Global Policy Forum

Oil Rigged


By Thad Dunning and Leslie Wirpsa

Resource Center of the Americas
February, 2001

The public face of U.S. policy toward Colombia has long been the war on drugs. Colombia, according to widely reported CIA estimates, produces 90 percent of the U.S. cocaine supply and 65 percent of U.S. heroin imports. U.S. officials say the aim of Plan Colombia, a $1.3 billion aid package signed by President Clinton last year, is fighting "narco-guerrillas" and eradicating coca crops.

But that's just part of the agenda. Plan Colombia is also about oil.

Colombia's petroleum production today rivals Kuwait's on the eve of the Gulf War. The United States imports more oil from Colombia and its neighbors Venezuela and Ecuador than from all Persian Gulf countries combined. And, last June, Colombia announced its largest oil discovery since the 1980s. The Colombian government and transnational oil companies are eager to secure their exploration and production activities with U.S. military might.

Some U.S. military officials harbor no illusions about their role in Colombia. Stan Goff, a former U.S. Special Forces intelligence sergeant, retired in 1996 from the unit that trains Colombian anti-narcotics battalions. Plan Colombia's purpose is "defending the operations of Occidental, British Petroleum and Texas Petroleum and securing control of future Colombian fields," said Goff, quoted in October by the Bogotá daily El Espectador. "The main interest of the United States is oil."

Colombia's two major guerrilla groups condemn foreign control of the nation's petroleum even as they rely on the oil companies for ransoms and extortion payments. The guerrillas face competition from rightist death squads known as paramilitaries, many with documented links to Bogotá's army and some with alleged ties to the oil firms.

In recent months, the violence has begun to spread beyond the nation's borders. To the south, the Colombian war is further destabilizing Ecuador, a country wracked for decades by political upheaval, including a military coup during an indigenous revolt a year ago. To the north, the war is heightening tensions in Venezuela, where populist President Hugo Chávez has helped drive up world oil prices by reviving the Organization of Petroleum Exporting Countries (OPEC).

Critics of U.S. policy in Colombia have likened it to past interventions in Vietnam and El Salvador. But with world oil prices stuck at all-time highs, with U.S. oil consumption expected to rise 25 percent over the next two decades, and with Middle East producers increasingly unreliable, another important comparison is the U.S. war against Iraq.

One question is whether U.S. military aid will help keep the Colombian oil flowing—whether it will enhance or erode the security of oil operations. More troubling questions surround the human cost of further militarizing a conflict that has killed tens of thousands of Colombians and displaced almost 2 million since 1985.


Colombia's known oil reserves amount to 2.6 billion barrels, far fewer than those of the world's major oil powers. But only about 20 percent of the country's potential oil territory has been explored, due to the violence. Desperate for more investment, President Andrés Pastrana's administration sweetened the terms a year ago, allowing foreign companies a larger share of profit from Colombian oil operations. As a result, the state's Empresa Colombiana de Petroleos (Ecopetrol) awarded a record 13 new exploration and production contracts last year.

Colombia's biggest foreign investor is BP Amoco, formed when British Petroleum merged with Chicago-based Amoco in 1998. The London-based giant controls Colombia's largest oilfield, a 1.5-billion-barrel trove called Cusiana-Cupiagua in the northeastern province of Casanare (see MAP). A 444-mile pipeline called Ocensa carries BP Amoco oil to the Caribbean port of Coveñas for export.

Los Angeles–based Occidental Petroleum helps operate the nation's second-largest oilfield, Caño Limón, holding 1 billion barrels in Arauca, a province just north of Casanare. Occidental pumps away its share through a 485-mile duct to Coveñas.

The June announcement confirmed a deposit about 55 miles southwest of Bogotá. An international consortium led by Canadian Occidental Petroleum expects as much as 300 million barrels from the oilfield, called Boquerón, making it the nation's third-largest deposit.

