Ecopetrol importing spot crude for new refinery

OREANDA-NEWS. April 13, 2016. Colombia's state-controlled Ecopetrol is buying crude on the international spot market to round out the slate for its new 165,000 b/d Cartagena refinery (Reficar).

The company is currently importing 16,000-30,000 b/d before ramping up to a target average of 50,000 b/d by May or June when the refinery reaches full capacity, company officials say.

"As we expected, in order to compliment the local crude diet and maximize margins, the Cartagena refinery has been importing crude since it started up at the end of 2015," Ecopetrol told Argus. Ecopetrol is sourcing from "different regions, such as Africa and South America."

The company is looking for crude of 18-24 API quality with less than 2pc sulfur to compliment a base slate of medium and heavy Castilla, Magdalena and Vasconia Norte crude grades.

Foreign crude supply could decrease after July 2016, when Ecopetrol plans to take over operation of the 160,000 b/d Rubiales field that is currently controlled by financially struggling Canadian independent Pacific Exploration and Production.

An undetermined percentage of the field's production will be allocated to Reficar. Pacific E&P usually exports around 3mn bl or more of crude per month from Rubiales, so Ecopetrol?s absorption of some of the Rubiales flow could support spot crude prices.

"We're in an exploratory phase right now, learning the market and trying to figure out which crudes work well together with our base slate," a company official said.

Another company official had told Argus in September last year that an incoming shipment of 950,000 bl of Nigerian Bonny Light crude would likely be a one-time deal with the goal of covering capacity during the refinery start-up.

The imports coincide with a decline in Colombia?s crude production, with around three quarters of oil rigs standing idle because of the oil price slump, according to Colombian oil services chamber Campetrol.

Output sank by 7pc in February to 955,000 b/d compared with the same month of 2015, government data shows.

Reficar is scheduled to be fully operational by the middle of this year, taking the place of a decommissioned 78,000 b/d refinery.