Colombia sets ceasefire deadline, oil pipeline hit

OREANDA-NEWS. October 06, 2016. Tensions are resurfacing in Colombia as the government scrambles to start renegotiating the terms of a peace agreement with the main rebel group Farc.

A narrow majority of voters stunned the nation by rejecting the accord in a 2 October referendum.

The Defense Ministry said yesterday that a bilateral ceasefire will expire on 31 October for reasons of "operational and legal security" but added that the ceasefire could be extended.

Amid the political turmoil, Colombia?s military accused the country?s second largest rebel group ELN of bombing a crude pipeline. The ELN was not a party to the four years of peace negotiations with the Farc, but the government had been hoping to turn informal talks with the ELN into a formal peace process once the Farc deal was nailed down.

The fresh attack took place yesterday on state-controlled Ecopetrol's 220,000 b/d Ca?o Limon-Cove?as oil pipeline in Arauquita municipality, Arauca province in eastern Colombia near the Venezuelan border.

Suspension of the line also shuts down the 120,000 b/d Bicentenario pipeline, which feeds Llanos crude into the Cove?as-bound line.

The ELN has a strong presence in Arauca and Norte de Santander province, where US Occidental and Ecopetrol operate and depend on the pipeline network.

ELN had declared a halt to military offensives for the period 30 September – 5 October in the interest of security for plebiscite voters.

President Juan Manuel Santos is meeting today for the first time in roughly six years with former president and hawkish political adversary Alvaro Uribe, the leading critic of the aborted peace deal. Former president Andr?s Pastrana, whose administration tried and failed to make peace with the Farc in 1999-2002, will also attend the Santos-Uribe meeting.

The uncertainty has thrown the country onto an uncharted course as the commodity-based economy stutters. Oil companies had been hoping the peace agreement would improve operating conditions and reduce rebel attacks on infrastructure such as pipelines.

Some producers have said they could expand exploration and production in zones historically inaccessible because of a rebel presence.

Bogota is under pressure to find more crude reserves, which stood at just over 2bn bl at the end of 2015, equivalent to a reserves-to-production ratio of just 5.5 years.

Senator Uribe and his political party Centro Democratic, the main force behind the referendum?s winning "no" camp, say the peace terms negotiated by the government are too soft on rebel leaders and offered them too much political participation. The Uribe camp also wants to scale back a proposed land reform.

The Farc reacted negatively to the government?s meeting with the former presidents.

"It's true that the country is crossing through into the grey, a risky zone, a dangerous limbo, but it will only be worse if we put peace in the hands of Uribe and Pastrana," said chief Farc negotiator Ivan Marquez.

The political crisis is now spurring questions over whether the government will be able to pass a sweeping tax reform by the end of the year.

The Finance Ministry says it still plans to submit a tax reform proposal to the congress by next week as scheduled.

The reform looks to broaden Colombia's tax base and simplify the tax code.

Oil and gas companies have been lobbying for a lower government take, part of a series of reforms oil chamber ACP says is critical for restoring competitiveness to the sector and reviving investment.