Newspaper article THE JOURNAL RECORD

Colombia Begins Economic Oil Harvest

Newspaper article THE JOURNAL RECORD

Colombia Begins Economic Oil Harvest

Article excerpt

BOGOTA, Colombia _ Oil has begun to flow from a large field with reserves estimated by British Petroleum at 1.5 billion barrels, and production is being accompanied by a lively debate in Colombia over what could be the nation's biggest economic bonanza ever.

Predictions vary from bright forecasts of prosperity to doomsday predictions of misspent funds, runaway inflation, and wasted opportunities.

By 2000, Colombia could be exporting 500,000 barrels of crude oil a day from the field, at Cusiana, about 100 miles east of Bogota. Current crude oil exports run about 200,000 barrels daily. The operating company is the British Petroleum Co., which has also surveyed a nearby field at Cupiagua, whose reserves BP estimates at 500 million barrels.

The discovery has been described by BP and others as the largest in recent years in the Western Hemisphere; the last big find was the 10-billion-barrel reserve at Prudhoe Bay, Alaska, in the 1970s.

The field is being developed at a cost of $7 billion by BP, the Triton Energy Corp., of Dallas (each of which have a 19 percent interest), and the Total group of France (which holds 12 percent). The state-owned oil company, Ecopetrol, holds 50 percent.

Earnings from Cusiana, which could start to pour in by 1996, could reach $2.5 billion a year by 2000, and finally total $14 billion.

One troubling unknown is the ongoing battle between guerrilla forces and the government. The rebels have been terrorizing several rural areas for a decade, including the region around the new oil finds, and despite on-and-off peace talks, no letup is in sight.

Many in the government have compared Cusiana to winning a lottery: If the money is well spent, it will create prosperity; if not, the winner will eventually be poorer than at the start.

"This country is used to regarding bonanzas with terror," said Guillermo Fernandez de Soto, president of the Bogota Chamber of Commerce, which represents about 25 percent of the country's businesses. "This makes us unable to take full advantage of them."

Colombia's monetary policies have been conservative compared with the rest of Latin America. …

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