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Ecopetrol Seeks Waiver from U.S. Sanctions for Venezuelan Gas to Plug Shortfall

    State-run company says Colombia faces supply gap from 2025
    Pipeline between two countries will need repairs, CEO says
State-run company says Colombia faces supply gap from 2025. Pipeline between two countries will need repairs, CEO says

Andrea Jaramillo, Bloomberg News

BOGOTA
EnergiesNet.com 05 09 2024

Colombia’s Ecopetrol SA is seeking a waiver from the US to import natural gas from Venezuela as the South American country faces a supply shortfall of the power-station fuel from next year.

An appeal has been made to US officials for special dispensation to advance talks with Petroleos de Venezuela SA on gas supply, Ecopetrol Chief Executive Officer Ricardo Roa said in an interview late Tuesday. The request was made through the Colombian embassy in Washington, he said.

State-owned Ecopetrol has forecast that Colombia’s gas supply will fall short of daily demand by the start of 2025 and imports will need to plug the gap before deep water deposits come online. Venezuelan gas is among a raft of potential alternatives, but reinstated US sanctions will likely complicate that option.

Repair Needed

The US reimposed sanctions after determining that Nicolas Maduro’s regime failed to honor an agreement to allow a fairer vote scheduled for July.

However, Colombia will need more than a US waiver to import Venezuelan gas. A 224 kilometer (139 mile) pipeline that connects the two countries will require repairs on the Colombian side, which could take 10 to 12 months, Roa said.

On Tuesday, Ecopetrol announced first quarter net income fell 29% to 4.01 trillion pesos ($1 billion), below the consensus of 4.59 trillion pesos. A stronger currency impacted profits, Roa told reporters.  

Separately, El Tiempo reported Wednesday that two magistrates at Colombia’s electoral council called for an investigation into the Ecopetrol CEO as part of alleged irregularities in the financing of President Gustavo Petro’s 2022 campaign. Roa, who managed the campaign, has been under scrutiny by the electoral authority over a possible breach of legal funding limits.

The Attorney General’s office has also been investigating Roa and Petro’s son Nicolás, and is also trying to establish if some of the campaign funds came from criminal sources. The electoral council board must now decide whether to start a formal investigation. 

Ecopetrol’s shares reversed earlier declines in Bogota, rising 0.7% to 2,285 pesos at 10:24 a.m. local time. 

BTG Pactual reiterated its neutral rating on the company’s shares, citing “the recent deterioration in the company’s corporate governance.” In a May 7 note, analysts Daniel Guardiola and Juan José Muñoz also pointed to “the lack of momentum for results due to mounting costs, weaker margins, higher taxation, and slightly softer production” despite high oil prices. 

–With assistance from Alex Vasquez.

bloomberg.com 05 08 2024

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