Rebels Halt Output at Colombia Oil Field

Story Filed: Friday, August 04, 2000 4:39 PM EST

BOGOTA (Reuters) - Occidental Petroleum Corp (OXY.N) suspended production and declared force majeure at Colombia's second largest oil field on Friday after Marxist rebels repeatedly bombed the pipeline that pumps crude from the field.

It was thought to be the first time in more than 18 months that the U.S. multinational had called force majeure at the 105,000 barrel per day Cano Limon complex, in northeast Arauca province, which it operates in association with state-run oil firm Ecopetrol.

The declaration is a legal move which allows the company to suspend contractual obligations and in some cases even crude export shipments until the security situation normalizes. Oil is Colombia's leading export, earning some $1.9 billion of the total $5.15 billion export revenues in the January through May period, the latest date for which official figures are available.

The first declaration of force majeure at Cano Limon in July 1997 sent a shudder through U.S. markets and energy officials since it was the starkest indication until that time of the risk posed by Colombia's warring rebel factions against the oil industry.

``We have declared force majeure,'' an Occidental spokesman at the company's corporate headquarters in Los Angeles told Reuters by phone. He was unable to say whether the move applied just to output at the field or also affected export commitments.

The decision was prompted after rebels blew up a section of the pipeline that transports crude from Cano Limon to the Caribbean lifting terminal at Covenas less than four hours after it had been repaired after a July 23 attack. Colombia's state-run oil company Ecopetrol and state security forces attributed the blast to Cummunist rebels. The pipeline has now been out of action 12 days, the longest outage this year.

EXPORT SUPPLIES EXHAUSTED

Shortly before the Occidental announcement, Ecopetrol reported that export supplies were exhausted at the one million barrel storage facilities at the Covenas lifting terminal.

That facility is used for storing both Occidental and Ecopetrol exports.

Colombia's two biggest Communist guerrilla groups have regularly targeted energy infrastructure in protest at what they see as the excessive involvement of foreign multinationals in the country's oil industry, which produces about 710,000 bpd of crude.

Government officials have frequently appealed to the guerrillas to cease targeting the country's main crude export pipelines in their three-decade-old war to topple the state -- a conflict that has cost 35,000 lives in just the last 10 years.

It was not clear whether the Revolutionary Armed Forces of Colombia (FARC) or the smaller National Liberation Army (ELN) was responsible for Friday's blast on the Cano Limon-Covenas pipeline at a point 27 miles (43 km) west of the field.

The 230,000 bpd capacity tube has been blown up nearly 40 times this year. Last year it was blown up a record 79 times.

Earlier this year, Occidental chiefs lobbied hard for the U.S. government to press ahead with a pledge to hand over a record aid package to Colombia to help it fight drug-traffickers and Communist guerrillas.

The U.S. Congress approved the $1.3 billion package of mostly military assistance in June and President Clinton signed the bill into law last month.

It was not clear if the latest spate of rebel attacks on the Cano Limon-Covenas pipeline were linked to Occidental's backing for the U.S. aid plan.

Ecopetrol was unable to say how soon the Cano Limon-Covenas pipeline may be repaired and pumping again.

A spokesman for the state-run company, however, said its own export schedules were not in jeopardy and their next shipment, of about 500,000 barrels, was not due until late next week.

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-- Martin Thompson (mthom1927@aol.com), August 04, 2000