Ecopetrol studies revival of old refinery units
OREANDA-NEWS. Colombia's state-controlled oil company Ecopetrol is studying the viability of integrating its new 165,000 b/d Cartagena refinery with older, decommissioned facilities.
Ecopetrol's Cartagena refinery (Reficar) is conducting a general study to evaluate how it could connect the new refinery and unspecified adjacent units of the decommissioned 78,000 b/d refinery, a project that could boost capacity above 200,000 b/d, Reficar chief executive Oscar Reyes said today.
Reficar, which is progressively turning on new units, is currently processing around 110,000 b/d of crude, and is next slated to launch petroleum coke and sulfur production.
Ecopetrol plans to have the refinery fully operational by next month.
The new refinery will allow Colombia to reduce gasoline and diesel imports. The finance ministry has said the refinery will contribute 0.6pc to Colombia's projected 3pc GDP growth in 2016.
Ecopetrol is currently in settlement talks with Reficar?s lead engineering firm CBI because of cost overruns that have sparked several official investigations.
"We hope to arrive at a settlement, I don't think either side wants to take this to arbitration, which would take years in an international court, where you'd be spending a lot of money," said Reyes.
Ecopetrol contracted Houston-based CBI in November 2009 to build the new refinery after reaching a March 2009 deal to acquire Glencore's 51pc controlling stake in the old facility for around $550mn.
Glencore had controlled Reficar since 2007. Ecopetrol held 49pc.
Expenditures on the new refinery totaled around $8bn as of September 2015, compared to a $4bn budget set in October 2009, according to a controller?s office report.
Ecopetrol chief executive Juan Carlos Echeverry and finance minister Mauricio C?rdenas responded to the cost overruns, saying some added costs were "justified," including damages and delays associated with 2012 flooding and labor-related delays in 2012-13.
C?rdenas said several "unjustified" management decisions led to excessive cost overruns, including the limited refinery-building experience of Glencore and CBI, and poor planning decisions, including the decision to set a budget with only 20pc of the engineering and design completed.
CBI did not respond to requests for comment.
Reficar has around $5bn in debt due by 2028, including around $3bn from the World Bank and $2bn from the Ecopetrol Group, Reyes said.