June 20, 2014 / 5:19 PM / 4 years ago

Oil sector is Colombia's biggest economic concern -finance minister

BOGOTA, June 20 (Reuters) - Rebel attacks on infrastructure and burdensome red tape are making Colombia’s one million barrel a day oil sector the Andean nation’s biggest economic concern, Finance Minister Mauricio Cardenas said on Friday.

Average output so far this year has slipped to 981,000 bpd from 1,006,000 bpd in 2013 mainly because of attacks on pipelines by leftist rebels, one of which kept a major pipeline shut for two months.

Cardenas told local radio that the long waits faced by oil companies to obtain the permits necessary to start projects have also constricted production growth, which is leveling off after almost doubling since 2007.

“We cannot allow oil activity to slow down. I think it’s the big focus now because if we don’t keep up this pace and oil activity slows for whatever reason ... this will affect all Colombians,” he said.

Regular bomb attacks by leftist FARC and ELN guerrillas normally shut stretches of the country’s pipelines down for several days while repairs are carried out. There were 259 such explosions in 2013, the highest in a decade, Colombia’s Petroleum Association says.

Economic analysts have voiced caution over Colombia’s heavy dependence on oil exports, which account for about 40 percent of export revenue. Current output also makes it a struggle for the country to raise its own oil reserves beyond a fairly tight seven years.

Shares in state-owned oil producer Ecopetrol, which produces about two thirds of the country’s crude, have fallen about 12 percent over the past year. The next largest producer is Canada’s Pacific Rubiales.

President Juan Manuel Santos, who was re-elected on Sunday, recognized during his campaign the need to streamline the government’s management of the oil sector so that planned private investments can be turned into productive projects more quickly.

A 2011 reform slashed the share of royalties distributed to communities living closest to oil and mining projects, spurring resistance to extractive activity by residents who say they will suffer the effects of pollution while receiving negligible benefits.

Despite Cardenas’s caution, Colombia’s economy is growing at a fast pace. In the first quarter, it grew by 6.4 percent from the same period a year earlier, the fastest first-quarter growth since 2007. (Reporting by Nelson Bocanegra; Additional reporting and writing by Peter Murphy; Editing by Peter Galloway)

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