Friday April 27, 1:58 pm Eastern Time

Colombia oil woes may shortchange govt,
IMF target

By Phil Stewart

BOGOTA, Colombia, April 27 (Reuters) - Rebel bomb attacks could mean lower than expected oil revenues for the Colombian government in 2001, possibly threatening its IMF-agreed fiscal target, the Colombian Petroleum Association said on Friday.

The Association, citing figures from private economic think-tank Fedesarrollo, said buyers of Colombian crude -- unwilling to take a risk of non-delivery -- are now paying an average discount of up to $2.50 a barrel to U.S. benchmark crude West Texas Intermediate.

Fedesarrollo calculated that the average price of Colombia oil would end 2000 at $24 a barrel, well under the current market price and below the $25.80 estimated by the government.

Lower output and lower prices means the government could receive 0.39 percent of GDP less than what it had projected. It must meet a fiscal deficit target of 1.5 percent of GDP.

Failure to meet the IMF target, agreed to as part of a $2.7 billion bailout loan signed in 1999, would be embarrassing for the Andean nation -- which might be forced to renegotiate the
accord.

Fedesarrollo added the government would not have met its 3.6 percent deficit target for 2000 had it not been for high oil prices last year, which offset an increase in central government expenditures last year of 2.4 percent of GDP.

``Fedesarrollo has indicated that, according to its data, the outlook for this year will not be as bright as the government thinks, and it seems that guerrilla activity is going to affect results this year,'' the association's president Alejandro Martinez told reporters.

Colombia's government is the biggest recipient of the nation's oil revenues. State-owned Ecopetrol is either wholly or partially involved in all oil production and refining in Colombia, while taxes on oil help line government coffers.

Martinez added that terrorist activity would certainly lower output this year, but declined to offer a projection. He said Fedesarrollo calculated that Colombia would export up to 40,000 barrels less than the government has forecast.

REBELS HAMMER CANO LIMON

Hardest hit, they said, has been the Cano Limon oil field, Colombia's second largest, which has been virtually paralyzed since Feb. 17 due to rebel bomb attacks. Members of the Cuban inspired National Liberation Army, or ELN, also kidnapped about 100 workers from Cano Limon field operator Occidental Petroleum Corp earlier this month.

The ELN released all of the hostages within three days of their capture, saying it was a purely political act.

The 485-mile (780-km) Cano Limon pipeline, with a capacity of 220,000 bpd, only saw 47 hours of production last month -- cutting output from the field to 9,000 barrels per day in March, according to Occidental.

Ecopetrol receives 50 percent of the oil pumped through Cano Limon, Occidental receives 35 percent, and Spanish-Argentine company Repsol the rest.

``This is a truly worrisome situation,'' Martinez said. ``For more than two months, terrorist activity has expanded across the entire oil producing region.''

The field's on-site storage capacity is full at 500,000 barrels, preventing further extraction of oil, Occidental told Reuters in a recent interview. The Colombian army's 18th brigade is attempting to secure the area, but added Occidental officials were in a wait-and-see pattern since much repair remained to be done.

The association published Fedesarrollo's data in its quarterly publication, Conyuntura de Hidrocarburos, which was released at a press conference on Friday.

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