Colombia river oil freight rises, dredging in limbo

The volume of crude and oil products transported by barge on Colombia's strategic Magdalena river jumped by an average of more than 300pc to 1.5mn bl in January from a year earlier, according to data from river regulator Cormagdalena.

Fuel oil from state-controlled Ecopetrol led the way with 780,534 bl, up by 253pc from 221,098 bl in January 2016.

Trafigura's Colombia subsidiary Impala moved 469,273 bl of crude in January, up by 402pc compared with 93,466 bl January a year before. The company also transported 271,425 bl of naphtha diluent, up 1,417pc compared with 17,890 bl in January 2016.

January 2017 river transit included 20,468 bl of butanol. None was transported in the same month of 2016.

The increase in oil barge volumes mainly reflects higher river levels, improved navigation technology, and expanded storage capacity at Impala's Barrancabermeja terminal, where tanker trucks bring crude from interior basins, mainly the Llanos, industry participants say.

Colombia's government is looking for a new construction company to take up dredging and maintenance of the 908km (564mi) Magdalena river after regulators last week initiated cancellation proceedings of an existing contract with Navelena, a consortium led by corruption-tainted Brazilian contractor Odebrecht.

Power China is vying to take over the 2.5 trillion ($877mn) contract, which involves dredging a 652km stretch of river that oil and coal producers use as an alternative to Colombia's dilapidated highway network.

The contract also entails extending navigability along a 256km up-river stretch from refinery city Barrancabermeja to Puerto Salgar in Colombia's interior.

"If we can't cede the contract to Power China, Cormagdalena will guarantee the normal navigability of the Magdalena river through public works contracts," the regulator said last week.

If Power China takes over the contract, the project would appear to represent the Chinese state-run company's first foray into Latin America.

Meanwhile, Navelena will continue to be responsible for the preconstruction elements of the project, including maintenance dredging, until the contract is dissolved or a new strategic partner takes control.

"The contract will remain in the preconstruction phase until all financial arrangements are wrapped up," Cormagdalena said.

Despite the uncertainty surrounding Navelena, barge activity along the river is normal, the river regulator told Argus.

Navelena, in which Odebrecht holds 87pc and Colombian builder Valorcon holds the balance, has been struggling to transfer the August 2014-awarded contract to an alternative party since late last year.

Mexico's Grupo Carso and Japanese Sumitomo bailed out of separate negotiations with Odebrecht and the government for the project during the third quarter last year.

Odebrecht has been withdrawing from projects across Latin America after the eruption of a massive corruption scandal in which it admitted to paying millions of dollars in bribes to win contracts.

The Colombian attorney general´s office has said it found no corruption in 2014 dredging project award.