Ecopetrol Extends Subsidies, Increases Pipeline Financing Assistance
BOGOTA (Reuters) — Oil transportation companies have agreed to extend reductions for pipeline charges amid a fall in oil prices, Cenit, a subsidiary of Colombia's state-run oil company Ecopetrol, said on Friday.
Private oil companies in the Andean country have been hit hard by falling prices, which dropped on the double shock of low demand due to the spread of coronavirus and a surge in supply.
Cenit said it and its transport subsidiaries will extend previously offered financing for a period of up to six months and has agreed to tariff discounts and more flexibility in certain contracts with oil companies.
"The current situation has affected the entire oil industry, including producers, transporters, refiners and retailers," the company said in a statement.
At the end of April, Cenit said it would offer financing to reduce pipeline tariffs by 50% for a period of two months, followed by a two-month grace period.
Private producers group the Colombian Petroleum Association (ACP) scoffed at the offer, saying it would only lead to higher costs later in 2020.
Now Cenit and its subsidiaries have offered to extend the financing option for a further four months, with subsequent grace periods agreed with individual companies.
The financing offer will not depend on oil volumes or prices.
Discounts on pipeline tariffs of between 6% to 21% - depending partly on volumes - were included in 13 contracts in recent weeks, Cenit said.
As part of agreements with traders and producers, flexibility clauses were also specified in nine contracts, the company added.
The deals cover some 80% of Colombia's oil production, Cenit said.
The government welcomed the agreements between producers and transporters, calling the deals "timely and positive" in a statement.
Colombia's government previously said it was considering an unprecedented intervention in pipeline tariffs.
Fees for transporting oil have long been a bone of contention, which the ACP say are excessively high.
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