Pacific Rubiales (PRE.to) has a community problem? Or what?

Colombian press says there is all sorts of weirdness at PRE.to’s flagship Rubiales field, and the company may have to shut the field for the second time in just over a month over protests. Dinero reports (my excessively literal translation):

Pacific Rubiales threatens to shut operations in Rubiales field

Pacific Rubiales said Tuesday that at least 30 people entered the field and have burned tanker trucks and the encampments and that they suspect that it has to do with groups at the margin of the law, who are risking the integrity of the workers.

The vice president of corporate affairs, Federico Restrepo, indicated that the decision to halt production in the field and investments will be “taken at any moment.” [Note: they use the future tense, saying it will be taken, but the rest of the article seems to say that the decision may be taken — grains of salt always useful when dealing with these sorts of stories.]

Restrepo assured that Colombian law permits the closure because a red alert of hostile issues has been declared.(continues in Spanish, and yes, you should know how to read Spanish if you are investing in Colombia)

I haven’t had time to try and reach PRE.to or the workers’ union on this one…feel free to chime in if you know anything about the situation beyond what this article says, as the description here seems exceedingly sketchy.

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5 thoughts on “Pacific Rubiales (PRE.to) has a community problem? Or what?

  1. westslope

    It makes sense that the Rubiales field is targeted. Go for the biggest installation and impose costs with a good dose of intimidation and fear. I’m assuming that some union organization drive is indeed the primary objective.

    Colombia has a well known history of violent political rent-seeking. This was to be expected given the tremendous success experienced to date. The high number of assassinated union leaders speaks volumes to the state of labour-relations in the country.

    Did Pacific Rubiales make the best of the situation or make it worse? I can’t tell. The former union organizer in me, and this is nothing more than a hunch, says that the company let the ball drop on small, symbolic details. Never underestimate ‘envy’ as a significant factor of motivation.

    The company argues that the demonstrations (road blocks and acts of sabotage are the result of regional and municipal elections taking place in October. Once these elections are finished, the conflicts will go away. Some of the oil royalties go directly to local governments, hence the competition for votes is fierce because it gives the winning parties control of significant resources. Presumably, and this is the part I don’t understand, these violent pressure tactics against Pacific Rubiales help politicians win regional and municipal elections. Pardon me for having trouble connecting the dots.

    Raymond James just lowered the share price target to C$24/share and gave the company an Underperform rating.

  2. westslope

    Pacific Rubiales management must be desperate to threaten oil production stoppages through a press conference. By doing so the company threatens the state petroleum company–Ecopetrol–and the number one shareholder, the Colombian state.

    Usually when a private company resorts to media megaphone lobbying, it means that it has lost control. Senior ESMAD officers might have reneged on earlier commitments for example.

  3. Frontier Strategy Group

    An example of why companies absolutely must look at the local community dynamic and improve community relations whenever possible. Obviously, this type of structural hindrance cannot bode well for MNCs looking to establish or ramp up operations in Colombia.

  4. A004

    Colombia’s police and tax agency raid offices of Pacific Rubiales Friday, 04 November 2011 10:25 Alice Boyd

    Colombia’s tax and customs agency DIAN and the judicial police raided the offices of Canadian oil company Pacific Rubiales to conduct an investigation of their official documentation, according to a report by W Radio Thursday.

    The Canadian oil company, most of whose assets are in Colombia, has been involved in a number of high profile controversies in recent months.

    Workers protests broke out at their sites in Puerto Gaitan and Quifa in September, where protests went on for several days demanding improvements in working conditions and site security.

    In August, Colombian regulators announced that they would be investigating whether the Toronto-based company should be labeled a “business group” rather than a “company” due to its apparent links to more than a dozen subsidiaries and other companies.

    According to a report by W Radio, Pacific Rubiales has maintained that their corporate structure has always been public, open and transparent and that they have never refused to register as a business group.

    Colombia is the fourth largest oil producer in Latin America and Pacific Rubiales is Colombia’s largest and most productive private oil company.

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