Colombia oil industry threatened by local opposition: group

BOGOTA (Reuters) - Colombia’s oil industry is threatened by a growing number of public referendums that seek to ban crude production, the country’s oil association said on Monday, as the mining sector faced similar votes.

The warning from the Colombian Petroleum Association (ACP), which represents private producers in the Andean country, came one day after residents of Cumaral municipality in Meta province voted by a large majority to ban crude exploration, drilling and production.

Cumaral’s vote was the first public referendum on banning oil exploration, but another 20 are scheduled, which could increase legal uncertainty and lead to the delay or cancellation of millions of dollars in investments key to averting a fall in reserves, ACP head Franciso Jose Lloreda said.

“Legal uncertainty will lead to a nosedive for exploration and production activity in Colombia. There won’t be investment or exploration if a wave of public votes continues,” Lloreda said.

Mansarovar Energy, a joint venture between India’s ONGC-Videsh and China’s Sinopec, has a project in Cumaral.

“Mansarovar Energy hopes that with the help of the national government we can rapidly define clear rules for companies and investors, to solve the legal and regulatory uncertainty that the energy sector find itself in,” the company said in a statement, adding it would hold meetings with the government to decide its next steps.

The mining industry has already been hit by similar referendums. South Africa’s AngloGold Ashanti announced in April it would halt all exploration work at its $2 billion La Colosa project in Tolima province, after locals backed a proposal to ban mining over water quality fears.

The government says it will seek congressional approval to harmonize national and local mining laws in an attempt to head off investor worries about the mining votes.

Oil companies operating in Colombia announced in March that they would double their investment to as much as $5 billion to maintain production levels amid stable prices. Lloreda said uncertainty over the votes could lead some to reevaluate their investments.

Colombian output has decreased due to the global fall in crude prices, as companies delayed exploration and lowered production. Average output was down 12 percent year-on-year in 2016 to 885,000 barrels per day.

Reporting by Luis Jaime Acosta; Writing by Julia Symmes Cobb; Editing by Andrew Hay