Colombia, long dependent on coffee for a large percentage of its export earnings, has suffered recently because of the fluctuations of the world coffee market. The country has a chronic problem with an unfavorable balance of payments and relies consistently on financial aid in the form of loans from various international and United States agencies. Obviously, export earnings from oil, far superior to those from coffee, would solve many of its problems. Until recently Colombia has ranked as second-rate in the production of oil on a world-wide basis. Even so, one half of all U.S. investment in Colombia, which totals %500 million, has been in the petroleum industry. In a recent article in E1 Tiempo (Bogota), Carlos Gustavo Arrieta, the Minister of Mines and Petroleum, states: "Colombia is one of the oil-producing nations in the world with the most ample and benevolent legislation which encourages exploitation by foreign firms."
Recently an extremely important new oil field was discovered by Texaco and Gulf in the Putumayo area of southern Colombia, bordering Ecuador. To protect their interests the companies obtained permission to exploit the area, which covers more than 4 million acres of concessions in Color.bia and 5.2 million acres of concessions in Ecuador, for five years. A $50 million oil pipeline is to be built across the Colombian Andes, which, at $25,000 per mile will be the most extensive one constructed, in terms of cost per mile. Plans are to pipe crude oil from the Colombian and Ecuadorian concessions to Tumaco, a port on the Pacific coast where it will then go by supertanker to the U.S. west coast.
Plans also include the construction of a new, $40 million 100% Texaco-owned refinery with a daily capacity of 25,000 b/d to be ready by early 1969. Up until now, the Colombian government petroleum company, ECOPETROL, has been running the country's largest refinery for crude introduction and is seeking to gain more control over this end of the industry. Thus, the issue of a completely foreign-owned refinery is a delicate subject. Judging by the current situation, it looks as if the U.S. oil companies are managing to pull the right strings to allow them a refinery for major development of the Putumayo field without ECOPETROL participation.
