Fighting for Colombia, Not the Oil

Its About Colombian National Welfare

To the writer of this article he sees the donation of $98million to protect the pipeline as "corporate welfare", but I see Colombian national welfare. He sees the money going to protect Occidental's interests, but with only 15% of the production from the field going to Oxy, and the vast majority of the remainder going to the country, then any help in maintaining production from the field should be welcome indeed to the Colombian economy.

Oxy Would Just Pack Up

I suspect that if Oxy was going to have to pay an additional $3 per barrel to extract their crude then they'd just pack up and go home. With declining production and increasing costs to keep their production going; having an additional sum levied on them to provide the Colombian government with their revenue stream would be a final kick in the teeth. This does not mean that the Colombians could do any better. As I understand it, Ecopetrol lifting costs - the cost to extract the oil - are typically higher than those of the foreign companies who operate in Colombia - they have to cover the costs of their large workforce, pensions etc. They'd be in no position to deal with an additional chunk of cost on their operations.

Losing Oil to Venezeula, Every Day

An interesting sidenote is that the field straddles the Colombian - Venezuelan border and when the Colombian side is shut-in due to pipeline attacks, the Venezuelans keep pumping and stealing oil from Colombia. This loss is permanent.

More Security, More Investment

Anne Patterson, the US ambassador in Colombia, was interviewed by El Tiempo on Sunday and made an additional point that the cash was a message to potential US investors that the US was willing to protect the interests of those investors. Maybe that's a more powerful reason for this money: more investment in Colombia, not just oil has got to be good.