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Economy

Colombia considers oil pipeline to Pacific

by Matt Snyder August 5, 2011

pipeline

Colombia is studying the feasibility of a new oil pipeline crossing the Andes mountains from the oil-rich Llanos Basin to the Pacific coast to help tap Asian markets, the country’s energy minister said on Thursday.

Latin America’s No. 4 oil producer is enjoying a boom in investment into its mining and oil sectors, which has pushed up output of crude oil and coal to historic highs while the country struggles to boost infrastructure.

Energy Minister Carlos Rodado said that a pipeline to the Pacific coast might run from the Llanos Basin through Andes mountains to either the port of Tumaco in Narino province or Buenaventura in Valle del Cauca department.

“We’re talking about periods of 4 or 5 years that a pipeline of this nature could become a reality,” Rodado told reporters at an investment conference.

“This is only in the conceptual stage, but it’s a way of looking toward the Pacific, which is precisely the region of the world that is seeing the biggest growth for commodities.”

Colombia is in the process of upgrading existing oil and gas lines and building a new one as production hits historic levels and output is expected to continue climbing, topping 1.5 million barrels of oil per day (bpd) in coming years.

An oil pipeline project such as the one mentioned by Rodado would likely face major obstacles such as environmental and security concerns.

The Andean country produces over 900,000 bpd, a record for Colombia as better security and fiscal terms have boosted investment into the energy and mining sectors. Much of the production is heavy crude oil from the Llanos Basin.

Colombia’s under-developed Pacific coast is seen as key if the country wants to deepen exports to Asia — Ecopetrol, the nation’s largest oil producer, already ships around a third of its oil exports to the Far East.

Colombian coal exporters sometimes send shipments of thermal coal to the Asian giant, China, and metallurgical coal to India, but high shipping costs still hinder trade.

Rodado said that it was too early to give estimates on the cost of such a project but that similar schemes have cost more than $1 billion, and that pre-feasibility, feasibility and design studies still needed to be carried out.

“China (and) India are demanding huge amounts of oil, and that’s why Colombia is also interested in having an outlet for the Pacific,” Rodado said.

economyoil

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