Colombia cuts 2020 oil output forecast by up to 17pc

Colombia's 2020 crude production range is expected to fall to 750,000-850,000 b/d depending on a Brent price range of $25-$45/bl, the government said today.

The non-Opec country is currently producing around 820,000 b/d, down from 857,113 b/d in March and 878,389 b/d in February. The first quarter average was 873,125 b/d, down by 2.1pc year on year.

Before global oil prices crashed in March, Colombia had been recovering moderately toward a 2020 target of close to 900,000 b/d, compared with 885,000 b/d in 2019, based on a $60-$65/bl price assumption and investment of $5bn-$6bn.

But the oil supply glut coupled with Covid-19 related restrictions that have sharply curbed fuel demand has pulled the rug out from under Colombia's 2020 assumptions.

In a joint press conference today, mines and energy minister Maria Fernanda Suarez and new National Hydrocarbons Agency (ANH) president Armando Zamora laid out the diminished expectations.

The number of exploration wells programmed for this year is projected to drop from 42 to 20-33, while 2D seismic is seen falling to 850km from a programmed 1,400km. The declines reflect the ANH's easing of contractual commitments to allow oil companies to postpone expenditures that current oil prices no longer cover.

According to a preliminary report on end-2019 reserves released today, Colombia has 2.036bn bl of proven oil reserves, equivalent to 6.3 years of production. This compares to 1.958bn bl — or 6.2 years of output — at the end of 2018.

Proven reserves of natural gas totaled 3.1 Tcf at end-2019, equivalent to eight years of production, down from 3.8 Tcf or 9.8 years at the end of 2018.

The ministry's Suarez told reporters today that the government's plan to issue a tender in May for a Pacific coast LNG import terminal remains on track despite the current crisis. Colombia already has one LNG receiving terminal outside Cartagena.

Colombia produced 1.105 Bcf/d of gas in the first quarter, up by 5pc from a year earlier.

Pipeline tariff row

Several oil companies have taken advantage of more flexible upstream contract conditions offered by the government, but private-sector producers are seeking more relief in the form of a 60pc cut in crude pipeline tariffs when Brent is below $45/bl.

The oil chamber (ACP) today rejected a proposal by state-controlled Ecopetrol's midstream unit Cenit to finance tariffs during May and June.

The ACP, which represents independent producers, says the main Ocensa export pipeline, which Cenit controls with a 72.6pc stake, offered a 0.6pc tariff reduction to 7.70/bl, following a 10pc tariff hike in July 2019, effectively maintaining a "excessively high" rate.

The group said today that negotiations have now been exhausted, and it is urging the government to intervene to force a tariff cut.

The ministry was non-committal in today's press conference.

By Patricia Garip