Colombia Poised for Cusiana Oil Field Boom : Trade: It is expected that exports will triple and eventually earn the nation an extra $2.5 billion a year.

This nation, long known for its coffee exports, is perched on the edge of an oil boom that could boost its economy and finance improvement of its infrastructure.

Pumping recently began in the mammoth Cusiana oil field in the northeastern state of Casanare, a development that adds an estimated 1.5 billion to 2.5 billion barrels to the nation’s reserves and may be one of the largest finds in the Americas since fields detected in Alaska’s Prudhoe Bay in 1968. It is expected to triple Colombian oil exports and eventually earn the country an extra $2.5 billion a year.

With its estimated 4 billion barrels of reserves, Colombia will remain a minor power compared to Venezuela, with 60 billion barrels, and Mexico, with 45 billion. Still, the bonanza of petro-dollars will have a major impact on Colombia’s relatively small economy.

The prospects for new oil riches has left Colombians delirious with thoughts of fat times to come. Government planners, reeling from a devastating drop in prices for Colombia’s other main legal export, coffee, are tantalizing the nation with talk of using the oil windfall to build roads and bridges, invest in health and education, finance water and electricity projects and even to prepay one-quarter of the nation’s foreign debt.

But officials are also prescribing sobriety with the petroleum high.

Colombians have only to look to neighboring Venezuela for a case study in the destabilizing social and economic effects of an over-dependence on oil income, once that income begins to decline. Or they can look to Mexico for instruction in oil-induced theft and corruption.

Colombia’s own Cano Limon field in the eastern Arauca state, site of its largest production up to now, has long been a victim of its own special form of petroleum curse: Leftist guerrillas belonging to the National Liberation Army regularly kidnap oil executives for ransom and blow up pipelines containing thousands of gallons of crude.

The Cusiana field was discovered and verified in September, 1991. Pumping officially started June 29 and is expected to lift Colombia’s oil exports to at least 600,000 barrels a day by 1997. Annual income from Cusiana should reach $2.5 billion by then.

Colombia’s partners in the Cusiana project are British Petroleum, the U.S.-based Triton Energy Corp., and TOTAL--Compagnie Francaise des Petroles of France. Colombia is represented by the state company Ecopetrol.

“For the international companies, these projects represent a solid return on their investment, and for the country an opportunity for progress and development,” Colombian President Cesar Gaviria said in announcing what he described as the dawning of a new era of petroleum wealth.

A potent mixture of risks and opportunities lies ahead.

Colombia will have unparalleled opportunities at the Cusiana and neighboring Cupiaga fields over the next decade with wells that produce a light, easy-to-refine crude. And the nation will take a whopping 87% of earnings, including taxes and royalties.

But Cusiana is a geologically complex and technically difficult site, experts say. Investment, including drilling, pipelines and infrastructure, will cost between $5.9 billion and $6.5 billion.

By 1997, when Colombia starts producing full steam, economists worry that the nation could fall victim to a massive influx of oil money, which would steeply revalue the local currency and damage other non-oil exporting sectors. The phenomenon is known as the “Dutch Disease,” for the distortions in the Netherlands’ economy when the Dutch discovered a wealth of natural gas in the 1960s.

Added to the potential difficulties is the guerrilla movement, which some authorities fear may step up sabotage attacks.