(Reuters) – Colombia’s state-run Ecopetrol oil company will issue bonds this year and use the resources to substitute outstanding bank credit, Finance Minister Mauricio Cardenas said on Tue sday.

Colombia’s largest oil producer, Ecopetrol has requested approval from regulators to issue up to 3 trillion pesos ($1.66 billion) in ordinary bonds with a maturity of 3 to 10 years and commercial paper with maturities of less than one year.

“It is a credit replacement operation. Ecopetrol has taken credits with banks in Colombia, and given the current conditions, they can be replaced with bonds also issued in pesos,” Cardenas, who is on Ecopetrol’s board of directors, told reporters.

“What we’ve told Ecopetrol is that we do not want them to get debt in dollars, and these peso bonds would allow the replacement of bank loans … and generate savings from the point of view of interest for Ecopetrol.”

Cardenas said the paper would be issued this year, but he did not say how much of the total coupon could be sold. He gave no other details about the issuance.

In 2010, Ecopetrol, which is majority owned by the government, issued ordinary bonds for 1 trillion pesos.

$1=1,799.29 Colombian pesos