- Posted August 30, 2013 by
Pacific Rubiales: the Colombian Superstar
From 2008 to 2012, Pacific Rubiales increased its oil production by 300% (100,000 barrels/day in 2012) and its reserves by 150% (600 million barrels of P2 reserves in 2012).
Late in 2008, in the midst of the debt crisis, Pacific Rubiales saw its 200-million-dollar line of credit suspended; this line of credit was to finance the pipeline, to open up production of heavy oil. Unexpectedly, and even though major projects were being suspended everywhere else worldwide, a major Colombian bank and BNP decided to put their faith in the young Colombian company’s management headed by the company founders, Ronald Pantin and José Arata, formerly of PDVSA, Venezuela's national company.
It was the beginning of one of the most spectacular success stories in the South American oil industry.
Five years later, Pacific Rubiales had not only consolidated its success but also diversified, built a solid infrastructure and reduced its production costs.
In June 2016, Pacific Rubiales will lose the concession to what historically has been its Rubiales field. In making over 12 acquisitions over the past 5 years at a total value of 2.3 billion dollars, the company should largely compensate for this loss and can envision a second phase of production growth.
There are three major opportunities today:
• The CPE6 field in Colombia’s Los Llanos region: the company expects authorisations by September to drill 6 wells; this should confirm the potential expected to be greater than that in Rubiales.
• In Peru, block 138: Pacific Rubiales acquired this block in 2007. Early estimates would indicate reserves (oil in place) possibly amounting to 573 million barrels.
• In Brazil, the Karoon blocks: In the very rich Santos Basin off the coast of Rio de Janeiro, Pacific Rubiales’ partner Karoon has recently made two discoveries; the most recent has brought to light a 70-metre oil column.
Pacific Rubiales has jointly created a solid infrastructure
The risky experience of 2008 in which the company was at the mercy of a pipeline construction showed this: infrastructure is a real priority.
Pacific Rubiales holds respectively 35% and 33% of the shares in the country's two largest pipelines: the ODL and the OBC pipelines.
At the same time, the company controls 56% of Pacific Infrastructure, which is participating in the following projects:
Puerto Bahia: this port will be an alternative to the Covenas terminal which today centralises the lion’s share of crude oil traffic. With an initial storage capacity expected to be 1.6 million barrels, the company can comfortably plan production output.
Olecar: this pipeline will connect the Bahia and Covenas terminals, thus permitting optimisation of available storage and refining capacity.
Pacific Rubiales is also putting energy savings projects into action: an irrigation project (Agrocascada) to recover waste water from the Rubiales field; an electrification project (PEL) to eliminate costly use of diesel fuel to cut energy costs by close to 40% in the Kifa/Rubiales fields area.
A Cost-Cutting Acquisition Programme
Pacific Rubiales acquisitions must accomplish two goals: they must be profitable, and also help reduce shipping and refining costs.
The acquisition of the small companies C&C Energia and Petromagdalena, which mostly produce light oil, have allowed reduction of diluent purchasing by 40% over last year: the heavy oil produced by Rubiales in fact required quite significant expenditure for diluent in order to get authorisation to access pipelines shared with other oil companies. With these acquisitions, and in diluting its heavy oil, Pacific Rubiales has reduced its costs and addressed the shipping problem.
Finalisation and start-up of the OBC pipeline should generate savings of 3 to 5 dollars per barrel by eliminating lorry transport.
Pacific Rubiales is a too-rare example of a company that builds its success both downstream and upstream of its main business. A virtuous circle from which the local populations benefits as well through increased employment and infrastructures.
by Stefan Chaligne