VZCZCXYZ0000
RR RUEHWEB

DE RUEHBO #0019 0071912
ZNR UUUUU ZZH
R 071912Z JAN 09
FM AMEMBASSY BOGOTA
TO RUEHC/SECSTATE WASHDC 6365
INFO RUEHBR/AMEMBASSY BRASILIA 8582
RUEHZP/AMEMBASSY PANAMA 2830
RUEHLP/AMEMBASSY LA PAZ JAN LIMA 6866
RUEHCV/AMEMBASSY CARACAS 1477
RUEHQT/AMEMBASSY QUITO 7562
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS BOGOTA 000019 
 
SIPDIS 
SENSITIVE 
 
WHA/EPSC FOR FCORNIELLE; EEB/ESC FOR MMCMANUS; DOE FOR 
LEINSTEIN AND GWARD; TREASURY FOR AJEWELL 
 
E.O. 12958: N/A 
TAGS: ENRG ECON EFIN PGOV PINR CO
SUBJECT: TURMOIL FROM PYRAMID SCHEME CURBS SOUTHERN OIL 
PRODUCTION 
 
REF: 08 BOGOTA 4263 
 
¶1. (SBU) SUMMARY: Protests and strikes over the collapse of 
several pyramid schemes and the government's closure of the 
largest reputed scheme (reftel) have cut production of some 
oil producers in southern Colombia over 90 percent since 
November 2008.  While the cuts did not prevent Colombia's 
overall oil production from reaching a six-year high of 
624,000 barrels per day (bpd) according to the National 
Hydrocarbons Agency (ANH), they did stall several small-scale 
operations in Putumayo Department.  With protests tapering 
off, national hydrocarbons company Ecopetrol announced 
January 6 it would re-open its Orito pipeline which has 
remained closed since November.  Producers such as 
U.S.-incorporated Gran Tierra plan to resume normal 
operations as soon as possible.  END SUMMARY. 
 
¶2. (SBU) Following the collapse and government-imposed 
closure of several pyramid schemes in November, thousands of 
defrauded Colombians took to the streets to protest the GOC's 
failure to prevent the scams that are estimated to have 
swindled more than 500,000 Colombians out of as much USD 1 
billion in savings.  A majority of victims are reported to 
live in Colombian's southern departments, where two of the 
largest pyramid companies, DMG and DFRE, originated.  The 
protests turned violent in mid-November with at least two 
reported deaths and numerous reports of property damage in 
Putumayo and Narino.  As a result of the protests and a 
general strike by organized victims, economic activity in 
many areas of Putumayo, Narino, Cauca, and Huila departments 
ground to a halt. 
 
¶3. (SBU) As a precaution to protect its oil transshipment 
facilities in Putumayo, Ecopetrol temporarily closed its 
Orito pipeline in November which ships oil from fields in 
Colombia's southern interior to Tumaco on the Pacific Coast. 
Alvaro Vargas, Ecopetrol's Vice President for Strategy and 
Growth, told us January 7 that the company has assessed that 
the civil situation has improved enough to resume shipments 
through the pipeline, allowing Gran Tierra, Petrominerales 
and other small producers to resume production. 
 
¶4. (SBU) According to Edgar Dyes, Gran Tierra country 
manager, the pyramid scheme-induced disturbances and pipeline 
closure has brought the company's 13,000 bpd production to a 
virtual standstill.  Dyes said the conditions had similarly 
affected several other small producers in the region, but 
speculated that some had resorted to high-cost shipment by 
trucks to maintain at least a reduced level of production. 
Another company operating in the area, Canada-based 
Petrominerales, says it had to cut overall production 20 
percent as a result of the unrest.  Dyes told us that the 
opening of the pipeline is a key step to bringing production 
back on-line, but noted that the company continues to receive 
anonymous threats from the populace due to its close 
coordination with local authorities and the persistent 
anti-government sentiment from the pyramid fallout. 
Nevertheless, Dyes said the company has bolstered security 
and hopes to have production moving within two weeks. 
 
¶5. (SBU) COMMENT: Despite the disruptions, Colombia still 
managed to raise its national oil production daily average to 
624,000 bpd in November compared to 565,000 bpd during the 
same period in 2007 (Note: December production figures not 
yet tabulated.  End Note).  Unfortunately, the production 
falloff in southern Colombia coincided with the decline in 
world oil prices and put added pressure on Colombia's already 
strained royalty revenues.  While the re-opening of the Orito 
pipeline is a welcome step and a concrete reflection of the 
gradually diminishing social uproar caused by the pyramid 
schemes, the two-month reduction in oil production represents 
one further cost to what has become one of Colombia's most 
expensive and disruptive scandals ever. 
NICHOLS