Colombia: production may not recover from crisis

According to data released by Bloomberg, Colombia may be one of the countries that will not be able to recover after the oil market crisis. That's because the country faces a number of long-term problems that threaten the industry. 

Among the reasons for the crisis is Ecopetrol's $1.5 billion investment in the U.S. shale gas sector, not its own fields. In addition, Occidental Petroleum is also leveraged after buying a u.S. rival shortly before the price drop. At the same time, the country depends on a number of operators who do not have the financial strength to pump oil at a loss.

Thus, according to Nicolás Urrutia, who covers Colombia's oil industry at the consulting firm Control Risks, "perhaps a quarter of Colombia's production could be lost by 2021, and will never be recovered if prices remain close to where they are."

The geology of the country also does not help in recovery. The high cost of production is also caused by the location of the oil producing region in the east, which is in an aquifer. "In a field like Rubiales/Quifa, producing 165,000 barrels of oil per day meant that more than 2 million barrels of water had to be handled." "The disposal of this water is where the real costs are," explained Fernando Valle, an analyst at Bloomberg Intelligence.


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