Other major investors in Colombian oil have included Exxon, Shell and Elf Aquitane. The transnationals have helped boost the nation's oil production almost 80 percent over the last decade. Most of the exports have gone to the United States, putting Colombia among the top eight U.S. oil suppliers.

Many of these companies have led the fight for U.S. military aid to Colombia, the world's third-largest recipient of U.S. security assistance. In 1996, BP Amoco and Occidental joined Enron Corporation, a Houston-based energy firm, and other corporations to form the U.S.-Colombia Business Partnership. Since then, backed by hefty oil-industry donations to political candidates, the partnership has lobbied hard for increased aid. Lawrence P. Meriage, Occidental's public-affairs vice president, not only pushed for Plan Colombia last year but urged a House subcommittee to extend military aid to the nation's north to "augment security for oil development operations."

The firms have allies in the U.S. national-security apparatus. In 1998, Gen. Charles Wilhelm, then head of the U.S. Southern Command, told Congress that oil discoveries had increased Colombia's "strategic importance." Last April, Sen. Bob Graham (D-Florida) and former National Security Adviser Brent Scowcroft warned in a Los Angeles Times editorial that Colombia's reserves would "remain untapped unless stability is restored."

Petroleum companies say their presence in Colombia creates employment alternatives for coca farmers, adds muscle to counterinsurgency efforts and, ultimately, promotes peace and stability. In 1996, British Petroleum, Occidental and Royal Dutch/Shell co-sponsored a full-page ad about Colombia in the Houston Chronicle, touting "a powerful new weapon . . . in the war against drugs." The ad pictured the nozzle of a gas pump.


Numerous studies suggest that transnational extraction of natural resources from the Third World promotes not economic and political stability, but violence and lawlessness. From Indonesia to Nigeria to Colombia, mining and oil drilling have spurred the growth of rightist militias, criminal gangs and leftist insurgencies. Political scientists call this the "resource curse."

Since 1986, according to Colombian government sources, the country's guerrilla groups have bombed oil pipelines more than 1,000 times and have kidnapped hundreds of oil-company executives and employees. Using these operations as leverage, the guerrillas have generated roughly $140 million per year in ransoms and extortion payments. They also squeeze "taxes" from local contractors working for the companies. In all, the oil revenue rivals conservative estimates of guerrilla earnings from the cocaine and heroin trades.

During construction of the Caño Limón pipeline in the 1980s, contractors for the German company Mannesmann reportedly paid about $4 million to the National Liberation Army (ELN) for the release of four kidnapped engineers. Such payments enabled the ELN, verging on collapse, to regroup and rearm. Today the ELN, with 7,000 members, is the nation's second largest guerrilla army. The 17,000-strong Revolutionary Armed Forces of Colombia (FARC), the largest rebel group, has adopted similar tactics, even consenting to oil drilling opposed by local indigenous people.

Guerrilla violence around the oil industry has intensified since July 13, when President Clinton signed Plan Colombia. Decrying "North American intervention," ELN guerrillas bombed the Caño Limón pipeline 23 times between July and September, forcing Occidental to declare force majeure for 45 days. The pipeline was knocked out at least 97 times last year, exceeding a record 79 outages from rebel attacks in 1999. Recently, after a January 20 bombing west of Caño Limón, the duct was closed for three days.

FARC rebels, meanwhile, bombed Ecopetrol's southern pipeline 31 times in September, forcing Ecuador's state oil company, Petroecuador, which uses the line to export 45,000 barrels a day, to suspend its obligations.

The paramilitaries, for their part, have moved into oil-rich provinces such as Casanare and, along the southern border, Putumayo. In the central city of Barrancabermeja (see MAP), home to the country's largest oil refinery, paramilitaries intensified a campaign of murdering civilians in January. "Here we pump out all the energy we need," said Lt. Col. Hernán Moreno, head of the army's New Granada Battalion in Barrancabermeja, quoted in the New York Times. "The takeover of power is thus of prime importance to these armed groups."

