UPDATE 1-Colombia oilfield move challenges Ecopetrol, Canada's Pacific Rubiales
(Adds shares in Toronto down 13 pct, down 0.53 pct in Bogota, paragraph 5)
BOGOTA, March 16 (Reuters) - A decision by Colombia's state-run Ecopetrol to reclaim control of the Rubiales oil field will imply heavier investment for it to sustain output and raises pressure on Canada's Pacific Rubiales to replace the future loss of nearly half its production, analysts say.
Ecopetrol announced on Friday it would not renew a contract in mid-2016 under which Pacific Rubiales operates the field, putting the Canadian company's 65,000 barrel per day share of output back in Ecopetrol's hands.
Rubiales is the single most valuable asset of the Canadian company whose total output is around 145,000 barrels a day, almost all from projects in Colombia. The company faces a challenge to replace the oil field as low oil prices slash its investment, analysts say.
Pacific Rubiales still has the option of submitting a new proposal to continue operating the field under different terms, Ecopetrol said, without specifying.
Pacific Rubiales' Toronto shares ended 13 percent lower on Monday and Ecopetrol's Bogota shares down 0.53 percent, the first trading session to follow the decision on the oil field.
Research by analyst Morningstar published Friday notes that Pacific Rubiales' Colombian CPE-6 and Rio Arari blocks, with which the company has hoped to reach 120,000 barrels daily output, are producing a meager 1,500 barrels because of weather, security and environmental issues.
"To date, progress to replace the Rubiales Field production has been underwhelming," Morningstar wrote, before the Friday announcement. It also lowered its valuation to C$4 from C$6.
Morningstar questioned whether Pacific Rubiales would propose again to operate Rubiales field, stating it had abandoned development of its STAR technology it was testing to boost recovery levels. Continued...