UPDATE 1-Colombia's Ecopetrol raises 2014 budget 11 percent to $10.6 billion

Fri Dec 13, 2013 6:57pm EST

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By Peter Murphy
    BOGOTA, Dec 13 (Reuters) - Colombia's state-run oil company
Ecopetrol, which produces most of the country's one
million barrels per day output, said on Friday it would invest
$10.6 billion in 2014, two thirds of which will be spent on
exploration and production.
    The 11 percent increase in investment over 2013 will help
the country boost tight reserves of crude oil, and will be spent
partly on the drilling of 20 exploratory wells mostly onshore,
geological studies and revamping one of its two main refineries.
    The 2014 investment plan forecasts average production of
770,000 barrels per day of oil equivalent in Colombia, and
819,000 barrels when subsidiaries the company holds a stake in
are included, a summary of its investment plan showed.
    The most recent data available show Ecopetrol and its share
of production in subsidiaries it owns jointly, averaged 791,000
barrels per day in the January to September period of 2013, a
5.4 percent increase from the same period of 2012.
    Downstream investments will include funds for the
modernization of the Barrancabermeja refinery which produces
refined petrochemicals for the domestic market. The budget does
not include any cash for acquisitions the company may make.
    Ecopetrol's wholly-owned projects will receive 61 percent of
the budget while 39 percent will be invested in others it owns a
partial stake in.
    Most of the new exploratory wells will be drilled in the
Andean nation's Llanos Orientales or Eastern Plains, a promising
oil region where the company this week announced 35 million
barrels of proven reserves in an area it has been drilling
together with Toronto-listed Talisman Energy. 
    The previous week it announced proven reserves of 22.4
million barrels in the same region in the Cano Sur Este block it
owns in full. 
    The Bogota-traded company plans to spend $75 billion by 2020
to increase oil and gas production to 1.3 million barrels of oil
equivalent per day (boed). 
    Financing needs for the 2014 budget would depend on oil
prices, Ecopetrol's own cash generation, the pace at which it
makes its investments and whether or not it acquires other
companies during the year. It said it had ample capacity to
borrow and take on more debt with its access to variable and
fixed income markets helped by its 'investment grade' rating.
    Ecopetrol said it was continuing with projects to explore
for and turn productive its non-conventional oil and gas
resources, better known as shale oil and gas.
    Colombia's oil sector has expanded output helped by improved
security gained from a decade-long U.S.-backed military
offensive against the country's guerrilla movements. 
    Nonetheless, the FARC and smaller ELN rebel groups have
stepped up the pace of attacks in the last few months against
oil pipelines that can halt the flow of export crude to ports
for a few days at a time while repairs are carried out.
    Below is a breakdown of Ecopetrol's planned investments in
2014. All figures are given in millions of U.S. dollars.
    
    
                  Ecopetrol   Subsidiaries   Total
 Exploration      928         632            1,560
 Production       4,646       392            5,038
 Non-conventiona  240                        240
 l (shale)                                   
 Transport        0           1,344          1,344
 Refining         339         1,765          2,103
 Other            309         0              309
 Total            6,463       4,132          10,595
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