And paramilitaries target organizers such as Workers Trade Union leader Alvaro Remolina, who has called attention to the labor practices of Texaco and Occidental in Colombia. On January 11 last year, his nephew was murdered near the city of Bucaramanga, while his brother and a friend disappeared in the nearby town of Girón. He lost another brother to assassins in 1996, and soldiers killed his sister-in-law in 1999.

One human rights report on oil and security in Colombia says paramilitaries have received $2 million for protecting a Colombian pipeline. El Espectador, the London daily Guardian and the BBC, additionally, have documented paramilitary links to British Petroleum. A top BP official admitted that a British security contractor for the oil giant supplied night-vision goggles to an army brigade accused of killing civilians and committing other abuses. The contractor also hired former army commander Gen. Hernán Guzmán Rodrí­guez, a 1969 graduate of the U.S. Army School of the Americas. In a 1992 report, the Inter-American Commission on Human Rights linked Guzmán to a paramilitary group responsible for 149 murders from 1987 to 1990.

Colombia's official armed forces have their own stake in oil. Since 1992, a "war tax" of more than $1 per barrel on foreign oil corporations has helped Bogotá devote a quarter of its army to defending oil installations. And government forces often sell security services directly to the companies. Occidental, which earmarks roughly 10 percent of its in-country budget to security, has made direct payments to the army.

The oil violence weighs heaviest on local civilians. Disasters resulting from pipeline attacks have killed people and wreaked environmental destruction. In 1998, 73 people died after an ELN bombing of Ocensa, the BP Amoco pipeline. The blast set ablaze the northwestern village of Machuca, Antioquia.

Such violence has prompted communities to resist oil projects. The 7,000-member U'wa indigenous community in northeastern Colombia has opposed attempts by Occidental and Ecopetrol to drill in its ancestral land. Occidental is betting it could extract 1.4 billion barrels from the area. Last February, when government security forces broke up an indigenous roadblock against the project, three children drowned in a river during the melee. In November, some 2,000 government agents escorted Occidental rigs to drill an exploratory well in the land.

The project has brought violence from guerrillas too. In 1999, FARC members kidnapped and murdered U.S. citizens Terence Freitas, Ingrid Washinawatok and La'he Enae Gay, who were visiting to set up U'wa education projects.

Despite the upheaval, oil remains Colombia's largest export, with earnings totaling $3.7 billion in 1999. Ecopetrol diverts most of this profit to federal and local governments, but average Colombians see little benefit. Officials face pressure from guerrillas and paramilitaries alike to invest the payments in their favor. And many officials simply steal or squander the money. Arauca, a boomtown about 25 miles from the Caño Limón oilfield, has received millions of dollars annually in oil royalties but is ringed by shantytowns. In a petroleum-rich central valley known as the Middle Magdalena, more than 70 percent of the 750,000 inhabitants live in poverty and nearly 40 percent are unemployed, double the official nationwide rate.


Petroleum is playing an important role as the war expands beyond Colombia. Both the FARC and ELN have a growing presence in southern Venezuela. Guerrillas there are using extortion and kidnapping to generate revenue from ranchers and Petroleos de Venezuela (PDVSA), the government oil company, according to a January 24 Financial Times report.

Chávez, the Venezuelan president, says his government is not taking sides in the Colombian conflict. Venezuelan military officials say the guerrilla influx worries them less than a Plan Colombia provision to equip Bogotá's army with 60 Blackhawk helicopters. Under Chávez, who took office in 1999, Venezuela has barred U.S. "counternarcotics" flights over its airspace, calling them a violation of national sovereignty. And some Venezuelan military equipment has found its way into FARC hands.

Venezuelan oil weighs heavy in U.S. strategy for the region. The third-largest U.S. oil supplier and the hemisphere's sole OPEC member, Venezuela has 77 billion barrels in proven reserves—the most of any country outside the Middle East. The Chávez government convinced OPEC members to cut production, a move that has lifted oil prices to more than $30 a barrel, their highest level in a decade.

