Colombia Rebel Group Wages Oil Pipeline War as Another Disarms

(Bloomberg) -- Colombia's smaller rebel group has unleashed a wave of attacks on the country's No. 2 oil pipeline, a show of strength amid peace talks that's creating a headache for companies including Ecopetrol SA and Occidental Petroleum Corp.

There have been 17 attacks this year on the Cano Limon pipeline in eastern Colombia where the National Liberation Army, or ELN by its Spanish initials, is highly active, compared to seven attacks in the first two months of last year, according to state-controlled Ecopetrol. That's forcing some oil companies to store crude in tanks, rather than transport it to the Caribbean port of Covenas from where it's shipped to buyers.

Pumping through the pipeline has been halted since Feb. 15, forcing Ecopetrol to declare force majeure on certain exports, according to people familiar with the situation. Drillers may have to halt production at fields in the area if the pipeline isn't fixed soon as storage space runs out, according to Humberto Alvarez of the USO oil workers union.

ELN rebels initiated peace talks with the Colombian government on Feb. 7, following in the footsteps of the larger Revolutionary Armed Forces of Colombia, or FARC, which finally reached a peace agreement late-2016 after four years of torturous negotiations.

“Peace is very important to the sector,” Ecopetrol Chief Executive Officer Juan Carlos Echeverry said Feb. 24. “We're asking the ELN to stop bombing the pipelines that transport oil belonging to all Colombians.”

Both Marxist rebel groups were born in the 1960s amid a fierce struggle for land rights in the Andean nation. The United Nations starts its verification of FARC disarmament Wednesday, a process that must finish by May 29 under the terms of the peace deal.

To contact the reporter on this story: Andrew Willis in Bogota at awillis21@bloomberg.net.

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Steven Frank