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Cablegate: Ecopetrol Announces Plan to Triple Oil Production

VZCZCXYZ0002
RR RUEHWEB

DE RUEHBO #0712 0572056
ZNR UUUUU ZZH
R 262056Z FEB 08
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 1546
INFO RUEHCV/AMEMBASSY CARACAS 0011
RUEHLP/AMEMBASSY LA PAZ FEB LIMA 5946
RUEHZP/AMEMBASSY PANAMA 1298
RUEHQT/AMEMBASSY QUITO 6586
RHMFIUU/DEPT OF ENERGY WASHINGTON DC

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

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