UPDATE 1-Colombia to repair oil pipeline after deal with indigenous group

Thu May 1, 2014 11:07pm EDT

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(Changes source to energy ministry; adds U'wa quote, detail)

By Peter Murphy

BOGOTA May 1 (Reuters) - A Colombian oil pipeline owned by state-run Ecopetrol will be repaired after the government reached a deal with the U'wa indigenous community who blocked access to a damaged section for more than a month, the Energy Ministry said on Thursday.

The 780-km (485-mile) Cano Limon-Covenas pipeline has been offline since a bomb attack by leftist guerrillas on March 25. Engineers have been unable to access the site due to a blockade by the U'wa who demand the pipeline be re-routed away from their area and that a nearby hydrocarbons project be scrapped.

The Cano Limon and Caricare fields are operated by New York-listed Occidental Petroleum Corp. They produce about 67,000 barrels per day of crude via the pipeline, which has been shut since the explosion.

Ecopetrol was forced to declare force majeure on at least 25 delivery contracts due to the stoppage. The pipeline's total capacity is around 220,000 barrels per day.

The government agreed to suspend for one month the nearby Magallanes gas exploration project to evaluate its environmental impact and also to despatch a team to confirm the boundaries of the U'wa territory, the Energy Ministry said in a statement.

As well as Energy Minister Amylkar Acosta, the meeting was also attended by Interior Minister Aurelio Iragorri Valencia and Ecopetrol Chief Executive Officer Javier Genaro Gutierrez.

Elmer Tegria, an U'wa leader, said the meeting had lasted 11 hours and that those manning the blockade would be contacted early on Friday and ordered to disband.

"It's our hope that the government does what they have committed to," he said. "Let's see."

Energy Minister Amylkar Acosta said on Tuesday that there might have been grounds to declare a state of emergency to deal with the blockade, suggesting the government had considered using armed forces to gain access to the pipe.

The deal will likely come as a relief to President Juan Manuel Santos whose support could have been dented in presidential elections less than four weeks away if he ordered the use of force. He is seeking a second four-year mandate.

Polls show Santos is the front-runner in the election but voting looks set to go to a run-off with no candidate having close to the 50 percent required for a first-round victory.

The month-long closure of a key Colombian oil pipeline following a bomb attack had cut the Andean nation's daily crude output by about 72,000 barrels, or about 7 percent, according to data from state-run oil company Ecopetrol, which owns the duct.

Colombia is Latin American's fourth biggest oil producer with usual production of around 1 million barrels per day, a level the energy minister said would be missed in April due to the pipeline shut down.

Colombia's leftist rebels have been intensifying their attacks on the country's oil pipelines, with 259 attacks last year alone. Oil companies usually manage to repair the damage within a few days and avoid major disruptions.

Colombia's government has been holding peace talks with FARC rebels since late 2012 even as combat between the two sides continues. (Additional reporting by Monica Garcia; Editing by Lisa Shumaker and Joseph Radford)

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