Peter Howard Wertheim
OGJ Correspondent
RIO DE JANEIRO, July 28 -- Colombia will privatize as much as 20% of state-owned Ecopetrol in a bid to draw much-needed investment for modernizing the country's ailing petroleum sector, the government said.
The move is Ecopetrol's first opening to private investors and comes just as other Latin American countries such as Venezuela, Bolivia, and Ecuador are wresting control from foreign firms over their natural resources.
Economists have estimated the public share offering could be worth $3-4 billion.
A large injection of capital into Ecopetrol is essential if the company is to increase exploration and boost output, the government said.
Colombian oil production has fallen from a peak of 820,000 b/d in 1999, due in part to violence associated with the country's 4-decade-old guerrilla war. Colombian produced 538,709 b/d of oil in May.
Oil analysts have said the difference between Colombia and some of its neighboring countries is that Colombian oil production is declining.
Reduced violence
In bucking the Andean trend toward state control over the energy sector, Colombia is looking for partners to share the risk of exploring for oil in a country where Marxist rebels often attack pipelines and other energy installations.
A marked reduction in violence during the past 2 years has allowed Ecopetrol to return to areas long abandoned by oil companies. Also, lower royalty rates introduced by President Alvaro Uribe have encouraged multinational exploration.
Uribe, popular for cutting crime as part of his US-backed crackdown on the guerrillas, is well liked on Wall Street for his market-friendly economic policies. Two months ago he won reelection with a 62% majority vote.
Also, earlier this month Colombia sold its biggest state gas transportation company, Ecogas, to local pension and employee funds for $301 million.