ECOPETROL ANNOUNCES PLAN TO TRIPLE OIL PRODUCTION

UNCLAS BOGOTA 000712 SIPDIS SIPDIS SENSITIVE WHA/EPSC FOR FCORNEILLE; EEB/ESC FOR MMCMANUS; DOE FOR GWARD E.O. 12958: N/A TAGS: ENRG EPET ECON PGOV CO SUBJECT: ECOPETROL ANNOUNCES PLAN TO TRIPLE OIL PRODUCTION BY 2015 REF: A. (A) BOGOTA 570 ¶B. (B) 07 BOGOTA 7088 ¶1. (U) Amid strong investment in Colombia's oil and gas sector (ref A),state-owned hydrocarbons company Ecopetrol announced February 25 plans to increase its annual production to 1 million barrels per day (bpd) by 2015. Ecopetrol intends to direct much of the proceeds from its successful partial privatization in 2007 (ref B) into investment of over USD 30 billion in exploration over the next seven years. The new investment will primarily focus on developing new finds, but will include downstream activities as well. ¶2. (SBU) In order to reach its target, Ecopetrol must raise its annual production 12 percent each year and add an average of 390 million barrels of new reserves annually. The company's Production Manager, Carlos Gutierrez Ardila, told us Ecopetrol hopes to increase production both in Colombia and through its partnerships in Brazil and Peru. Gutierrez said Ecopetrol also sees strong opportunities to build its reserves by pursuing investment and exploration activities in the Gulf of Mexico and Africa. The parastatal produced 326,000 bpd in 2007 and forecasts an increase to 425,000 bpd in 2008--mostly in Colombia. ¶3. (SBU) While Colombia has begun to reverse the decline in its domestic oil production, most local experts do not see strong prospects for major, light-crude finds in Colombia and underscore that Ecopetrol will have to focus much more on heavy oil development to boost its domestic production. A number of operators in Colombia have expressed cautious optimism that Colombia's frontier region with Venezuela may hold viable heavy oil fields, but are still awaiting significant finds. ¶4. (SBU) Nevertheless, when combined with Ecopetrol's increasingly international outlook, Alexandra Hernandez, Vice President of the Colombian Petroleum Association (ACP) told us she considers Ecopetrol's new production goals reachable. Hernandez also said the company's aggressive investment plan reflects Ecopetrol's interest in not disappointing its 400,000 new Colombian private shareholders and the GOC's interest in maintaining Colombia as a net oil exporter beyond ¶2015. Brownfield