Issued on: 23/09/2021
Vizcatán del Ene (Perú) (AFP)
In an impoverished village in Peru's largest coca-growing region, Angelica Lapa mourns her 19-year-old son, killed four months ago by remnant Shining Path guerrillas who maintain a grip of terror over the forgotten region.
On May 23, a Sunday, armed men stormed the far-flung settlement of San Miguel del Ene -- population 300 -- and attacked two taverns, mowing down 16 people. Four were children.
Lapa's son Luis Fernando was among the victims.
"My son was innocent, humble. His death was very difficult for us," the 67-year-old said as she wept on the small farm where she ekes out a living growing mainly coca -- the leaf used to make cocaine.
The plant is much coveted by drug dealers the government says work in cahoots with Shining Path rebels -- a convergence of interests that places the community in constant peril.
This was not the first time Lapa -- her hands worn by many years of labor in the earth and sun -- had loved ones killed by Shining Path.
In the 1980s, at the height of Peru's war, she lost cousins, uncles and grandparents to the Maoist guerrillas fighting to overthrow the government.
After so much suffering, she told AFP, it was time for "the government to send the army to put pressure on those who have killed so many innocent people."
Shining Path is labelled a terrorist organization by Lima, the European Union and United States.
- 'Comrade Jose' -
The government blamed the May 23 attack on a last active group of Shining Path guerrillas.
The attackers had left behind pamphlets warning the villagers, who live in extreme poverty in precarious wood and brick huts, not to vote for Keiko Fujimori -- then a candidate for presidential elections which have since been settled in favor of her rival Pedro Castillo.
After being militarily overwhelmed in the 1990s, the vast majority of Shining Path leaders were arrested, and the movement has dwindled to just about 200 remaining fighters led by renegade commander Victor Quispe Palomino or "Comrade Jose"
They are active in the remote, mountainous valley formed by the Apurimac, Ene and Mantaro rivers, though the Shining Path's original leaders do not recognize these fighters as members.
Shining Path founder Abimael Guzman died aged 86 at a maximum security prison on September 11, while serving a life sentence.
The sixteen victims of San Miguel del Ene are the latest on a long list of tens of thousands people killed in two decades of internal conflict from 1980 to 2000.
In the long-suffering VRAEM valley, so-called after the three rivers that form it, coca leaf cultivation is the only means of survival for many people in a place that does not even have sanitation or potable water.
The plant yields four times a year, making it more profitable than cacao, which is harvested only once a year, or lower-priced bananas.
"Economically, the leaf sustains us," Angelica's other son Roy, 35, told AFP.
- Most grown for drugs -
Peru is the world's second-largest producer of coca, after Colombia. About half of Peru's 49,000 hectares of coca plantations are found in the VRAEM valley.
The plant is allowed to be grown for traditional use -- usually chewed or brewed in a tea and consumed as a stimulant or to counter altitude sickness.
But for the most part, the coca grown in the VRAEM is destined for the production of cocaine -- of which the United States is the world's largest consumer.
According to Peru's DEVIDA anti-drug commission, about 90 percent of the 120,000 tons of coca grown in the country every year ends up being used in illicit drugs -- only 12,000 tons are reserved for traditional consumption.
In 2019, before the global pandemic, one "arroba" (11.5 kilograms) of coca leaf sold to drug traffickers for up to 200 soles, or about $60.
Now, they get five or six times less, coca growers told AFP.
"The pandemic ruined us economically because the price fell," said Roy.
Dina Manrique, 45, explained the locals had nowhere else to turn.
"There is no other product for us. Sometimes we grow cacao and we can't make a sale. We were selling to Enaco (the state coca company), now we have to sell to other people. I don't know what they will do," she said.
© 2021 AFP
Cocaine And Crime Are Amplifying Colombia’s Crude Oil Crisis
For as long as many people remember Colombia has been a violence riven country that has been a major hub in the global cocaine trade. What many people do not realize is that Colombia is one of Latin America’s largest oil producers. For the first seven months of 2021, Colombia pumped an average of 730,015 barrels per day, ranking it as the region’s third largest producer behind Mexico and then Brazil.
