Colombia Oil Pipeline's Construction Delayed By Labor Strife
BOGOTA (Dow Jones)
Workers hired to start building the Bicentenario oil pipeline, which, when completed in late 2012, will be Colombia's largest, have walked off the job due to a salary dispute, a representative for the pipeline company said Friday.
Paula Jaramillo, spokeswoman for Bicentenario Pipeline of Colombia, or OBC, said construction hasn't been completely halted because only about 25 of the 38 workers are participating in the strike. She added that construction of the pipeline itself hasn't begun yet. Instead, workers are building one of the encampments where they will eat and sleep during the 12-to 16-month construction period.
The labor strife marks the latest in a string of protests targeting Colombia's oil industry. Workers and residents in communities near to where several oil-drilling sites are located have blocked roads and, in some instances, temporarily forced companies to halt crude-oil production, arguing that foreign oil companies are hurting the environment and aren't providing enough local jobs.
The OBC pipeline company is 55% controlled by state-run Ecopetrol SA (ECOPETROL.BO, EC), while Canada's Pacific Rubiales Energy Corp. (PRE.T, PEGFF) has a 33% stake. Several other oil companies make up the remainder.
A statement from OBC rejected the striking workers' claims that their salaries don't meet the minimum levels paid in the oil industry.
"The salaries given for developing the project adhere to an analysis of the oil industry in the region," it said in a statement. "They also correspond to [the wages] previously agreed to by the workers and their representatives."
Attempts to reach representatives for the striking, unionized workers weren't successful.
When built, the pipeline will be 960 kilometers long and will eventually be able to carry 450,000 barrels a day of oil from the lowland Casanare region in eastern Colombia to the Atlantic port of Covenas in the north. Total investment for the pipeline is estimated at $4.2 billion.
Colombia's oil industry is booming, with production nearing one million barrels a day, which is almost double what it was four years ago. But improvements to the industry's transportation infrastructure have lagged far behind the sharp rise in oil production, which makes on-time completion of the Bicentenario pipeline a necessity.Copyright (c) 2011 Dow Jones & Company, Inc.