Pacific Rubiales Energy Corp. is eyeing a 33% stake in a key oil pipeline project in Colombia as the country’s crude transportation infrastructure struggles to keep up with a surge in output.
Ronald Pantin, chief executive of Pacific Rubiales, said Monday that the company plans to finance a stake in the Bicentennial oil pipeline with the company’s cash-flow and isn’t planning any debt or stock issues.
The pipeline, which is being built by state-run oil firm Ecopetrol SA along with other oil firms, has an estimated cost of $4.2 billion.
“This pipeline project has the potential to be the cornerstone of future oil transportation in Colombia as it will open up communication lines between new production areas and export ports,” Pacific Rubiales said in a statement Monday.
Colombia is readying to upgrade its oil pipelines and build new transportation networks as it enjoys a surge in oil output fueled in part by companies like Pacific Rubiales. Government officials expect oil output to close the year at 900,000 barrels per day and jump to 1 million barrels per day next year.
Pacific Rubiales also unveiled Monday a plan to broaden its corporate strategy to include more downstream operations.
The Canada-based producer of natural gas and heavy oil, which is the largest independent oil and gas company in Colombia, said the strategic review process has three major components: reserves growth, participating in key oil and gas transportation and port infrastructure projects, and integrating downstream assets in the value chain.
The company said oil and gas exploration and production will remain its main focus, with a goal of gross production of 500,000 barrels a day in the next few years.
It said the Rubiales Field continues to be the center of its short-term strategy, adding that the goal of gross production of 170,000 barrels a day by year-end is within sight. The company’s strategic partner in this asset is Ecopetrol SA.
In terms of infrastructure projects, Pacific Rubiales plans to buy a stake in a private venture called Pacific Infrastructure Inc., which is developing a crude oil and products terminal and port in Cartagena, as well as a new pipeline that will link Covenas with Cartagena in the Caribbean region.
The vertical downstream integration strategy will be two-pronged. Pacific Rubiales will first invest in a new venture named CI Pacific Fuels S.A. that will initially focus on developing the bunker market within Colombia. Pacific Rubiales also plans to participate in the development of asphaltite and coal assets through its equity participation in a company called Pacific Coal S.A.
The company is expected to release its third-quarter earnings report on Tuesday. (Darcy Crow amd Carolyn King / Dow Jones Newswires)