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Ecopetrol to Increase Diesel Imports Amid Shift to Cleaner Fuel

Via Bloomberg Business Week, By Lucia Kassai March 13, 2014

Ecopetrol SA (ECOPETL), Colombia’s state-controlled oil producer, may increase diesel imports from the U.S. this year as the country shifts to cleaner-burning fuel.

Diesel imports will rise 7.4 percent this year from about 55,000 barrels a day last year, according to Colombian government data compiled by consulting firm Frost & Sullivan Inc. The U.S. accounted for 79 percent of all fuel shipments to Colombia in 2013, the data show.

Colombia reduced sulfur limits on diesel used by trucks to no more than 50 parts per million from 500 parts, starting Jan. 1. The more stringent regulations and increasing demand are tightening supply as the country’s second-largest refinery produces less fuel while undergoing work to double its capacity.

“Given growth in fuel demand, they do have difficulties in supplying the domestic market and will keep increasing imports this year,” Hernan Cavarra, an analyst at Frost & Sullivan, said in a phone interview from Buenos Aires.

Colombia’s fuel demand is increasing as the country is forecast to expand by 4.5 percent, more than the 2.7 percent growth for the U.S. economy, data compiled by Bloomberg show. Ecopetrol is seeking to buy 415,000 barrels of diesel for delivery in April.

The Cartagena refinery ran at 34 percent of capacity in the fourth quarter, down from 86 percent a year ago, due to work to double its capacity to 165,000 barrels a day, the Bogota-based company said Feb. 25. The expansion should be completed by the first quarter of next year, Chief Executive Officer Javier Gutierrez said Feb. 26.

“We’re importing low sulfur diesel to meet the environmental regulation and this should go on until we finish expansion work at the Cartagena refinery,” Ecopetrol said in an e-mailed statement in response to why diesel imports are increasing.

Last year, Colombia bought 74,000 barrels a day of distillate fuel, including heating oil and diesel, from the U.S., the most in Energy Information Administration data going back to 1993.

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