Colombia’s Ecopetrol takes over petroleum operations

01 July 2010 18:01  [Source: ICIS news]

HOUSTON (ICIS news)--Colombia’s Ecopetrol assumed direct operation of the Cupiagua and Cupiagua Sur petroleum fields just after midnight local time on Thursday, Ecopetrol said in an announcement on Thursday morning following the takeover.

The fields are located in the municipality of Aguazul in the Casanare province, a major prospect region in Colombia.

Ecopetrol assumed sole operation of the fields at the midnight expiration of a 28-year multi-party arrangement under the Santiago de las Atalayas Association Contract in which Ecopetrol had held 50% of the production interest.

BP Exploration Company-Colombia and BP Santiago Oil Company had held 31% and Tepma had held the remaining 19% of the expired contract.

The northern section of the Cusiana field, which also had been governed by the Santiago de las Atalayas Association Contract, will continue to be operated by BP under joint agreement with Ecopetrol until 2016, when the Tauramena Association contract expires.

Current production at the Cupiagua and Cupiagua Sur fields is approximately 26,000 bbl/day, which will help meet Ecopetrol’s goal of increasing production 12% annually and producing 1m bbl/day of oil equivalent (including gas output) by 2015.

Together with Cusiana, the Cupiagua and Cupiagua Sur fields were the largest finds made in Colombia during the 1990s, and they produce light crude, which is in high demand on the international market.

The start-up of sole operations by Ecopetrol calls for a 12-point increase from 20% to 32% in royalty payments from basic production, as set forth in Law 756 of 2002. Also, the province and municipality will increase the amount of resources they receive for development.

About 18 months before expiration of Santiago de las Atalayas Association Contract, Ecopetrol and BP initiated joint operations designed to provide continuity to the various processes involved in operating the field.

Ecopetrol and BP will continue as partners, with BP as operator, in the contracts governing the Cusiana, Floreña, Recetor, Volcanera and Pauto fields, the announcement said. The joint operations are scheduled to end between 2016 and 2020.

Ecopetrol expects to invest US$28m (€23m) this year in the drilling of a new well at Cupiagua, the company said.

It also said it will invest an additional $284m in the Gas Cusiana facility to increase the facility’s gas treatment capacity by 70m cubic feet per day (mcfd) and liquefied petroleum gas (LPG) production by 6,900 bbl/day.

($1 = €0.82)

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By: George Martin
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