(Photo: Agencia de Noticias)

Following OPEC’s decision to maintain oil production at 30 million barrels per day (BPD), stock prices of oil companies operating in Colombia dropped.

Though Venezuelan Foreign Minister Rafael Ramirez tried to convince the oil cartel to reduce production by 2 million BPD, OPEC only agreed to reduce “overproduction,” meaning anything beyond the current limit, according to Spanish news agency EFE. Worldwide oil prices dropped to a four-year low of $70 per barrel with the news.

The share prices of Pacific Rubiales dropped more than 8%, while Canacol dropped 7.77%. Prices for Colombian state-owned oil and gas company Ecopetrol dropped by 5.64% to around $1.10 per share.

Asked whether the drop will affect secondary recovery projects or unconventional and offshore exploration in Colombia, Javier Betancourt, president of the National Hydrocarbon Agency, said told the website Portfolio that “it is clear that these projects are long-term and the contractual commitments will be honored by the companies. We will have to evaluate the impact on additional activity.”

Colombia’s Finance Minister, Mauricio Cárdenas, said that while the drop in price will not impact the Colombian 2015 budget in the short term, there are concerns in the medium and long term.

With oil accounting for more than 67% of total Colombian exports in 2013, falling market prices and production threaten the Colombian economy.

MORE: Falling oil prices threaten Colombian economy

Oil prices have fallen nearly 18% so far this year amid Colombia’s first recorded oil production shortfall in over a decade. Three months ago, Mauricio Cardenas, Colombia’s finance minister, said in an interview with Caracol Radio that it “is essential for Colombia that oil prices will not fall much below $ 100 per barrel.”

Faced with depleting demand from its biggest oil buyer, the United States, Colombia is reportedly seeing itself having to expand its horizons to more distant markets such as Asia and Europe.

MORE: Colombia oil exports to US fall for 1st time in 6 years

In 2013, Colombia’s oil industry witnessed its first decline in exports to the US after six years of flourishing trade, forcing it to diversify its clientele to farther countries.

Between 2006 and 2012, the tailoring of crude oil composition to US requirements had boosted Colombia’s external sales by 200%, hitting a high of 403,000 barrels per day.

Nevertheless, the US Energy Department’s Energy Information Administration (EIA) recorded a 6.5% decrease in exports by November 2013, the first negative statistics in six years.

Sources

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