VZCZCXYZ0009
RR RUEHWEB

DE RUEHBO #7088 2751426
ZNR UUUUU ZZH
R 021426Z OCT 07
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 9219
INFO RUEHBR/AMEMBASSY BRASILIA 7772
RUEHCV/AMEMBASSY CARACAS 9356
RUEHPE/AMEMBASSY LIMA 5445
RUEHZP/AMEMBASSY PANAMA 0668
RUEHQT/AMEMBASSY QUITO 6043
RHMFIUU/DEPT OF ENERGY WASHINGTON DC

UNCLAS BOGOTA 007088 
 
SIPDIS 
 
SIPDIS 
 
WHA/EPSC FOR FCORNEILLE; EEB/ESC FOR MMCMANUS 
 
E.O. 12958: N/A 
TAGS: ENRG ECON EINV EFIN CO
SUBJECT: ECOPETROL PARTIAL PRIVATIZATION RESOUNDING SUCCESS 
 
REF: BOGOTA 6862 
 
¶1. (U) SUMMARY: On September 25, Colombia's state-owned 
hydrocarbons company Ecopetrol completed the first round of 
its partial privatization, successfully selling a 10.1 
percent stake to a mix of Colombian companies and private 
citizens.  The offering, which raised USD 3.3 billion in new 
funds for Ecopetrol, significantly exceeded goals for the 
total number of participants in the sale (469,290) and 
average number of shares purchased per participant (six). 
The sale, the largest privatization offering in Latin America 
this year, builds on the highly successful September 18 
auction of nine new offshore exploration blocks (reftel) and 
underscores the growing confidence in Colombia's hydrocarbon 
sector. END SUMMARY. 
 
Breaking Records 
---------------- 
 
¶2. (U) The GOC launched the first-ever public offering of 
Ecopetrol shares on August 27 with a goal of attracting 
250,000 new shareholders.  Attracted by the high price of oil 
and the chance of owning a piece of Colombia's biggest 
company, 469,290 Colombians submitted purchase requests. 
Shares were bundled in 1.2 million Colombian peso (USD 600) 
packets, with bidders purchasing an average of six packets 
each.  Colombian pension funds purchased approximately 
one-third of the shares, while other major buyers included 
Bancolombia, Banco Davivienda, and Fenalco.  Due to the 
greater than expected demand for shares, the GOC is 
considering prorating the largest share purchases to ensure 
that all 469,290 purchase requests receive at least one 
share.  The sale generated more than USD 3.3 billion in new 
capital for Ecopetrol and exceeded the GOC's goal for the 
first round by USD 1 billion. 
 
More Investor Confidence and More Investors Period 
--------------------------------------------- ----- 
 
¶3. (SBU) Jorge Londono, President of Bancolombia, now the 
largest single private stakeholder in Ecopetrol with a 1.7 
percent stake, told Econoffs September 26 that the highly 
successful Ecopetrol sale will bolster investor confidence 
throughout Colombia and encourage the GOC to move forward 
with additional privatizations.  National Association of 
Financial Institutions (ANIF) President Sergio Clavijo echoed 
the sentiment adding that the inflow of private capital will 
help improve transparency and accountability in Ecopetrol. 
Both praised the "democratic" handling of the privatization 
citing the fact that Colombians from every department 
purchased shares and grocery store outlets sold 15 percent of 
the total shares. 
 
The Second Round and Beyond 
--------------------------- 
 
¶4. (U) GOP officials, boosted by the success of the first 
round, are now confident that they will complete the partial 
privatization in a second round offer by the end of 2007. 
The GOC expects to adjudicate the first-round share sales by 
early November. The company's 20 largest private stakeholders 
will then elect one representative to the board of directors 
before scheduling the second round of the privatization. 
Although details on the structuring of the second round are 
not final, the GOC plans to open it to international 
investors and will not offer short-term financing to 
Colombian citizens to purchase shares as in the first round. 
The GOC aims to list Ecopetrol on the New York Stock Exchange 
by August 2008. 
 
¶5. (U) Ecopetrol, which has suffered from a lack of 
investment capital for decades, has already begun to revise 
upward its near-term plans for expanded exploration and 
investment under the privatization process.  The company 
plans to use its new funds to pursue a combination of 
offshore exploration in Colombian waters and international 
joint venture opportunities around the region. 
Brownfield