Bloomberg News

OCP Ecuador Plans Pipeline Extension for Colombia Oil, CEO Says

June 28, 2011

June 28 (Bloomberg) -- Oleoducto de Crudos Pesados Ecuador SA, operator of the nation’s heavy crude pipeline, plans to extend its operations into Colombia as production ramps up, Chief Executive Officer Andres Mendizabal said.

The closely held company, known as OCP, is in talks with at least four Colombian oil producers to connect its Ecuadorean pipeline to their fields and may begin transporting Colombian oil to the port of Esmeraldas by next year, Mendizabal said yesterday in an interview. OCP is also studying the construction of a 700-kilometer (435-mile) pipeline to run from eastern Bogota to Lago Agrio, Ecuador, he said.

OCP, which operates at about 27 percent capacity, is seeking to boost transport levels after seeing pipeline volumes decline 29 percent since 2004, Mendizabal said. The company expects expansion into Colombia and increases from private oil producers in Ecuador, including Spain’s largest oil driller Repsol YPF SA, will help curb the declines, he said.

“Colombia has the opposite problem from Ecuador, it has more production than they can transport,” Mendizabal, a 40- year-old industrial engineer, said from his offices in Quito. “There’s a large amount of oil that can’t even be moved and the possibility exists that OCP can be used for that.”

Colombia is seeing a boom in energy investment as the country works to increase oil production to 2 million barrels a day by 2020, up from 923,000 currently.

The pipeline from Bogota would cost $2 billion and take four years to build, Mendizabal said. It would “require large investments from the Colombian side,” he said.

--Editors: Brendan Walsh, Glenn J. Kalinoski

To contact the reporter on this story: Nathan Gill in Quito at ngill4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at Papadopoulos@bloomberg.net


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