National Treasure

Ecopetrol is the largest oil and gas company in Colombia. Its general counsel walks us through the dynamic decade that revitalized the energy giant.

Rodolfo Garcia, General Counsel, Ecopetrol

Rodolfo Garcia assumed leadership of corporate and international law for Ecopetrol in 2013 after witnessing enormous transitions in the Colombian petroleum industry during his fourteen years at the energy operation. Throughout his tenure, he has helped the company adapt to public ownership, navigate new exploration, and remain competitive with new methods and technologies. With a nod to its past, Garcia gives us a look at Ecopetrol’s future.

Going Public

Previously, Ecopetrol was Empresa Colombiana de Petróleos. But in response to shrinking national petroleum reserves, the Colombian government went in and restructured to make the company more competitive. Ecopetrol became a public stock-holding corporation that is 88.5 percent state-owned in 2003. “It was a big change,” Garcia says, “requiring us to switch to the Brazilian model,” wherein nonrenewable resources, such as petroleum, belong to the government, but can be extracted and produced by private enterprise with due royalties. “Here in Colombia, that was an aggressive change.”

Catalyzing Collaboration

For almost a decade after 1999, Colombian petroleum production plateaued and declined due to a lack of discovery and infrastructure. But regulatory intervention spurred foreign investment and began reversing that trend in 2008. In 2010 Ecopetrol partnered with an international consortium to construct a $4.2 billion pipeline. “We had a long history, and the only way to successfully expand was to collaborate with other countries,” says Garcia. The Colombian Finance Ministry expects Colombia to produce an average of 981,000 barrels of petroleum per day in 2014.

Building a Unified Vision

Attorneys play an incredibly important role at Ecopetrol. Not simply relegated to the legal department, the general counsel’s team is an integral part of all business decisions. More broadly, the organization strives to keep all departments on the same page. “We still have government participation, so we have to pace new business, and that requires having a unified vision,” Garcia says. The corporate and international law department maintains processes to keep everyone informed with the same information. “It’s an interesting industry with different regimes,” he says. Business and agreements are subject to common law systems. There are Colombian civil law regimes. “There’s a lot to balance, and from business and legal points of view, negotiating agreements is very complex.”

Exploring New Frontiers

Since naming Javier Gutiérrez CEO in 2007, Ecopetrol has ramped up production considerably, producing between 750,000 and 800,000 barrels a day, making the company one of the best-performing energy groups in Latin America. According to Forbes, revenue has been climbing for five years with year-end sales of $37.4 billion projected for 2014.

Under Garcia’s watch from a legal standpoint, the company has grown in other, equally important ways, including the 2011 acquisition of BP Colombia Exploration Company. The acquisition was one of many strategic moves that strengthened operations in Colombia, especially in the Piedemonte Llanero, which according to Gutiérrez was an area in Colombia with a great deal of potential.

“There could be no better time for acquisitions,” Garcia says. “The acquisition fit in with our expansion strategy, and as we began to grow in Colombia, it helped us prepare for expanding abroad.”

Concurrent with domestic production, Ecopetrol set forth an internationalization plan in 2006. Ecopetrol now operates in Peru, Brazil, and explores for oil and gas in the Gulf of Mexico. As Ecopetrol expanded, Garcia and his colleagues needed to understand the markets they were moving into.

Staying Up To Speed

As technology continues to be developed more rapidly, Garcia predicts that having an understanding of emerging technology, its best uses, and how to leverage it will be of the utmost importance in his field­—an industry already known for moving quickly. “In the 14 years alone that I’ve been with Ecopetrol, the industry has changed enough to talk about for hours,” he laughs.

For Colombia to remain competitive, those changes will have to continue in the form of offshore and unconventional exploration, namely shale drilling. Ecopetrol has plans for the former in the Caribbean. The latter will require an understanding of new environmental regulation that could allow the use of hydraulic fracturing to extract oil and gas.

“It’s also important to understand that in Colombia, we’ve lived through the most important changes in the country’s history in the past 30 years. Things have moved fast and they’re going to keep going that way. Ecopetrol became a competitor in the industry and brought Colombia with it. It must now maintain that,” says Garcia, “by developing new goals and using new technology to make them a reality.”

A Través de los Años

A brief history of Ecopetrol and the Colombian oil industry

1948 Empresa Colombiana de Petróleos is founded.

1999 Colombian oil production begins to decline for a period
of nine years.

2003 Colombian President Álvaro Uribe Vélez reforms the energy sector, shifting regulation and administration of hydrocarbons from Ecopetrol to the National Hydrocarbons Agency, placing Ecopetrol on level playing ground with foreign and local investors.

2006 Ecopetrol S.A. enters Peru.

2008 Foreign investment spurs an oil production turnaround for the country. Subsidiary Ecopetrol America, Inc. acquires interest in a Gulf of Mexico deepwater oil and gas field from Union Oil Company of California.

2009 Ecopetrol S.A. announces a modernization project for its Cartagena refinery, which will expand capacity and increase its downstream oil industry.

2011 The company makes its first discovery in the Gulf of Mexico.

2013 Ecopetrol S.A. becomes the 12th most valuable oil producer globally, valued at $87 billion.

2014 In August Ecopetrol is granted Patent for Biofuel Diversification Technology. This is the third patent granted to the company in 2014 adding up to 58 patents already granted to Ecopetrol in several countries.