Something is not quite right at Ecopetrol. The Colombian majority state oil company had a 44.1% drop in profits in the first nine months of this year. A figure attributed by the company to factors such as the drop in the international price of crude oil (64%), the appreciation of the peso against the dollar (28%), or the increase in taxes (15%). Beyond these explanations, however, some sector analysts draw attention to the absence of certain details that would help put the puzzle together better.
Seen in perspective, says Itaú variable income analyst Valeria Álvarez, the company’s balance until September has been neutral. He emphasizes that the drop in profits is marked by the increase in taxes, which increased from 32.8% in the third quarter of last year to 47% in the same period of 2023. A leaden burden that derives from the tax reform approved in November of last year.
The company has confirmed that the greatest fiscal weight has been exerted by the new surtax on hydrocarbons and the elimination of the deductibility of royalties. But, after reviewing the figures carefully, the academic from the Universidad de los Andes Sergio Cabrales finds more than one blind spot: “In the provision of income taxes, at least for this quarter, there is no significant increase with respect to to the same period last year.”
However, it does detect striking variations in operational matters: “Exploratory expenses increase by 700%. That is, more or less, a trillion pesos in new expenses that leave many questions. Why are we increasing operational expenses in a context of falling international prices?”
César Loza, president of the Unión Sindical Obrera, the main union, remembers that as a result of the Russian invasion of Ukraine, a barrel of Brent reached $120 during the third quarter of 2022. This year’s average, despite Although it reached 110 in July, it is around 85 dollars. “However,” Loza continues, “Ecopetrol’s contributions to the country continue to be significant.” The 2.8% increase in barrel production so far this year is one of the positive points that has strongly sustained the operation. According to Ecopetrol, this is the highest figure of 2015, spurred by the quota of the Rubiales and Caño Sur fields, both in the department of Meta.
“Production was extremely good, the loads in the refineries allowed the sale of other products to be greater and, even, the transportation business did very well,” indicates Valeria Álvarez, from Itaú. Sergio Cabrales, however, considers it “surprising” that most of the daily barrel production today comes from the Permian field, on the border between New Mexico and Texas. “The only differential factor that is leveraging the company’s crude oil production is the fracking in United States. I don’t know if it is a strategic change, but it raises many questions for the future.”
Newsletter
The analysis of current events and the best stories from Colombia, every week in your mailbox
RECEIVE THE
On the other hand, the financial hole caused by the gasoline subsidy included within the Fuel Price Stabilization Fund has become a great urgency for Ecopetrol and its largest shareholder, the Colombian State. Ecopetrol is the one that receives the least income from its gasoline sales and receives subsequent payments from the Government. Although the president of the oil company, Ricardo Roa, celebrated the gradual reduction of the money owed as an achievement, the balance still reaches 25.7 billion pesos.
For Sergio Cabrales, we should look with a little more patience at the factors that the company has listed: “To know with certainty how this drop in profits occurs and if its reading contains indicators that allow us to know where Ecopetrol is going.” He believes, for example, that the strategy could be turning the central and historical axis of the business, hydrocarbons, towards an energy company model that, except in the isolated case of ISA, is still unknown territory.
“Are they going to leave the hydrocarbon business to move on to a less profitable one such as energy generation?” Cabrales insists, “Today they are putting all their chips into the gas business. Who is going to put up the money for some extremely expensive projects? “There are more questions and noises than certainties.”
Cabrales cites some unconfirmed press reports about an alleged cut in next year’s investment plan. A matter that the president of the USO, César Loza, confirms: “This year the Capex for exploration was 4.5 billion dollars. For next year, it was estimated that these capital investments would be $2.5 billion. A significant reduction to which we opposed because it affects production in the medium term and the country’s income from exports.”
Ricardo Roa met last week with union representatives to discuss the issue. “They told us that this plan was included and that at the end of this month the new scenario would be defined, which is between 3.5 billion and 4.2 billion dollars,” says Loza.
Another front revolves around changes to the bylaws to elect board members. An option that the Government had already explored last year and that caused quite a bit of reluctance in some circles, due to the proposal to add a chair for a union representative. Cesar Loza, for now, clears up one of many doubts. “There is already an extraordinary meeting called by the majority shareholder to make some modifications to the board. So that there is greater participation of women and, probably, so that the arrival of comrade Edwin Palma, vice minister of Labor, occurs. [y directivo del sindicato]”.
Subscribe here to the EL PAÍS newsletter about Colombia and here to the channel on WhatsAppand receive all the information keys on current events in the country.
Subscribe to continue reading
Read without limits
_
#doubts #left #collapse #Ecopetrols #profits