April 30, 2020 / 2:07 PM / 24 days ago

Colombia pipeline financing will increase costs later in 2020 - producers group

BOGOTA, April 30 (Reuters) - An offer by Ecopetrol pipeline subsidiary Cenit to let oil producers take financing on 50% of transportation tariffs for two months will only lead to higher costs later in 2020, the private producers association said on Thursday.

Cenit, which is a subsidiary of majority state-owned company Ecopetrol, said on Wednesday it will offer oil producers financing to allow them to cut their pipeline tariffs in May and June by 50% before paying the remaining 50% beginning in September.

“This would only increase transportation costs because after two months you would have to pay the same rate with interest,” the Colombian Petroleum Association (ACP) said in a statement.

Private oil companies in the Andean country have been hit hard by falling prices amid a global crisis caused by the spread of the novel coronavirus, prompting the ACP to call for urgent intervention regarding “excessively high” pipeline costs.

The ACP previously forecast that oil production in Colombia could fall by 100,000 barrels per day (bpd) if Brent crude prices drop below $25 a barrel.

Oil production has already fallen by around 52,000 bpd in Colombia, the ACP said, adding that it expects a further 30,000 bpd to be cut from national output at the start of next month. (Reporting by Oliver Griffin Editing by Paul Simao)

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