Political Risk Latin America Blog @PolRiskLatam

Colombia oil: Blocked pipes

Posted in News and Articles, Political Risk by politicalrisklatam on June 24, 2011

by The Economist Intelligence Unit, June 21st, 2011.

Guerrilla violence is not the biggest threat to Colombia’s burgeoning oil sector.

Despite recent progress in curbing the illicit trade, Colombia remains the world’s largest producer and exporter of cocaine. Now, the country is becoming known more for legitimate revenues from a black and sludgy commodity as for the white and powdery stuff. Oil production in Colombia rose by 16.9% last year, according to BP, the fastest clip of any country. Yet a spate of attacks and kidnappings has cast a shadow on this hopeful picture for hydrocarbons.

Three Chinese oil workers and their interpreter were kidnapped in early June by guerrillas from the Revolutionary Armed Forces of Colombia (FARC) in the south of the country and remain missing. This followed the abduction in March of 23 contractors conducting exploration work for Talisman Energy, a Canadian firm. Security forces have since rescued all but one of the workers, but the intervening months also saw several pipeline bombings.

All this conjures up the dark days of the 1990s, when such incidents were the norm. Yet renewed attacks do not herald a return to such turbulence, and pose a limited threat to Colombian oil production. Rather, oil industry insiders fret about less well-reported issues that they fear are far more likely to halt the industry’s progress. (continue reading… )

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