Ecopetrol Unit to Let Colombia Oil Producers Cut Pipeline Costs for Two Months
BOGOTA (Reuters) — Cenit, a subsidiary of Colombia's majority state-owned oil company Ecopetrol, will allow oil producers in the Andean country to cut their transportation tariffs by 50% for two months, it said on Wednesday.
In the face of an oil price crash, Cenit said in a statement that it will offer oil producers financing allowing them to cut their pipeline tariffs in May and June by 50% before paying the remaining 50% beginning in September.
Global oil prices have dropped sharply on a combination of lower demand amid the spread of the coronavirus and a surge in supply.
"We are convinced that it is necessary to support producers and shippers in general with financing initiatives," Cenit Chief Executive Hector Manosalva Rojas said in the statement.
Private oil companies in the Andean country have been hit hard by the falling prices, prompting the Colombian Petroleum Association (ACP) to call for an urgent intervention regarding "excessively high" pipeline costs.
The ACP has forecast that oil production in Colombia could fall by 100,000 barrels a day if Brent prices drop below $25 a barrel. Brent crude futures on Wednesday settled at $22.54 a barrel.
The financing option is not conditional on transporting a minimum volume of oil or on oil prices, Cenit said.
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