Colombia O&G watch: Ecopetrol secures US$665mn crisis loan

Colombia's finance ministry has authorized state-run oil company Ecopetrol to secure a US$665mn multi-bank international loan.

Mizuho Bank will provide US$235mn while Scotiabank will disburse US$430mn, according to a resolution published on the ministry's website.

Ecopetrol is expected to use the funds to mitigate a sharp oil price downturn amid the coronavirus pandemic and a price war between Russia and Saudi Arabia.

Last month, the Bogotá-based company trimmed US$1.2bn from its 2020 capital program and announced a US$500mn cost efficiency plan. 

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Oil and gas operators in Colombia will be free to redirect investments in stalled exploration projects to other upstream activities, in line with new rules designed to replace dwindling reserves.

The guidelines, ratified by industry regulator ANH, can be seen here, in Spanish.

The changes could unlock investments of US$700mn currently allocated to projects that are halted by legal, regulatory or social issues. 

Officials say ANH's proposed changes would also free companies of obligations in areas where initial exploration activities delivered poor results. 

The mines and energy ministry has warned that without new discoveries, Colombia's oil and gas reserves would run out in around six years and 10 years, respectively.

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Low income earners in Colombia will receive a 10% discount on their monthly gas bills under a plan to ease the financial impact of the coronavirus outbreak.

The measure will apply to households in the underprivileged stratum 1 and 2 districts that pay their bills on time, the Naturgas industry association said. 

Consumers will also be given a 36-month interest-free period to defer payments. In addition, those that had services cut this year because of non-payment will be reconnected to distribution networks during the pandemic, Naturgas said.  

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Colombian oil engineers association Acipet has urged lawmakers and stakeholders to unite to overcome the industry slump. 

"Our call is for the entire value chain of the sector – including the government, operators, service companies, the labor force and communities – to support each other in solidarity to mitigate the impact that this crisis can cause," Acipet president Carlos Leal said in a statement. 

"[It] is much more severe in the weakest links of this chain, such as small companies and industry collaborators," he added.