MercoPress. South Atlantic News Agency

Colombia reaches sustained production of over a million barrels of oil per day

Production is 7% higher than a year ago and double in the last seven years

Colombia announced that it produced an average of 1.01 million barrels of oil per day in January, marking the first time that average crude output for a month surpassed the one million-barrel mark that the government had set as a target for the country's oil industry.

Last month's figure was more than 7% higher than the 944,000 barrels a day produced in January 2012, the Mines and Energy Ministry said in a statement. For all of 2012, average oil output stood at 940,000 barrels of oil per day, which represents a 3.16% increase from 2011.

Colombia has seen its oil production more than double in the past seven years as market-friendlier tax and royalty rates and the government's success in taking back territory once controlled by Marxist guerrillas have helped attract foreign investment.

The leftist rebels remain a threat, however, and have continued to attack oil infrastructure, which made the government's goal a tough target to reach in 2012.

A two-month-old cease fire linked to peace talks between the government and the Revolutionary Armed Forces of Colombia, or FARC, allowed production to increase sharply in December and January.

But the FARC lifted the cease fire late last month and has resumed its attacks against oil infrastructure. Oil pipelines are once again the guerrillas' favorite targets for dynamite attacks, and these bombings in the past have prompted drops in oil output.

The Mines and Energy ministry also confirmed that foreign investment in the industry jumped 8.3% last year over 2011 (12.241bn) totaling 13.12 billion dollars.

However the Colombian government is not satisfied since although investment is encouraging for the oil industry it remains weak for labor intensive industries such as manufacturing trade and construction. These industries last year attracted 3.15bn dollars.

Likewise Fedesarrollo, a manufacturers lobby points out that “the presence of greater foreign resources forces and appreciation of the Colombian Peso, with an impact on national productions displacing capital and jobs from other activities and thus reducing the overall welfare level of the country”.

Mining activities in developing countries do not always create the necessary complementation with other industries and tends to be limited to the geography of the resources’ exploitation with no major links with the neighbouring population or the rest of the local economy, concludes Fedesarrollo.