In
few words |
Which
is more important for Synergy: Avianca or Rubiales? |
| Synergy
places the same importance on all its businesses, just as a father should treat
all his children equally. |
| In
Colombia, you are an airman and an oilman. The air industry complains of the high
price of jet fuel, a derivative of the oil you produce. How do you manage that
duality? |
When
I have the Avianca hat on, I am going to cry and scream about the cost of jet-fuel
which represents 30% of the costs of air operations. And when I wear
the Meta
Petroleum hat, I am going to laugh, and I am going to say, “how great that
the price of oil is so high.” |
| How
involved are you in the development of Rubiales? |
| The
real oilman at Synergy is Boris Abad, President and responsible for the Hydrocarbon
division in the Andes region. He brought it up to the current production levels.
I visit Rubiales fairly frequently. |
| Where
do you get your gift for business? |
| My
father was a good negotiator, but even better than him was my grandmother. Despite
the fact that she was illiterate and she had never set foot in a school, she bought
and sold and did the most complex calculations in her head. |
|
Report
The
man behind the metamorphosis in the Rubiales field
The
Efromovich’s challenge
As
head of the Brazilian Synergy group, German Efromovich bought Avianca
for US$64
million last year. But in his role as an oilman, he is at the point
of moving
US$1 billion to make a block in Meta one of the most productive
heavy crude
projects in the history of Colombia. Interview.
Reckless
and obstinate in business, Bolivian by birth, Chilean in upbringing, and Brazilian
at his roots, German Efromovich began to make his own money when in his grade
school in Arica, in the southern country of Chile, he began to sell quails almost
50 years ago.
Currently,
Synergy, the multinational he heads has capital invested in companies in the aeronautical,
energy, oil, and shipping sectors in several Latin American countries. One of
them, Meta Petroleum, bought the exploitation rights in June 2002 to the Rubiales
field, in Puerto Lopez, on the border between the Departments of Vichada and Meta.
At
that time, Rubiales had a few wells that produced 700 barrels per day of something
that looked more like mud than oil. Given its location, the public order difficulties
in the region, and the lack of demand for heavy crude in the oil world, not a
single oilman would bet a peso on the future of that field.
Today,
with 35 wells, 10,000 barrels are extracted daily from Rubiales, and sold as fuel
oil and asphalt in several cities of the country. With its geological similarities
to the Caño Limon field in Arauca, Efromovich’s goal is to take the
Rubiales field to a production of 100, 000 barrels per day in less than four years.
In
an interview with Carta Petrolera, this engineer, who three decades ago was one
of the professors for Luis Ignacio Lula Da Silva, current President of Brazil,
talks about how he is going to take on one of the greatest oil challenges in the
current millennium in Colombia.
How
is the development going for the field you bought three years ago? |
Rubiales
is on automatic pilot. We have reached production of 10,000 barrels a day and
we are going to stabilize at that level for a few years, among other things because
to transport that volume of crude on trucks throughout the rest of Colombia is
complicated. We have already reached the limit for production with our current
infrastructure. |
What
are your plans for expansion? |
We
have proven the existence in Rubiales of a significant deposit of more than 3
billion barrels in place. If we estimate a recovery of 15% or 16%, the reserves
are very important and they can be developed only through an intense program of
drilling 600 wells. Those wells should be ready by 2008, and that is why we are
now structuring the complete development project. |
How
much is it worth and what does this project include? |
Rubiales
is going to be an investment project of almost 1 billion dollars, where, in addition
to the entire drilling infrastructure, we have to build an oil pipeline and a
treatment plant to improve the quality of the crude. The objective is that in
2008 we will reach 50,000 barrels and then 100,000 barrels of daily production. |
What
is the breakdown for that investment? |
These
resources are going to be invested over the next five years, and will be con tributed
by Meta Petroleum. We estimate that US$300 million will be spent on drilling the
wells, and the other US$700 million on the facilities that include the entire
production infrastructure in the plant –because we have to manage a lot of
water – to improve the quality of the crude, and in the pipeline. |
Let
’s talk about the pipeline… |
We
have a route marked out that goes from the field to the El Porvenir station in
Casanare. We estimate it will take a year to obtain licenses, and from 18 to 24
months to build it. The investment will be around US$190 million and the size
of the pipe will depend on the results we get from the Quifa Block, a concession
that we own next to Rubiales. |
And
what kind of perspectives are there regarding that Block? |
We
just finished a 2D seismic and it has shown us an attractive structure. We have
not seen where Rubiales ends, and since Quifa is very close, we don’t know
if it is an independent field. So the idea would be to build a pipeline with sufficient
capacity to manage at least the production from Rubiales, which will reach 100,000
barrels per day between 2008 and 2010. |
When
will construction begin on the plant? |
By
the time the pipeline is ready, the plant and the wells we drill must be in operation.
Those wells can be drilled and finished in nine days because they are very shallow,
and we are going to have four or five rigs working simultaneously. It is going
to be interesting in terms of logistics. |
How
much will the quality of the crude improve? |
Rubiales
is at 2,800 feet, and the gravity is 12.5 degrees. For a heavy crude, it is exceptional
because it has very little sulfur, nickel, and vanadium. The quality of the crude
is going to go up 16 or 17 degrees API, but the viscosity has to be decreased
to meet the requirements of the pipeline that will take the oil to the export
port of Coveñas. |
With
that gravity, what is the crude used for? |
Rubiales’
crude has excellent caloric properties and produces a high quality asphalt. It
is a natural fuel oil, with less sulfur, salt, and ashes than fuel oil. It is
unique among the heavy crudes and today we sell it in Bogotá, Cali, Medellín,
and Cartagena. |
Why
are you betting on Rubiales? |
First,
because I have a tradition of not going for what is conventional. Everyone does
what is conventional. In second place, the future of hydrocarbons is different
than what it was some years ago. With the socio-political problems in the Middle
East, with the terrifying growth in China, with the technological developments
in the refining process, what was not an attractive business five years ago, today
is attractive. The prices confirm that. Oil prices have never stayed so high for
such a long time, without significant oscillations, as they have done in the last
24 months. |
When
Meta Petroleum, your company, bought Rubiales, the field had a record of public
order problems. How has that situation been managed? |
| I
am going to be very sincere. The truth is that here in Colombia, we came upon
this deal almost by accident. Later we analyzed the deal and looked at the confidence
that has been expressed to us by the government, the transparency with which it
has laid down the rules of the game, and the security and the comfort that it
has given us. If you add to that the emotional part, which is a magnet that the
Colombian people have, well, that was all more than sufficient to make a very
simple decision:Colombia is the place to invest. |
|
