Colombia labor dispute halts Reficar refinery construction

BOGOTA, Colombia -- Work on Colombia’s biggest-ever construction project, a $6.47-billion refinery called Reficar going up near the coastal city of Cartagena, has ground to a halt amid ongoing labor strife, the latest in a series of setbacks that has contributed to delays and billions in cost overruns on the megaproject.

The strike is only the latest in Colombia’s fast-growing energy and mining sectors. The most notable impacts have been a slowdown this year in the country’s oil boom and a possible decline in coal exports for the first time in a decade, both partly the result of labor strikes.

The conflict at Reficar also illustrates the consequences of skilled labor shortages common in other Latin American economies where the growth in output of goods and services is outpacing the creation of technical personnel.

The disputes between striking members of the USO labor union and Reficar, a wholly owned entity of state-controlled oil company Ecopetrol, forced the refinery’s general contractor to suspend work Tuesday, a stoppage that continued into Thursday. The halt affects 12,000 workers directly and indirectly involved in the project.

After a strike in May, Reficar revised upward the project’s estimated cost, saying it would pencil out at $6.47 billion, compared with the $3.5 billion originally budgeted. Inauguration was also pushed back to the end of 2014, a year later than the previous target.

In a statement Wednesday, Reficar said the halt was called because of threats that striking workers had made to those who continue to report for work and the risk of “reprisals to employees and their families.” The company said employees arriving at work on buses were harassed by union members blocking gates and roads.

In a telephone interview, USO President Rodolfo Vecino said workers were demonstrating peacefully over wages and work conditions and that the company had improperly fired 312 striking workers this week for exercising their legal right to protest.

“Every time workers try to access their legal right to assemble and protest, the company tries to block them in violation of international labor practices,” Vecino said.

A Reficar spokeswoman said the workers were suspended, not fired.

The main bone of contention is what the union alleges is greater pay offered to foreign skilled workers than what is paid to Colombian workers doing the same job. A shortage of solderers and other skilled workers has forced general contractor Chicago Bridge & Iron to import hundreds of workers from Central America, Venezuela and Mexico, who receive more lucrative pay packages than local hires, Vecino said.

In response, Reficar said the project conforms with Colombian labor laws and noted that it had trained 5,300 of the 16,000 people who have worked at one time or another on the site. The company also said in its release that a previous strike called by USO was ruled illegal in April by Colombia’s supreme court.

Owner Ecopetrol hopes the ultramodern facility will greatly improve its profits, allowing it to produce clean-burning diesels it now must import to conform with Colombia’s environmental rules. The refinery will also process a third more of each barrel of crude that it refines than the existing 1950s-era refinery, improving efficiency.

Over the last decade, Colombia has attracted a flood of foreign energy investment, enabling it to become a major global player in oil and coal exports. On some days this year, the country has produced more than 1 million barrels of oil a day, or 80% more than the yearly average in 2006.

Expansion of coal mining has transformed the country into one of the world’s top five coal exporters. But on Tuesday, about 5,000 workers at two Colombian mines operated by U.S.-based Drummond launched an indefinite strike over wage and health issues, threatening about a third of the nation’s coal production.

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Kraul is a special correspondent.