Colombian business journal Portafolio
reported that the collapse in global oil prices is hitting Colombia harder than
it has other oil exporters. The article explained that the crude oil by
Colombia is not valued very highly in international markets. At the start of
the fall in global oil prices, Colombian oil was valued on average $8.1 per
barrel below Brent crude prices, but that spread has widened to $10.4 per barrel,
occasionally as high as $12.1.
Portafolio went on to explain that, at these prices,
Colombian state-owned oil company Ecopetrol is just barely able to cover its
costs and are not making any profits on their oil extraction. According to Bloomberg,
Ecopetrol has actually started shutting down some oil wells in Colombia,
because the cost of operating the wells has exceeded the value of the oil
extracted. According to estimates from Ruben Lizarralde, executive president of
Campetrol, oil extraction at the Rubiales oil field, Colombia’s largest, is no
longer profitable.
Bloomberg
also reported that the value of the Colombian peso sunk even further, setting a
new record low of 3,452.55 pesos to the dollar. Falling oil prices, which on
Thursday traded close to their lowest level in the last 12 years, drove down
the value of the peso. Colombian Central Bank Governor Jose Dario Uribe warned
that the peso could fall even further, all the way to 3,500.
In other oil-related news, Colombian finance minister
Mauricio Cárdenas tried to explain
during a press conference the reasons for the $4 billion in cost overruns in
the modernization project of the Refinery of Cartagena. Minister Cárdenas
blamed the mistakes of hiring Glencore and Chicago, Bridge & Iron to manage
the project, as well as “a lack of planning” and “detailed knowledge of what
was to be done.”
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