Colombia gets crude awakening as oil price slump hits economy

Tue Mar 10, 2015 12:36pm EDT
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By Helen Murphy and Nelson Bocanegra

PUERTO GAITAN, Colombia, March 10 (Reuters) - As fewer and fewer oil trucks roll through the streets of Puerto Gaitan, Mario Romero crunches the numbers. Unless crude prices pick up and Colombia's oil firms invest again in exploration and production, his hauling company will soon go bust.

Just six months ago, Transportes Paraiso Regional had 320 drivers moving oil, machinery and personnel around Colombia's booming energy industry. Now, his 16 remaining drivers are looking for jobs.

"I told my staff we can hold out two months, and if things don't improve, I'll let them go," said Romero, 49, in Puerto Gaitan, the nearest town to oilfields operated by Pacific Rubiales and other producers.

Romero is far from alone. In a town until recently awash with cash to pave roads and host pop stars like Marc Anthony and Daddy Yankee, many businesses are now shuttered.

The mayor's office says Puerto Gaitan, home to 45,000 people and set along the lazy Manacacias River in central Colombia, will see oil royalties fall by about two-thirds this year.

The entire oil industry chain - from drillers and engineers to geologists and hotels - is in trouble, threatening consumer spending, tax revenue and broader economic growth.

Colombia is not a major producer - it has less than seven years of reserves - but oil is its largest export and typically accounts for about 20 percent of government revenue.

Security gains against Marxist rebel groups drove a decade-long boom as areas previously too dangerous to operate in were opened up.   Continued...