Ecopetrol says 2018 will be a good year
December 15, 2017
For Ecopetrol’s (NYSE:EC) regional vice president in Orinoquia, José Cotello, 2018 will be all about leaving the oil crisis behind and going back to the industry’s bonanza.
He said that "Ecopetrol left the austerity stage behind during 2017, even though we must maintain capital discipline." This allowed the firm to maintain an average production that will lead to growth. He added that after getting over the crisis, the NOC (National Oil Company) will invest between US$3.5Band US$4Bnext year; an increase of between 35% and 55% compared to investments made in 2017, of which 42% will go to the departments of Meta and Casanare.
According to him, ECP’s important investments for 2018 will be possible because during precious years, resources went to Reficar (one of the most modern industrial complexes in South America, located in Cartagena, Colombia), but as this asset is already in its operational phase and began generating profits; this year, 85% of that capital will go to E&P (energy and production projects).
He added that Ecopetrol will also focus on social investment projects and monitoring routines for infrastructure projects in the municipalities of Acacías and Castilla La Nueva, after signing an agreement with local authorities.
Around 1,500 to 2,000 new jobs will be generated with the NOC’s new projects in its areas of influence.
The Colombian oil sector reported a good performance during 2017, and the President of the National Hydrocarbons Agency (ANH), Orlando Velandia, said that oil production could increase up to 900mbd (900,000 barrels per day) or something very close to this figure during next year.
For him, oil price stability and the announcement by the Organization of the Petroleum Exporting Countries (OPEC) to keep production stable until December 2018, would help achieve this target.
Just like Cotello, Velandia stressed the importance of next year’s investments for E&P to increase production.
These new ANH’s estimates exceed the government's expectations in the Medium Term Fiscal Framework, where authorities set a production goal of 840mbd for 2018. Bottom-line: Last week, CEO Felipe Bayón spoke about the Ecopetrol’s goals for 2018. He briefly mentioned that developing unconventional technologies will be a key element to boost reserves and improve the industry’s situation in the country.
But at best, 2018 will see a limited trial that is unlikely to result in significant increases in either reserves or production next year.
The oil price and the OPEC announcements, however, are fundamental for the oil sector worldwide, but Colombia should work more on internal matters to promote production.
ECP has already announced an increase in CAPEX (CAPital EXpenditures) and, significantly, a redirection to E&P in Colombia. But other companies may be more cautious in an election year with an uncertain outcome.
Clear rules, social conflict and security are key topics to improve in Colombia.
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