U.S. Oil Companies Profiting from Plan Colombia
A Texas-based oil company, Harkin, of which George
W. Bush used to be a board member, recently signed
an oil exploration and production contract within
Colombia. The large amount of military aid that the
United States is investing in Colombia, as well as
recent IMF imposed economic reforms have created a
more safe and stable environment for foreign
companies to invest. In return for loans from the
IMF totaling $5 billion between 1999 and 2004,
Colombia promised to restructure state-owned
industries, like oil in order to make them
friendlier to foreign investment.
Harkin?s deal with Colombia states that Harkin?s
subsidiary Global Energy Development PLC ?will own
100% of the contract subject only to an initial 8%
royalty payable to the Colombian Ministry of
Energy.? The contract also grants Global PLC
exclusive exploration and production rights to
85,000 acres of oil fields, which is estimated to
yield about 1.8 million barrels. Following a
decision in 2004 by Colombia?s Minister of Energy,
foreign companies will no longer be required to
enter into a partnership with Colombia?s state-run
oil company, Ecopetrol, and thus can negotiate to
pay the country a lower rate of royalties. In the
past when foreign investors came to Colombia they
would enter into an equal partnership with Colombia
and pay 20% royalties.
Many are concerned that in the long run these types
of investment will only harm Colombia. Most of the
oil and profits are now contractually owned and
control by foreigners and will not stay within
Colombia. In addition, some note that Colombia was
in some ways backed into a corner. In order to get
aid from the U.S., Colombia has to agree to the IMF
reforms that were included into Plan Colombia.
Whether or not the trade off between security and
oil profits was a good one, is yet to be seen.
About the US Office on Colombia
The U.S. Office on Colombia is an independent non-
profit organization, not affiliated with any political
party, that seeks to educate U.S. policymakers, the
media and the U.S. public about the impact of U.S.
policy on Colombia.
