Colombia, Ecuador to discuss oil production freeze
OREANDA-NEWS. Ecuador's oil minister Carlos Pareja will meet Colombian officials in Bogota today to discuss an initiative to freeze oil production.
Colombia´s interim energy minister María Lorena Gutiérrez and foreign minister María Angela Holguín will meet with Pareja, Gutiérrez told Argus today.
Ecuador´s government is seeking to drum up support among Latin American oil exporters for freezing production at January levels, in anticipation of a 17 April meeting of some Opec and non-Opec producers in Doha.
The region´s oil exporters have lost substantial revenue since oil prices collapsed in mid-2014.
Ecuador is seeking to coordinate an 8 April meeting of regional oil ministers in Quito, after an earlier effort to meet on 11 March failed to generate traction.
A coordinated stance among regional oil exporters would have little practical impact, as regional production is flat or declining.
Non-Opec Colombia produced 955,000 b/d of crude in February, down by 7pc from the same month a year ago and down by 3.1pc from January.
The finance ministry is targeting average crude output of 944,000 b/d in 2016, down from 1.005mn b/d in 2015.
Non-Opec Mexico and Opec member Venezuela have not commented on Ecuador´s plan. Pareja said yesterday he will meet with Mexico´s energy secretary Pedro Joaquín Coldwell in Mexico City after the Bogota meeting.
The production-freeze proposal originated from a meeting in Doha last month between the oil ministers of Opec members Venezuela, Saudi Arabia and Qatar, and non-Opec Russia.
Colombia relies on oil and coal export revenue to fund social programs and is struggling to fund post-conflict spending in the event that the government signs a peace deal with the country´s main rebel group Farc. A 23 March deadline for the signing was not met amid lingering differences.
Beyond declining production levels, government support for a production freeze in Colombia and Mexico could undermine efforts in the two countries to stimulate private-sector upstream investment.
Sub-salt rich Brazil, a significant non-Opec producer and exporter, is not part of Ecuador´s regional initiative. In response to a question from Argus, the Brazilian energy ministry said on 3 March: "Brazil is not a member of Opec, and therefore cannot participate in any decision on Opec production freezing. Under Brazilian law and by contracts, the Brazilian government cannot interfere with the production rate of the contracted companies, and cannot impose production freezes."
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