Terrorism financing scandal latest bad news to rock Colombia's oil industry

Official sources in Colombia told reporters late on Thursday that the Colombian attorney general issued captures orders against five people implicated in scheme whereby the Italian-Argentine oil company Sicim funded the ELN guerrilla group. Implicated in the scandal are two of the company’s top employees in Colombia, who apparently maintained close relationships with members of the ELN and the FARC guerrilla groups. According to the EFE report, Sicim, a specialist in oil pipeline construction, made multi-million-dollar payoffs to the ELN and several FARC Fronts in northeastern Colombia, related to the construction of the Bicentenario pipeline.

In news related to Colombia’s mining sector, the focus has overwhelmingly been on the national mining strike that started on Wednesday. Colombian Senator Juan Diego Gómez Jiménez called for the resignation of the president of the Colombian National Mining Agency. He argued that the lack of decisive action by the director of the Agency is the main cause of the strike, and thus the director should be removed.

Meanwhile, the Colombian government has organized a meeting in Medellín between the government’s representatives and the leaders of the protesting miners to negotiate an end to the strike. Several regional opinion pieces spoke out in favor the of the miners and their grievances, highlighting the long tradition of small miners in Colombia, and the problems these miners have faced and the effect they have on their communities.

Peru looks to drum up increased oil and gas investment

In the wake of the violent protests against Argentine oil company Pluspetrol in Peru, the Peru oil and gas sector sought to drum up some positive news stories about the sector on Wednesday. Beatriz de la Vega, Oil and Gas leader for Ernst Young Peru consulting, told reporters that EY Peru projects that investment in Peruvian oil and gas projects will reach $26.1 billion by 2020. Accoring to Ernst and Young’s report, 65.7% of the investments will be for natural gas exploration and exploitation, 20% for renewable energies investments, 13.8% for oil, and 0.5% for coal. De la Vega went on to explain that though EY projects that the growth of the oil and gas sector will slow in 2015, the growth rate is expected to double in 2016.

In related news, Peruvian business journal Gestión reported that Perúpetro has decided not to postpone the auction of six oil fields. According to Peruvian state oil company, approximately fifteen companies from around the world are interested in participating in the bidding process.

Perúpetro president Luis Ortigas told Gestión that he expects the auction to occur once an agreement has been negotiated with the indigenous people that seized fourteen oil fields in this same area at the end of January. Oil field 1AB, which will be the one up for auction, already produces between 15,000 and 17,000 barrels of oil per day. Ortigas added, “Various firms are interested in the 1AB field, because it is already being exploited it is an attractive field, seeing as how it already generates revenues.”  He explained that if not for the negotiations between the Presidential Council of Ministers and the indigenous groups in Loreto, he would auction the fields off today.

Colombia's miners go on strike

In what almost seems like an annual tradition, Colombian miners across the country went on strike today, according to Luz Stella Ramirez Guevara, the director of the National Mining Confederation of Colombia. She explained that the strike is peaceful in nature and is intended to draw the Colombian government’s attention to the antiquated machinery used by the industry and to the imprecision of current environmental regulations. The protestors will predominantly be small- and medium-sized mining operations, representing the “artisanal miners” that are often deemed illegal by a government that wants to end this decentralized system and formalize the mining sector and concentrate mining operations in the hands of large corporations.

El Colombiano reported that the department of Antioquia was going to be the main site of protests during the strike. Informal miners are traveling to and congregating in six rendezvous points where they will demonstrate.

Elsewhere, in Colombia’s southwestern Cauca department, members of the local indigenous and Afrocolombian communities are protesting the illegal gold mining that happens in their regions. Andrew Almond, a protestor and leader of the Nasa indigenous community, said, “We protested in defense of our territory because mining is destroying what is ours. It is a march in solidarity with the people. Where we fish has become contaminated. We unite for once and for all protect our resources.”

In unrelated news, Colombian business journal Portafolio reported that while year-on-year overall foreign direct investment in Colombia is down 3.3%, foreign investment in sectors other than the oil sector is up 10%. This bodes well for Colombia’s ability to take advantage of the oil crisis to strengthen the country’s other industries.

Uncertainty regarding Pluspetrol's future in Peru

Conflicting reports emerged on Monday and over the weekend regarding Argentine oil company Pluspetrol’s future in Peru. The oil company has been the subject of repeated protests by local Peruvian communities, one of which turned violent late last week, leaving one protester dead and many others injured.

The Wall Street Journal reported on a deal supposedly brokered by the Peruvian government for Pluspetrol to leave Pichanaki, the area of the violent protests, ending the oil company’s exploration operations in the area. An Argentine news outlet provided additional context for the decision, explaining that Peruvian Energy and Mining minister Eleodoro Mayorga announced that the Peruvian government had officially asked Pluspetrol to end its operations in this part of Peru.

However, on Monday, conflicting reports began to emerge. According to Peruvian business journal Gestión, Pluspetrol confirmed that it would continue operating in Lot 108, the area in question, as the Peruvian government had made no motion to modify the legal and contractual situation governing Pluspetrol’s operations. The Argentine oil company emphasized that it has followed all legal, environment, and social requirements to operate in Peru, and wants to keep working and investing in Peru. With this statement, Pluspetrol has made clear that it will not simply forfeit its rights and investment without compensation.

To provide some context to the growing media storm surrounding Pluspetrol’s operations in Peru, leading Peruvian newspaper La Republica published a feature-length piece detailing and exploring the damages that Pluspetrol’s operations have inflicted on the Peruvian Amazon. According to the report, Pluspetrol is currently fighting in court to avoid paying 39.4 million soles in fines for environmental infractions that the oil company is accused of committing. La Republica’s report very clearly takes the side of Loreto’s indigenous people, providing historical background to their claims and protests against Pluspetrol.

More handwringing over Colombia's oil industry

Campetrol, the labor union that represents Colombian workers in the oil industry, met with the Minister of Mines and Energy to discuss the crisis currently affecting the country’s oil sector. Campetrol reiterated the same concern that all of the other players in the industry have made: Colombia needs more oil exploration. Rubén Darío Lizarralde, the president of Campetrol, warned that if the country does not invest in more exploration, the country could become a net importer of crude oil within a decade. He added that the fall of the oil industry would also have a tremendously negative impact on employment in the country, affecting not just those who work directly for oil companies, but also people up and down the greater oil sector supply chain. He explained that in many of these rural communities, there are no other employers.

Nonetheless, as Alejandro Martínez, an analyst and founding partner of AMZ Consulting, told Colombia business journal Portafolio, oil companies really don’t have a choice in the matter. They’ve been forced to draw resources away from exploration and invest instead in incremental improvements to production. Colombian state oil company Ecopetrol at least is still investing in exploration. The company announced on Friday that it is drilling three new offshore wells in 2015.

In related news, Colombian business journal Dinero reported on a conference organized by the National University of Colombia’s Center for Mining Thought. Ex-mining minister and current president of the Center, Cecilia López Montaño, argued that the country failed to take advantage of the opportunity provided by the commodities prices boom to create a real productive base for the national economy.  She stressed that Colombia should invest in developing a productive rural sector, a modern industrial sector, and a less informal services sector.