Though attacks on Colombian oil pipelines and other energy infrastructure declined after the government’s mid-decade military offensive against rebel groups, they have sharply increased in recent years. The U.S. Energy Information Administration (EIA) estimates that such attacks caused about 35,000 bpd of unplanned production disruptions last year – a 115 percent increase from 2012. While 2010 saw only 31 attacks, insurgents staged 84 attacks in 2011. There were 259 pipeline attacks in 2013, and 33 in the first quarter of 2014 including several major ones. On New Year’s Day, the National Liberation Army (ELN) detonated explosives at four crude oil holding pools in Norte de Santander province along the Caño Limon-Coveñas pipeline, a frequent target for attacks. Armed groups have also targeted oil industry personnel in the area. On the weekend of 11 January, an engineer working for Coindustrial, an Ecopetrol subcontractor, was kidnapped in Norte de Santander by an unidentified illegal armed group. The country’s largest armed group, the Revolutionary Armed Forces of Colombia (FARC), also operates in the area.
On 25 March, the Caño Limon-Coveñas pipeline, which carries crude oil to the Caribbean coast, was shut down after a bomb explosion triggered by rebels. These frequent incidents are usually resolved quickly, but the indigenous U’wa group prohibited access to the pipeline on their land for over a month until 1 May, when they reached an agreement with the government. The U’wa blocked repairs in order to force a dialogue over their environmental concerns. Ecopetrol agreed to suspend a gas exploration project at Magallanes pending an environmental audit as part of the negotiation.
Just one day later, on 2 May, another attack on the Caño Limon-Coveñas pipeline, allegedly by the ELN, caused an oil spill raised that sparked alarm over potential river pollution. And attacks are not limited to pipelines. On 27 April, 12 vehicles that were carrying equipment to repair the Caño Limon-Coveñas pipeline were destroyed by fire.
These attacks harm the oil sector at a time when reserves are finally growing. At the close of 2013, crude reserves were at 2.445 billion barrels, an increase of 2.86 percent over 2012, and the best in 15 years according to Minister Acosta. Energy insecurity also poses a threat to a key source of government revenue. With an increase in reserves and stalled output, Colombia is failing to capitalize on potential oil profits, revenues that President Juan Manuel Santos counts on to prop up public spending. During the month that the Caño Limon-Coveñas pipeline was shut down, Ecopetrol was said to have lost out on approximately US$220 million in revenue, over half of which would have gone to government coffers in the form of taxes or royalties. Santos’ 2014 budget is six percent higher than in 2013, with increased spending on programs such as theServicio Nacional de Aprendizaje, Más Familias en Acción and 100,000 Viviendas Gratis, and he needs funds to pay for it.
To further increase reserves and production, Colombia needs to persuade more companies to invest, but attacks on energy assets damage investor confidence. Continued assaults could also put peace talks with the FARC, ongoing in Havana since 2012, at risk.