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Colombian Service Sector Thrives, Sees Heavy Oil as Key to Growth
Oil Daily
By: James Bourne, New York
mm/dd/aaaa: 08/01/2011



Colombia’s oil services sector generated revenues of some $5 billion last year, according to a recent study by local industry association Campetrol.

The group said its 160 members had combined revenues in 2010 of 9.1 trillion Colombian pesos ($5.15 billion) up from 7.9 trillion in 2009. The 128 companies directly involved in oil and gas drilling generated 7.1 trillion pesos, or 82% of the total. The remainder was earned by companies involved in ancillary businesses such as chemical manufacturing, equipment sales and design.

A more detailed study of the Colombian oil services sector, with data up to 2007, was published by the group in June. The sector's revenues in 2007 amounted to 5.1 trillion Colombian pesos and accounted for 1.1% of the nation's gross domestic product (GDP).

That report also found that the revenues of Colombian oil service companies were split 67%-33% between foreign and local firms, despite the fact that just over half (52%) of service firms working in Colombia at the time were locally owned. 

This is largely because foreign firms were on average three times bigger than local ones, the report said. In terms of assets, large service firms accounted for 89% of the sector, medium-sized companies for 10% and small companies for just 1%. 

In 2007 almost 84% of oil service sector revenues in Colombia were generated in just three of the country’s 21 provinces – Santander (44.6%), Meta (21.5%) and Casanare (17.7%). The concentration of hydrocarbon resources in just a few areas of the country has contributed to a proposed reform of the way oil and gas royalties are distributed within Colombia (OD May31'11).

The Campetrol study also found that for each new job created in the oil service sector, 3.3 other jobs are generated in Colombia and that each peso paid to the sector generates 20 pesos for the Colombian economy overall.

Comparing the Colombian oil industry with those of Brazil and Norway, the report concluded that the formation of "clusters", defined as a geographical concentration of economic, social and political players working in an interdependent and articulated way, could improve competitiveness and strengthen the sector.

After conducting two years of workshops, Campetrol identified heavy oil as a key area for the industry and the likely driver of future production growth in Colombia. As a result the association is hosting the first Heavy Oil Latin America Congress in Bogota this week.

“We’re looking to understand, through the experience of service companies, what’s happening in other countries where they see the importance of heavy crude,” Campetrol Chairman Hermes Aguirre told Oil Daily.

Aguirre, Halliburton's top executive in Colombia, said that while Campetrol supports the government's royalty distribution reform “for social reasons,” a less heralded but welcome aspect of the plan is that some of the money will be invested in developing local technology for the oil industry.



Source: Oil Daily (mm/dd/aaaa: 08/01/2011)


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