US embassy cable - 05BOGOTA2304

C O N F I D E N T I A L SECTION 01 OF 02 BOGOTA 002304 
 
SIPDIS 
 
E.O. 12958: DECL: 03/08/2015 
TAGS: ENRG, EPET, MCAP, MOPS, CO 
SUBJECT: OCCIDENTAL PETROLEUM: REDUCTION IN OIL EXPORTS DUE 
TO  ATTACKS ON THE CANO LIMON PIPELINE 
 
 
Classified By: Ambassador William B. Wood, Reasons 1.4 b and d 
 
1.  (C) Summary:  The Cano Limon pipeline has been hit eight 
times this year, generating losses of over USD 25 million 
(more than the losses in 2004).  The area attacked has also 
changed, with half the attacks in the Catatumbo region of 
Norte de Santander Department, where repairs are more 
difficult and time consuming. Oxy reps credit the increased 
attacks on increasing narco-terrorist activity in the 
Catatumbo region as narco-terrorist groups are driven out of 
Arauca, where the Infrastructure Security Program (ISP) has 
been successful.  Oxy also credits the release of those 
jailed in large-scale detentions in Arauca for some of the 
the increase in attacks there.  Oxy also believes that the 
deployment of helicopter assets in the ISP would give 
increased coverage to the pipeline and discourage potential 
attacks.  Despite the recent events, Oxy is continuing its 
increased investment in Cano Limon and signing new 
exploration contracts elsewhere in Colombia.  End Summary. 
 
2.  (C)  The Ambassador hosted Occidental Petroleum 
Colombia's President Guimer Dominguez and Oxy's Government 
Affairs chief, Jorge Camacho, to discuss the current 
situation on the Cano Limon pipeline.  The DCM and ECONCOUNS 
also attended.  Dominguez raised Oxy's concern that there had 
been an increase in attacks on the pipeline and electrical 
infrastructure that had caused Oxy to shut down production 
this year, generating a USD 25 million loss.  The pipeline 
was hit eight times in the first two months of 2005, compared 
with 17 attacks in all of 2004.  The electrical system was 
hit four times in two months, compared to ten times in 2004 
(and all four attempts have been near the Cano Limon field). 
Unlike previous years, where pipeline attacks in Arauca were 
the vast majority,  the attacks were now evenly split between 
two neighboring departments, Arauca and Norte de Santander. 
 
3.  (C) Dominguez expressed particular concern about the new 
attacks in the Catatumbo region of Norte de Santander 
department, as the terrain was mountainous and access far 
more difficult.  The 5th brigade (that covers the area) has 
not received training under the Infrastructure Security 
Program.  In addition, judicial programs in place in Arauca 
that had helped drive down the level of attacks from 170 in 
2001 to 17 in 2004 were also not in place.  The difficult 
terrain and security situation mean that it takes longer to 
secure the area and make repairs, translating into more lost 
oil production.  Dominguez also highlighted the fact that 
there was increased narco-terrorist activity in the area, and 
cited local reports of dramatic increases in coca production 
(Embassy estimates do not bear those out, but post will do 
reconnaissance flights over the area). 
 
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Oxy Seeks Judicial Solutions 
---------------------------- 
 
4.  (C) Dominguez said the GOC inter-agency effort in Arauca 
produced 600 arrests in the past two years and several dozen 
successful prosecutions and the release of some 300 
detainees.  According to Oxy's sources, many of those freed 
returned to attack the pipeline, especially in Arauca.  The 
attacks had also spread to the electrical grid supplying 
Oxy's Cano Limon field, as the towers were less protected 
than the pipeline.  Oxy explained that the tower attacks hurt 
production as Oxy depended on the local power grid for a 
third of the power needed to run the pumps in the wells. 
 
5.  (C)  Dominguez thought that it was possible to counter 
the increase in attacks in Norte de Santander by applying the 
successful lessons learned in Arauca under the ISP. 
Dominguez explained that the pipeline attacks were usually 
done by small groups, so the use of small military patrols 
all along the pipeline and not just in Arauca would have an 
important deterrent affect.  Dominguez also felt that the 
inter-agency effort in Arauca, especially the use of 
intelligence packages by judicial authorities, would also 
dramatically increase the effectiveness of the program in 
Norte de Santander.  Dominguez also suggested that any cases 
developed should be heard by judges from other regions of the 
country to lessen the judges' potential security concerns. 
Finally, Dominguez stated that the prompt delivery of the ten 
helicopters under the ISP was very important.  The rapid 
reaction and increased patrolling capability these airframes 
provide would give the military much needed abilities to 
patrol the entire pipeline.  Dominguez told the Ambassador 
that he had discussed these concerns with the GOC's Defense 
and Mines and Energy Ministers and both were receptive and 
helpful. 
 
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Signs of Confidence 
------------------- 
 
6.  (C)  Oxy is concerned about the increased attacks, but 
the company feels that with rapid action the problem can be 
contained.  As a result, Oxy is moving forward with plans to 
invest an additional USD 100 million in new technology to 
help recover remaining reserves in Cano Limon and has also 
signed new exploratory contracts that could potentially 
involve an additional USD 500 million in investments in 
Colombia. 
WOOD