Peace talks, border row rattle Colombia oil sector

OREANDA-NEWS. September 24, 2015. Oil producers in Colombia are closely watching today?s progress in Cuba toward ending Colombia?s 50-year domestic armed conflict, and separate talks in Caracas aimed at resolving a border dispute with Venezuela that erupted last month.

"Peace is close," Colombian president Juan Manuel Santos said today before a stop in Havana, Cuba where the government has been negotiated a peace deal with the main rebel group Farc since late 2012.

"Integral System of Truth, Justice, Reparation and Non Repetition about to be agreed," Farc negotiator Ivan Marquez said today, referring to the fourth agreement in a six-point agenda to reach a final peace agreement.

A final peace deal, which could be signed before years end, should diminish chronic pipeline bombings and other industry attacks that have thwarted Colombian oil production and investment. But attacks by the separate ELN rebel group and splinter groups that thrive off extortion and drug trafficking are likely to persist.

Farc leader Rodrigo Londo, alias Timole?n Jim?nez, is also in Cuba today. Londo and other Farc rebels are believed to hide out in the border region of Colombia?s Norte de Santander province, the epicenter of a diplomatic stand-off between Santos and Venezuelan president Nicolas Maduro. Colombian rebels have been known to secure safe haven in ideologically aligned Venezuela.

Maduro began ordering a series of border closures on 19 August with the official objective of stamping out fuel and food smuggling and paramilitary violence. Thousands of Colombians on the Venezuelan side have been forced to leave.

Critics say the border closure and the government?s suspension of constitutional guarantees in border towns are aimed at tamping down the political opposition ahead of 6 December legislative elections that are widely seen as a referendum on Maduro?s rule. Venezuela?s oil-based economy is forecast to contract by at least 7pc in 2015.

Colombia has boosted gasoline and diesel supply to border regions to compensate for the loss of cheap Venezuelan fuel that was regularly smuggled into eastern Colombian towns like Cucuta. At the same time, the government has helped to reroute Colombian coal shipments that had been regularly exported through western Venezuela. The emergency measures have cost the Colombian government at a time when its commodity export-based economy is already slowing down.

Caracas says the border closure has expanded its own fuel supplies and interrupted contraband gangs.

Maduro and Santos met on 21 September in Quito to try to diffuse the conflict, but most of the border remains closed. Maduro said last night that the border in remote Amazonas state, the remaining part of the frontier with Colombia that had still been opened, would also be shut.

A high-level Colombian delegation including Colombian energy and mines minister Tomas Gonzalez is in Caracas today for further border talks. The Venezuelan side includes Venezuelan state-owned oil company PdV chief executive and energy minister Eulogio del Pino.

Venezuela and Chile are overseeing the Havana peace process between the Colombian government and the Farc. Norway and Cuba are the talks' guarantors.

Santos has raised expectations that a peace deal with the Farc would usher in an economic peace dividend.

The Colombian government and the Farc have so far reached preliminary agreements on three issues: land reform, illicit drugs, and political participation for rebels. The last two items on the agenda before implementation of an eventual accord are transitional justice, which includes the rights of victims, and ending the conflict, including demobilization of rebels and a bilateral cease-fire.

The Farc declared a unilateral cease-fire on 20 July.

The ELN is in exploratory talks with Santos' government and could begin formal talks with the Colombian government in Ecuador soon.