SUMMARY - 2005 OIL INFRASTRUCTURE ATTACKS

C O N F I D E N T I A L BOGOTA 001118

SIPDIS

SIPDIS

DEPT PLS PASS DOE - A/S KAREN HARBERT

E.O. 12958: DECL: 02/07/2016
TAGS: ENRG EPET MCAP MOPS CO
SUBJECT: SUMMARY - 2005 OIL INFRASTRUCTURE ATTACKS

REF: 2005 BOGOTA 2304

Classified By: DCM Milton K. Drucker, reasons 1.4 (b) and (d).


1. (C) Summary: Colombian oil infrastructure attacks
increased in 2005, due mainly to FARC offensives in the
Putumayo region. While the overall number of oil pipeline
and electrical tower attacks increased countrywide from 2004
levels, total figures remain at significantly reduced levels
from the peak in 2001. U.S. investor Occidental Petroleum
reports that while the Cano-Limon Covenas pipeline that
carries its product experienced 5 more attacks in 2005 than
in 2004, electrical tower attacks account for the majority of
their production losses. Fuel theft from pipelines has
declined dramatically from 2002-2005. End Summary.

Oil Pipeline Attacks Increase Slightly from 2004 Levels
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2. (SBU) The Ministry of Defense (MND) reported that there
were 123 oil pipeline attacks in Colombia in 2005, an
increase of 32 percent from the 93 attacks reported in 2004.
The majority of these occurred against an Ecopetrol pipeline
in the Putumayo region where the FARC led a major offensive
for much of the year. A breakdown of total attacks by major
pipeline demonstrates that most attacks occurred in the
south. The Trans-Andino pipeline, which runs from the port
of Tumaco through the Department of Putumayo, suffered 90 of
the 123 attacks (about 73 percent). No U.S. firms are
involved with ownership or management of this pipeline. The
Cano-Limon Covenas pipeline, used by U.S. investor Occidental
Petroleum to move crude oil production from Arauca, was hit
22 times, according to Occidental Petroleum President Guimer
Dominguez; other smaller pipelines account for the remaining
attacks. The Ocensa pipeline, used by British Petroleum to
transport its product from its facilities in the Casanare
region, was not attacked in 2005. (Comment: Despite the
increase in 2005, oil pipeline attacks remain down from a
peak of the 260 attacks reported in 2001.)

Electrical Tower Attacks Spike Upwards
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3. (U) MND reported that attacks against electrical towers
almost doubled from 121 in 2004 to 227 in 2005. While the
overall level of attacks is down drastically from a peak of
483 in 2002, electrical towers still offer illegal groups an
easy target with disproportional disruptive effects on the
oil industry and the lives of average citizens.

Oxy Pipeline Security Remains Stable But Production Losses
from Electrical Tower Attacks Escalate
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4. (C) Attacks on the Cano Limon-Covenas pipeline used by
Occidental Petroleum rose slightly from the 17 it reported in
2004 to 22 in 2005. Occidental officials viewed the increase
as tolerable when compared to the record high of 170 attacks
suffered in 2001 but production losses are still substantial
(see para. 5). In 2006, Oxy has reported 2 pipeline attacks,
the first on January 27 and a second on January 31. Oxy also
reported that attacks on electrical towers affecting its
operations doubled from 11 in 2004 to 21 in 2005. Of the 21
attacks last year, 11 resulted in damage that caused
production losses. Electrical tower attacks are significant
for Oxy since the power grid provides 50 percent of the
energy it needs for operations and power losses disrupt
production. Production losses would be greater but Oxy has a
program to reinforce tower foundations that has helped limit
damage.


5. (C) Oxy officials estimate that attacks in 2005 on the
Cano-Limon pipeline and electrical towers caused production
losses of almost 1.3 million barrels of oil (worth USD 66.3
million based on an average 2005 price of Cano-Limon crude
oil of USD 51/barrel). Almost two-thirds of the losses
(nearly 824,000 barrels) were attributable to electrical
tower attacks versus hits on the oil pipeline (470,000
barrels).


6. (C) The majority of Cano Limon pipeline attacks (68
percent) occurred in the Catatumbo region of Norte de
Santander, continuing a two-year trend. In past years, the
majority of attacks occurred on the portion of the pipeline
in the department of Arauca, close to Oxy,s production
facilities. Oxy officials attribute the shift to a number of
factors. First, the 18th brigade of the Colombian army has
been effective in establishing firmer control over the Arauca
region through its patrol tactics and greatly improved
capabilities resulting from U.S. military assistance in the
form of helicopters and training. Second, illegal groups can
hit the pipeline more readily in the mountainous terrain
farther north on the pipeline in Norte de Santander and then
seek refuge easily across the nearby border with Venezuela.
In December 2005, the Colombian army,s 30th mobile brigade
assumed responsibility for Norte de Santander and Oxy
officials welcomed the addition of 1,500 troops in January
2006 to this unit. Oxy President Dominguez indicated a
higher level of confidence in COLMIL's ability to protect the
pipeline than in the past (see reftel) but concluded the task
is more difficult in this region. Third, Oxy officials
asserted that coca and poppy cultivation has expanded rapidly
in Norte de Santander and illegal groups hit the pipeline to
distract security forces and facilitate illegal drug
production and trafficking.

Efforts to Prevent Fuel Theft from Pipelines Are Succeeding
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7. (U) State oil company Ecopetrol reported significant
improvements in preventing fuel theft from oil pipelines in

2005. The average rate of stolen fuel fell by 78 percent
from a peak of 7,270 barrels/day in 2002 to 1,601 barrels/day
in 2005. Total yearly losses have declined from about USD
105 million in 2002 to USD 46 million in 2005. Ecopetrol
added that there have been 236 convictions for fuel theft in
the last two years and 139 related asset forfeiture/seizures
during that time. The oil company attributes law enforcement
successes to a strategy that focuses resources on cities that
neighbor its refineries in Bucaramanga and Barrancabermeja
where 53 percent of all fuel theft took place last year.

Comment
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8. (C) The pace of oil pipeline and electrical tower attacks
picked up in 2005 but this trend is more a reflection of the
FARC strategy to go after stationary targets as part of its
southern 2005 offensive than a weakening of security forces
capability to protect oil infrastructure. While the trend
bears watching (and there may be a spike in violence during
the upcoming election season),COLMIL efforts to secure oil
infrastructure during the last four years have been largely
successful. Studies done by the USMILGRP in concert with the
Ministry of Defense predict a continuing decline in pipeline
attacks although terrain in Norte de Santander and the
closeness of the Venezuelan border will make it difficult to
eradicate the problem completely. Despite its 2005 losses,
Oxy remains convinced that the security climate will continue
to stabilize as it expands its exploration activity. End
Comment
WOOD