Colombian oil giant Ecopetrol added its name to the list of crude producers impacted by ongoing social protests and blockades, saying in a statement May 26 that output has fallen so far this month to an average 651,000 barrels of crude and equivalents, a 3.6% decline from the 675,000 boe/d reported for the first quarter ended March 31.
Producer of more than two-thirds of Colombia's oil and natural gas, Ecopetrol said the "ongoing public order situation" had impacted gas and LPG production in its Cusiana and Floreña fields, as well as various crude oil drilling operations in the Putumayo, Meta, Arauca and Boyaca provinces.
Ecopetrol also noted midstream and downstream impacts. Its Cenit pipeline subsidiary was forced "suspend intermittently pumping at some of its systems" because of the disturbances, while output at its giant Barrancabermeja refinery so far this month has fallen to 207,000 barrels of fuels per day, down from an average 216,900 b/d reported for the first quarter.
The company blamed "the lower availability of domestic crude and low withdrawals of fuel, petrochemical and industrial products" for the Barrancabermeja slowdown. Operations at the smaller Cartagena refinery, where throughput averaged 143,300 b/d last quarter, have not been impacted, the company said.
Ecopetrol said national demand for diesel has fallen 33%, gasoline 15% and jet fuel 1% since the protests and blockades began late last month. In addition, industrial and thermal sales of gas products have decreased 16% so far in May and the demand for LPG by 41%.
The company said that for the time being it is maintaining its full year production target for 2021 of between 690,000 and 700,000 boe/d.
Tax reform proposal the spark
Protests began in late April after President Ivan Duque introduced a tax reform proposal that critics said was unfair to low and middle class wage earners already suffering from the devastating impacts of the COVID-19 pandemic.
Duque quickly withdrew the proposal, but marches, blockades and violent vandalism only grew as disaffected interest groups including environmentalists, farmers and medical care advocates joined the demonstrations. Outraged by the rising cost of fuels and toll roads, truckers blocked most major highways leading into Bogota, the capital, and other major cities, causing scarcities of food and medicines.
Several meetings of Duque administration officials and leaders of the National Strike Committee so far have failed to produce a resolution to the crisis, and violent confrontations continue. On May 25, an historic courthouse in Tulua in southwest Colombia burned to the ground amid protests.
Duque has promised to use the military to clear blockades unless protesters relent.
Three smaller oil companies previously announced production cuts at their Colombian operations located mostly in rural areas where protesters have blocked transport and access to production facilities. Geopark announced last week a 40%-45% drop from first quarter's 31,355 boe/d; Gran Tierra an 18% decline from 29,600 b/d, and Parex Resources a 25% decline from 41,100 boe/d.
The energy ministry announced May 19 that nationwide crude output had fallen to below 700,000 b/d for the first time since 2009.
The woes of the Colombian economy, already under pressure from COVID-19 and declining coal and petroleum tax revenue, have only deepened. On May 19, Standard & Poor's lowered Colombia's and Ecopetrol's debt rating to below investment grade for the first time since 2010, citing Duque's withdrawal of the tax reform bill and expectations that a 2021 spending deficit will exceed 8% of gross national product.
A wide variety of businesses from paper mills and sugar refineries to hotels and shopping centers and have closed in recent weeks in reaction to the protests.
