scheduled for completion in December 2012.
Resurgent production
The country’s pipeline developments are set against a background of increasing production and exports, according to the US Energy Information Administration.
Colombia produced an estimated 800,000 b/d of oil in 2010, up from 686,000 b/d in 2009, according to EIA, which said the upward trend has continued in 2011.
EIA cited a report by Colombia’s National Hydrocarbons Agency that production reached 923,000 b/d in May.
However, in the face of Colombia’s resurgent production, consultant Exclusive Analysis reports that pipelines and other systems are likely to become the target of attacks by drug related organizations.
“Occidental and Ecopetrol's Cano Limon-Covenas oil pipeline in Norte de Santander is likely to be a top target, along with Ecopetrol's Transandino pipeline in Putumayo and Narino,” EA said.
But the London-based analyst also said smaller oil pipelines elsewhere, as well as lines carrying natural gas, are also “likely” to be increasingly targeted.
“Oil sector subcontractors in the Eastern Plains will face high risks of extortion-related bombings and kidnappings, as exploration increasingly overlaps with cocaine territory,” EA said.
The Ocensa pipeline, which starts at the Cusiana and Cupiagua fields and terminates at Colombia’s Caribbean Sea port of Covenas, carries 560,000 b/d of oil from the Llanos basin, representing 60% of the country’s total oil production.
Petrominerales said it expects to transport about 25,000 b/d of oil through the Ocensa line and expects to realize average cost savings of more than $10/bbl.
"Our first quarter total operating netbacks would have been at least $5 higher than the $69.34/bbl of oil operating netbacks reported, due to lower trucking costs and higher realized pricing," the company said.
Petrominerales said the acquisition, which is expected to close July 20, reduces the firm’s exposure to higher trucking costs.
“Transportation of Llanos basin production on the Ocensa pipeline enables cost savings of over $20/bbl of oil when compared to the cost of trucking production to export terminals on the Caribbean coast of Colombia,” Petrominerales said.
Ocensa is the most strategic pipeline for Llanos basin production as it is the lowest cost transportation alternative to international markets, the company said.
Ocensa is one of six major pipelines in Colombia, four of which connect production fields to the Covenas export terminal.
The other lines include the Cano Limon, Alto Magdalena, Colombia Oil, Llanos Orientales, and the Transandino.
Last November, Colombia’s state-owned Ecopetrol said it is partnering with an international consortium to develop the 450,000-b/d Oleoducto Bicentenario pipeline, a $4.2 billion project scheduled for completion in December 2012.
Resurgent production
The country’s pipeline developments are set against a background of increasing production and exports, according to the US Energy Information Administration.
Colombia produced an estimated 800,000 b/d of oil in 2010, up from 686,000 b/d in 2009, according to EIA, which said the upward trend has continued in 2011.
EIA cited a report by Colombia’s National Hydrocarbons Agency that production reached 923,000 b/d in May.
However, in the face of Colombia’s resurgent production, consultant Exclusive Analysis reports that pipelines and other systems are likely to become the target of attacks by drug related organizations.
“Occidental and Ecopetrol's Cano Limon-Covenas oil pipeline in Norte de Santander is likely to be a top target, along with Ecopetrol's Transandino pipeline in Putumayo and Narino,” EA said.
But the London-based analyst also said smaller oil pipelines elsewhere, as well as lines carrying natural gas, are also “likely” to be increasingly targeted.
“Oil sector subcontractors in the Eastern Plains will face high risks of extortion-related bombings and kidnappings, as exploration increasingly overlaps with cocaine territory,” EA said.
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