Bloomberg News

Ecopetrol Dividends of at Least $1 Billion to Stay Overseas

February 09, 2012

(Updates with peso in fourth paragraph, adds refinery maintenance in ninth paragraph.)

Feb. 8 (Bloomberg) -- Colombia will keep abroad at least $1 billion of dividends from state-run oil producer Ecopetrol SA to ease a peso rally amid record international investment.

The government also is in “no rush” to sell its stake in Ecopetrol, the nation’s largest oil company, Finance Minister Juan Carlos Echeverry said today on a call with analysts.

Colombia seeks to stem inflows of dollars amid record oil production and rising foreign direct investment after companies such as billionaire Eike Batista’s AUX Canada Acquisition Inc. snapped up assets. A 9 percent rally this year in the peso against the dollar erodes competitiveness of flower exporters and coffee growers in Colombia, the second-largest supplier of Arabica beans favored by brewers like Starbucks Corp.

“There is a lot of appetite for emerging markets that is stimulating inflows, so the government needs to take steps to mitigate it,” Nicolas Bernal, an analyst at brokerage Ultrabursatiles SA, said by telephone from Bogota. “Bringing in Ecopetrol funds would increase the supply of dollars, going against government efforts to aid other industries.”

The peso gained 0.2 percent to 1,779.30 per U.S. dollar, from 1,782.10 yesterday.

Colombia’s peso probably will extend gains that trim peso- denominated revenue for coffee farmers battered by above-average rainfall that cut last year’s production, Bernal said.

Latin American Rallies

Inflows from Colombian oil, Chilean copper and Brazilian iron-ore contributed to a rally in most major Latin America currencies this year, spurring policymakers to act. Colombia’s central bank this week resumed dollar purchases to stem gains, after raising interest rates last week. Colombia’s benchmark rate is 5 percent, compared with near zero in the U.S.

Colombia expects about $10 billion in international investment in crude, mining and energy projects this year, similar to last year, Mines Minister Mauricio Cardenas said in January. Batista’s AUX Canada Acquisition purchased control of Ventana Gold Corp. last year.

The nation’s daily oil production is expected to increase an average 18 percent to a record 1.1 million barrels in December from a year earlier, Cardenas said in a Jan. 12 interview. Oil output is rising partly as Ecopetrol expands production and invests in its refineries.

A more than $4 billion expansion is under way at Ecopetrol’s Cartagena refinery, where maintenance work on its cracking unit will be finished this month, a company official who can’t be cited because of corporate policy, said today by telephone.

--With reporting by Andrea Jaramillo in Bogota. Editors: Robin Saponar, Jasmina Kelemen

To contact the reporter on this story: Heather Walsh in Bogota at hlwalsh@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net


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