Chávez's nationalist leanings and his pledges to prevent PDVSA's privatization have fueled worries among some U.S. policymakers about U.S. reliance on the Venezuelan crude. In August, adding to these worries, Chávez became the world's first democratically elected head of state since the Gulf War to visit Saddam Hussein, the leader of fellow OPEC member Iraq. And, in October, Chávez agreed to provide Cuba with inexpensive oil.

In other countries, the spillover violence from Colombia has begun to menace petroleum production. Just across the San Miguel River from Putumayo, the Colombian province, conflict pervades the town of Lago Agrio (see MAP), the Ecuadoran oil hub. The area has long been a site of rest and relaxation for FARC guerrillas. But the mood has changed since U.S.-backed counterinsurgency and coca eradication caused a larger influx of farmers, other displaced Colombians, guerrillas and paramilitaries. Local police say violence in December killed 20 people, including 15 who perished in clashes between Colombian guerrillas and paramilitaries and five in a bombing of Ecuador's only oil pipeline. (The duct carries crude to a Pacific port for export. Occidental is part of an international consortium vying to build a second Ecuadoran pipeline, a $750 million project.)

Such turmoil has led to militarization, threatening to turn Colombia's oil violence into a regional scourge. Brazil, Peru and Ecuador all host oil drilling near Colombia, and all are responding to guerrilla and paramilitary incursions by sending in military personnel and equipment.

Javier Pérez de Cuéllar, the former U.N. secretary general serving as Peru's interim prime minister, said in January that he supported Plan Colombia, marking a reversal from the policy of former President Alberto Fujimori, who resigned in November. "We are guarding our borders for possible infiltration, not only from Colombia but from Ecuador," said Pérez de Cuéllar, quoted by Reuters in January. "The violence is serious."

Ecuadoran President Gustavo Noboa, who took office after a January 2000 military coup, has strengthened border security and threatened to declare a state of emergency there. His foreign minister, Heinz Moeller, has asked the United States for $160 million to supplement the $20 million for Ecuador under Plan Colombia. Moeller said he expects to receive the aid because Washington, which already bases its Andean military operations in the Ecuadoran coastal town of Manta, wants to protect U.S. "investments" in Colombia. Moeller said the increased aid was necessary to protect an "economic buffer zone" between his country and Colombia, adding that the protection will require helicopters, speedboats and reconnaissance equipment.

Goff, the former Special Forces sergeant, says U.S. military operations in the Andes go beyond their stated purpose of fighting drugs. "We never mentioned the words coca or narco-trafficker in our training," he said. "The objective of our operations was not the Colombians but the Americans who pay taxes for the investment made in Colombia. The objective continues to be oil. Look where American forces are—Iraq, the Caspian Sea, Colombia—places where we expect to find petroleum reserves."


Oil will remain a U.S. military priority under President George W. Bush if his campaign donors and cabinet appointees have any influence. The top source of cash for his presidential and Texas gubernatorial bids was Enron and its employees, including CEO Kenneth L. Lay, according to the Center for Public Integrity. Enron, one of the companies that led lobbying for Plan Colombia, owns Centragas, a 357-mile natural gas distribution system in northern Colombia.

The cabinet includes Vice President Dick Cheney, former CEO of Halliburton Company, a Dallas-based oil services leader; Commerce Secretary Don Evans, former chairman of the Denver-based oil firm Tom Brown, Inc.; and National Security Adviser Condoleezza Rice, a former board member of San Francisco–based Chevron Corporation.

Bush appointed John Maisto as National Security Council adviser for inter-American affairs, his top adviser on the region. Maisto was ambassador to Nicaragua during the U.S.-backed guerrilla war against the Sandinista government and chargé d'affaires in Panama during the 1989 U.S. invasion that ousted Gen. Manuel Noriega. Under Clinton, he was ambassador to Venezuela and, later, an adviser to the U.S. military's Southern Command.

Bush's roster and the widening violence even before Plan Colombia hits stride are portents of what the United States holds in store for the region.

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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.