Colombia government, rebels agree to ceasefire

The Colombian government and Marxist rebel group Farc declared a bilateral cease fire today, marking another step toward diminishing security risks for the oil industry.

The government and the Farc jointly announced a "definitive bilateral ceasefire and end to hostilities (and) the laying down of arms." President Juan Manuel Santos says a final peace deal should be signed on 20 July, Colombia´s Independence Day.

Colombian oil producers expect a final peace agreement to reduce crippling attacks on oil pipelines and other infrastructure that have been a routine feature of the operating environment in Colombia for decades.

But the prospect of more tranquil operating conditions is unlikely to spark an upstream turnaround, because of sharply lower oil prices over the past two years, a fiscal framework the oil industry says is not competitive, declining reserves, and lingering above-ground risks.

Attacks have actually increased this year, partly because smaller rebel group ELN remains on the sidelines of the formal peace talks. Rebels mounted 15 attacks on oil pipelines between January and April 2016, compared with six during the same period last year, according to the latest statistics from Colombia's defense ministry.

Pipelines were bombed 80 times in 2015, mainly during a flare-up in hostilities in May-July. The escalation ended with Farc's 20 July 2015 unilateral ceasefire.

Colombia's military attributed most of this year's attacks to ELN.

Conflict analysts tell Argus that a ceasefire and planned Farc demobilization will not immediately pacify hot zones, including oil-producing provinces such as Meta, Putumayo, Norte de Santander and Arauca provinces.

Smaller localized conflicts characterized by community blockades and social unrest are likely to remain a growing challenge to oil operators in a post-conflict period.

The peace talks between the government and Farc leaders started in Havana, Cuba in November 2012. Today's agreement is the fifth pre-agreement before a referendum on the accords, implementation, and verification, the sixth and final point on the agenda. Leaders will gather in Cuba tomorrow to reveal the details of the final agreement.

Santos, FARC leader Timoleon Jimenez, Cuban President Raúl Castro, Norway's foreign minister Borge Brende, Chilean President Michelle Bachelet, Venezuelan President Nicolas Maduro, UN General Secretary Ban Ki-Moon and other regional officials will attend.