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Wood Mackenzie comments on Ecopetrol-Occidental Petroleum joint venture

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Oilfield Technology,

Colombia’s Ecopetrol has teamed up with Occidental Petroleum to form a joint venture (JV) to develop acreage in the Midland basin, part of the US’ Permian basin play.

Maria Cortez, senior research manager, Latin America upstream oil and gas, said: “Ecopetrol has pursued an aggressive diversification strategy in recent months, picking up acreage in pre-salt Brazil in 2018 with Shell and Chevron.

“These, together with the Occidental joint venture, are world-class partnerships for Ecopetrol which will add resource and new capabilities. This has been driven by maturing indigenous production in Colombia, which has forced Ecopetrol to look elsewhere. However, these opportunities come at a cost, and value will have to be quickly created.

“Exposure to shale will help strengthen Ecopetrol’s own capabilities to develop this resource domestically. However, structural challenges – like security, environmental permits and community relations – remain unresolved and will likely postpone development.”

Michael Whitney, from Wood Mackenzie’s corporate research team, added that ventures such as the Occidental/Ecopetrol tie-up may become more common as the Permian matures.

Whitney said: “Strategies of this nature should become more commonplace in a world of stockpiled Permian inventory with drilling locations that wouldn’t otherwise fit into development plans for upwards of a decade.”

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Upstream news US upstream news Shale news