Ecopetrol Opens Bidding Process for Cartagena Refinery Project

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). According to Ecopetrol´s declarations last week, Colombia’s state-owned petroleum company opened the bidding process for an EPC (engineering, construction, and procurement) contract to modernize and expand its refinery in Cartagena, Columbia near the northern caribbean coast. The bidding was opened to the following pre-qualified companies: Glencore (a Swiss mining and trading company), BP Corporation North America INC, Marubeni (the Japanese engineering company), and Brazil’s Petrobras (NYSE:PBR).

Overall, Ecopetrol will provide the existing infrastructure of the refinery to the highest bidder of the Cratagena refinery project. According to the official document that opens the bidding process, the maximum investment in the project may be up to $1billion. The project foresees the creation of a new company in which Ecopetrol will have a 49% stake and a maximum capital contribution of $250 million. Moreover, the expansion of the Cartagena refinery can be implemented while continuing production within the existing refinery.

After the tender is awarded, the company will negotiate with Ecopetrol and by the beginning of 2007 they will have a clearer picture of the project, as well as how much will be needed for financing. Moreover, the Inter-American development Bank (IDB) and Andean Development Corporation (CAF) have shown great interest in financing this project. There will not be any fixed date for receiving bids until the oil company meets the Colombian government’s requirements related to including the $250 million investment for this refinery project to fit the country’s national budget. Nevertheless, Ecopetrol will meet the four companies on March 9, 2006 to discuss possible deadlines.

The investment in the Cartagena project includes new cracking and hydrotreater units designed to increase the actual processing capacity from 75,000 barrels per day to 140,000 barrels per day of crude oil. According to Ecopetrol´s press release, the selection process for a partner is being used to maximize the value of existing assets and build the new refinery as soon as possible.

Since Ecopetrol´s Cartagena refinery is the second largest refinery in Columbia and currently exports about 42,800 barrels per day representing 18% of Ecopetrol, a significant increase in production would mean a big boost in distribution on the domestic market and exports to the Caribbean and North America.

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