Oil price drop stalls Ecopetrol refinery upgrade

OREANDA-NEWS. Colombian state-controlled Ecopetrol's Barrancabermeja refinery upgrade is on hold because of budget cutbacks tied to the decline in oil prices.

"The project is being analyzed by the company's board of directors," Ecopetrol says.

Officials close to the project tell Argus that Ecopetrol recently notified Barrancabermeja municipality that it has not renewed some contracts associated with the project while it re-evaluates its budget.

The 250,000 b/d refinery in Santander province is currently processing around 225,000 b/d. The facility produces diesel, jet fuel, gasoline, fuel oil, asphalt, petroleum coke and petrochemicals. The upgrade is aimed at boosting heavy sour crude processing, and yielding more gasoline, diesel, asphalt and other products.

If the refinery is not upgraded, Ecopetrol says throughput will drop to 190,000 b/d because Colombia?s crude production is growing heavier.

Barrancabermeja produces around 93pc of the country's asphalt, with the balance coming from its small Apiay refinery.

The upgrade is supposed to boost asphalt production capacity to 75,000 tons per month from a current 55,000 t per month, an increase that is key to ensuring domestic supplies for a massive government road-building program.

Ecopetrol says it has enough capacity to meet an expected 8.6pc increase in demand this year to 42,500 t per month. But if the upgrade remains stalled, market participants say Colombia will need to import.

The \$3.4bn upgrade had been scheduled to be completed in 2018, according to Ecopetrol.

Separately, Ecopetrol plans to complete the \$4.85bn Cartagena refinery (Reficar) upgrade in June.

The Reficar upgrade will raise capacity from 78,000 b/d to 165,000 b/d by adding 16 new refining and processing units that will also boost heavy crude processing.