Thanks in part to dramatically improved security in recent years, Colombia has vaulted into the major leagues of global crude producers. Ironically, that same success may be driving a surge in violent crime against oil workers flooding into areas formerly considered off-limits to outsiders.
About 130 companies are now looking for oil in the Colombian countryside, compared with a number that could have been counted on “the fingers of both hands” a few years ago, Defense Minister Rodrigo Rivera said this month.
Foreign oil companies are expected to spend a total of $4 billion on oil exploration and development this year, 50% more than last year, a sign of rising confidence. By year’s end, this South American nation could be pumping 1 million barrels a day, up 88% from the 2006 average.
But risk remains a harsh reality in Colombia, as seen recently in a spate of attacks, kidnappings and killings mostly attributed to leftist rebel groups.
Although the government and industry analysts say the attacks have not yet caused oil companies to suspend operations or flee the country, industry sources warn that continued deterioration of hard-won security gains could jeopardize Colombia’s oil boom by driving away the firms that produced it.
“Those who go to Colombia know exactly what they’re up against, and the current level of kidnapping is a blip compared to the level in 2000-2005,” said Gal Luft, executive director of the Institute for the Analysis of Global Security in Potomac, Md. “But if the uptick turns into a new wave, we could see companies reconsidering their plans.”
Most companies are drilling in the sparsely populated eastern jungle-plains area called the Llanos, where for the better part of the last decade wildcatters didn’t dare show their faces because leftist rebel groups, such as the hyper-violent Revolutionary Armed Forces of Colombia, or FARC, were dominant.
Under President Alvaro Uribe, who was in office from 2002 to 2010, Colombian armed forces reestablished control over much of the Llanos area. That improved panorama, combined with highly attractive government terms to foreign oil companies, resulted in a crush of companies rushing in to look for oil.
The oil boom’s big winner is the Colombian government, which chalked up $13.2 billion in oil-export revenue in the first half of this year, up 72.5% from the year-ago period. The windfall has strengthened the government’s finances and was a major factor in debt ratings agency Standard & Poor’s elevation of Colombia to investment grade this year.
U.S. consumers are also better off. Over the first six months of the year, Colombia has shipped an average of 350,000 barrels of crude a day to U.S. refineries, more than double the average five years ago, ranking it as the United States’ eighth-largest foreign source of crude. The increased supply works to ease price pressures.
But the benefits of the oil boom exact a hefty cost. At least 38 oil field workers have been kidnapped so far this year across the country. The most recent abductions occurred last week in North Santander state, when three subcontractors for state-controlled Ecopetrol were seized by a group of armed men. In an unusual twist, authorities on Friday blamed ransom-seeking criminal gangs — and not leftist guerrillas — for the hostage taking.
In a telephone interview last week, Brig. Gen. Felix Munoz Salcedo said the army has mounted a special rescue operation but has not found the hostages.
In other incidents, five contract workers for Westwood-based Occidental Petroleum were kidnapped July 29 in Arauca state in the east by suspected rebels and released two days later. In early June, five Chinese nationals who were working as contractors for China-owned Emerald Energy were kidnapped as they conducted fieldwork in the southern state of Caqueta and have not been heard from since.
Also in Caqueta, a worker for a company called Geoenergy was killed Aug. 3 when the SUV he was riding in struck a land mine. Three co-workers and his driver were injured.
Some analysts note that other countries, including Mexico, Sudan, Libya, Iraq and Nigeria, are witnessing an increase in violence directed at oil companies and their employees. Others link the incidents to the simple fact that oil company personnel here are encroaching on coca-growing territory and cocaine transit routes that were once under the undisputed control of drug traffickers and rebel groups.
Leon Valencia, director of Arco Iris, an independent peace advocacy group in Bogota, believes the added violence has more to do with rebels’ desire to demonstrate solidarity with some rural communities that resent the oil drillers because of increased pollution, tanker-truck traffic and poor working conditions for locals.
“The attacks have increased and will continue to increase as the oil boom continues,” Valencia said. “The guerrillas see it as a way of ingratiating themselves with those who disagree with all the mining and oil exploration activity Colombia is seeing.”
In a radio interview this month, Alejandro Martinez, president of the Colombian Petroleum Assn., the largest oil industry group, said he was “concerned” about the rising violence but expressed confidence in the armed forces to control the situation.
Citing Defense Ministry statistics, the Bogota-based security monitoring website Insight Crime says kidnappings over the first half of 2011 rose to 108 cases, up 20% over the same period last year, on top of a 32% increase in 2010 over the previous year.
Responding to the concerns, Defense Minister Rivera this month announced a “redesign” of the country’s security apparatus for energy firms, saying such an overhaul was long overdue given the increased presence of foreign oil companies.
“What was rational a few years ago because there were so few oil companies … now doesn’t make sense when you have 130 oil companies with exploration agreements, all of which have security requirements,” Rivera told reporters, adding that the new measures include strengthened military intelligence, mobility and special operations. He did not say whether the plan involves assigning more troops, but he urged oil companies to better coordinate their planning with the armed forces.
Kraul is a special correspondent. Special correspondent Jenny Carolina Gonzalez contributed to this report.