Colombia's Ecopetrol starts 2014 with numerous challenges

As Colombia state oil firm Ecopetrol (NYSE: EC, TSX: ECP) starts 2014 it faces challenges related to its falling share price, a recent bribery scandal, investor dissatisfaction with its 2014 budget and ongoing delays in upgrading two of its refineries.

Over the last three months Ecopetrol's share price has fallen roughly 20%, prompting minority shareholder representative Roberto Steiner to call for a meeting with Ecopetrol's directors.

"It's obvious shareholders have lost significant value on their investment," Steiner was quoted as saying in a report by local financial daily Portafolio.

Investors have also voiced concern over the firm's US$10.6bn 2014 investment plan which requires Ecopetrol to incur roughly US$1bn in debt.

Adding to the firm's troubles, a former Ecopetrol official was implicated in taking bribes from an executive at mining and energy services company PetroTiger in exchange for securing contracts.

"A formal investigation has begun and will be carried to its full extent," President Juan Manuel Santos announced on local TV.

If the ex-official is found guilty of putting competing firms at a disadvantage, Ecopetrol could be liable for US$200mn-US$500mn in damages, a report by local newspaper La Republica said citing legal experts.

On top of these new challenges Ecopetrol continues to deal with delays in upgrading and expanding its ​Reficar and Barrancabermeja refineries, in the departments of Bolivar and Santander, respectively.

Despite the difficulties, Ecopetrol minority shareholder representative Roberto Steiner is optimistic the firm will demonstrate strong performance in its 4Q13 results, due next month.