Colombia's Oil Industry : boom or frenzy

Sandwiched between OPEC members Ecuador and Venezuela, Colombia has for decades looked like an Andean misfit because it was not a major oil exporter. 

But when Venezuela's foreign minister visited Bogotá in November, he reportedly asked his counterpart, "When is Colombia going to join OPEC?" 

Quietly, Colombia has become the fourth-largest oil producer in Latin America, after Venezuela, Mexico and Brazil. 

Today, Colombia produces nearly 1 million barrels of oil per day (bpd), almost double its output in 2.005. 

By 2.015, Colombia's oil minister expects the country to produce 1.5 million bpd.

Improved security is the most obvious reason for Colombia's good fortune. 

With the help of U.S. foreign aid and security cooperation, Bogotá has beat back guerilla control over Colombian territory, opening up more land to oil and gas exploration and making the countryside more secure. 

Also, in 2.007, Colombia partly privatized its state-owned oil company, Ecopetrol. 

Since then, the country's oil patches have welcomed more than $10 billion in foreign investment. 

Venezuelan President Hugo Chávez also gave an inadvertent nudge to Colombia's oil industry. 

In 2.002, as Chávez moved to gain full control of the Venezuelan state-owned oil giant PDVSA, a worker's strike halted Venezuela's gas exports for 10 weeks. 

By the time Chávez was able to break up the protest in early 2.003, hundreds of the company's engineers and senior managers had fled to Colombia.  

One former PDVSA executive, Ronald Pantin, is now CEO of Pacific Rubiales Energy, Colombia's second-largest oil firm. 

Another, Humberto Calderón, heads Vetra Energy, an oil firm that is run by a league of Venezuelans expatriates. 

They're an unusually attractive class of exile: sickened by the ideological tilt back home and unimpeded by the linguistic or cultural barriers that often slows immigrants' contributions to their new societies.   

Colombia's oil boom fits into a regional trend, with emergent producers offsetting declines by traditional oil behemoths such as Mexico and Venezuela. 

While Brazil is expected to be a major new source of oil supply by 2.020, in the interim Colombia's output has been key.

This naturally bodes well for the United States, which draws in about 75 percent of Colombia's oil exports. In return, Washington is belatedly re-engaging Latin America, probably because the region offers the most realistic chance of curbing U.S. reliance on Middle East oil. 

As Daniel Yergin, energy expert and author of "The Quest: Energy, Security and the Remaking of the Modern World," argues, "We're going to see a new rebalancing, with the Western Hemisphere moving back to self-sufficiency."

Lest one get carried away with Colombia's apparent bonanza, advances are coming in fits and starts. Labor unrest has repeatedly interrupted oil operations, especially in the southeast of the country, and some companies have been forced into periodic shutdowns by the looming threat of worker kidnappings by Marxist guerillas. 

On March 6, 11 oil workers were released after being held hostage for more than a week.

Nor does Colombia have the infrastructure necessary to export as fast as the country's oilmen would like. 

Oil courses through existing pipelines at full capacity, and trucks are being used to transit additional oil to port. 

A new $4 billion pipeline is in the works, but while this may mitigate the problem, it is unlikely to solve it. 

Indeed, the 1 million bpd mark may represent that ceiling. 

Since taking office 18 months ago, Colombian President Juan Manuel Santos has repeatedly announced that the bright line would soon be crossed, only to be disappointed when official output figures came up short. 

In 2.011, oil production averaged 914,000 bpd. In January, Santos reiterated, "We're not going to achieve this million barrels [per day] in August of 2.014, I believe we're going to get there this month or next month at the latest." 

But oil production inched down to 896,000 bpd in February, according to preliminary government figures. 

Even if Colombia's oil production is reaching a plateau, it is far from the worst outcome imaginable. 

The oil sector's emergence signals an improved security environment, which may draw foreign investment into other sectors of the economy. 

But the current rate of production is unlikely to harken the sort of frenzy, now evident in Brazil, that could disadvantage other parts of the economy or necessitate repeated political pledges to spend oil revenues on new social programs. 

Its neighbors aside, being "in between" might work out well for Colombia.