Ecopetrol partially restores 2020 capex

Colombia's state-controlled Ecopetrol has partially restored capital expenditures (capex) for 2020 in response to a modest recovery in oil prices.

The company now plans to invest $3bn-$3.4bn in 2020, based on a Brent price assumption of $38/bl. The revised capex is similar to the 2019 level, the firm said today.

"Despite the current low price environment, this plan maintains its resilience and competitiveness at a breakeven cash price of $30," Ecopetrol said today.

In early May, in the wake of the March oil price crash and the onset of the demand-gutting Covid-19 pandemic, Ecopetrol slashed 2020 capex to $2.5bn-$3bn, based on $30-$40/bl prices.

The original spending plan for 2020, announced in November 2019, was $4.5bn-$5.5bn, based on a Brent price of $57/bl.

Consistent with Ecopetrol's upstream focus, 78pc of capex under the revised plan is earmarked for exploration and production, enabling the company to produce close to 700,000 b/d of oil equivalent, concentrating on enhanced recovery.

Ecopetrol said it will maintain $221mn in spending for its shale project in the US Permian basin, and $13mn to advance unconventional pilot projects in Colombia's Middle Magdalena valley.

Exploration will account for $583mn, including a focus on offshore Caribbean natural gas. The company plans to drill 13 exploration wells, of which 11 are onshore in Colombia and two offshore Brazil.

Downstream accounts for 11pc of the total 2020 spending. Throughput at Ecopetrol's Cartagena and Barrancabermeja refineries will average 300,000-320,000 b/d in 2020. Among key projects is a $60mn interconnection with a crude unit at the original Cartagena refinery that will allow installed processing capacity to exceed 200,000 b/d in 2022, compared with a current 165,000 b/d.

Of the remaining capex, 8pc will target midstream and 3pc research and development.

Ecopetrol, which is led by former BP executive Felipe Bayon, highlighted its commitment to the energy transition. The capex includes $140mn for decarbonization, renewable energy and water management.

By Patricia Garip