Over the last three decades Colombia has become increasingly dependent on petroleum to drive its economy, leaving it vulnerable to brutal price swings and the investment decisions made by big oil. Even during 2020 when oil prices plummeted because of the impact of the COVID-19 pandemic on economic activity and a price war between Russia and Saudi Arabia, crude oil remained Colombia’s top export. During that year, petroleum was also responsible for 17% of the national government’s revenue and contributed around 3% of gross domestic product.
The importance of Colombia’s crude oil industry is rapidly rising because of Bogota’s focus on bolstering economic growth, after a year where the economy shrank nearly 7%, and filling a massive budget black hole with a deficit equal to nearly 9% of GDP.
The urgency with which Colombia needs to attract additional petroleum investment is emphasized by steadily rising prices, with the international Brent benchmark rising more than 50% this year and currently trading at over $75 per barrel. Ironically, while Colombia is pumping more petroleum than neighboring Venezuela, 731,255 barrels per day compared to 523,000 barrels, Colombia has paltry reserves totaling 1.8 billion barrels compared to Venezuela’s 304 billion barrels. This illustrates the urgency with which Bogota must act to attract substantial foreign energy investment while reducing the geopolitical risks faced by oil companies operating in Colombia.
A combination of rising insecurity, increased lawlessness, nationwide anti-government protests, sharply weaker oil prices, and the pandemic are all weighing heavily on investment and ultimately Colombia’s petroleum production. Last year oil industry investment plunged to $2.05 billion, its lowest level in over a decade, and even after oil prices rallied it is only forecast to be $3.2 billion for 2021, a marked 20.5% less than the $40.03 billion spent during 2019.
As a result, hydrocarbon production remains weak, well below the one million barrels once targeted by Bogota as being the optimal level to drive economic growth. Ministry of Mines and Energy data (Spanish) shows Colombia only pumped an average of 731,255 barrels per day during July 2021. This was 0.5% less than the same period a year earlier, at the height of the pandemic, when there were only six active drill rigs compared to 19 at the end of July 2021.
Source: Colombia Ministry of Mines and Energy, U.S. EIA.
There is a long way to go before Colombia’s economically crucial petroleum output returns to pre-pandemic levels. That could not occur at a worse time for a government battling to increase revenues, reduce inflation caused by a sharply weaker peso, and fund social programs to alleviate a marked uptick in poverty. Four-month-long nationwide anti-government demonstrations had a material impact on Colombia’s crude oil production causing the Andean country’s oil output to plunge to a multi-year low of 650,884 barrels per day by late May 2021.
These are not the only events weighing heavily on Colombia’s economically crucial petroleum industry. A significant uptick in violence and lawlessness across Colombia, particularly since 2018, is deterring investment and preventing the effective exploration of many remote parts of the country for the presence of hydrocarbons.
Colombia is enormously underexplored, with it estimated that less than a third of the Andean country has been examined for the presence of hydrocarbons, yet it possesses considerable potential. It is estimated that combined, Colombia’s 18 sedimentary basins possess potential hydrocarbon resources of 37 billion barrels of oil equivalent, which is more than twenty times greater than Colombia’s proven petroleum reserves. Only seven of those 18 sedimentary basins have commercial crude oil-producing operations. The primary reason for the lack of hydrocarbon exploration and presence of industry operations is Colombia’s long history of civil conflict with many petroleum-rich areas located in zones long dominated by armed non-state actors.Related: Crude Prices Jump On Oil Sands Outages
Bogota believed that the 2016 peace agreement with the Revolutionary Armed Forces of Colombia (FARC – Spanish initials) would open up large swathes of territory controlled by the leftist guerillas to oil exploration. This has not occurred because of a sharp uptick in violence and lawlessness since President Ivan Duque took power after defeating leftist candidate and senator Gustavo Petro in the 2018 presidential election. That, in part, can be blamed on Duque’s reluctance to effectively implement the FARC peace accord which is responsible for a growing number of dissident combatants who do not recognize the agreement.
Those dissident FARC groups are fighting among themselves as well as with the Marxist National Liberation Army (ELN – Spanish initials) and various paramilitary successor groups for control of lucrative coca cropping, illegal gold mining, and smuggling routes. At the end of 2020, it was estimated there were around 7,000 combatants comprising the various non-state armed groups operating in Colombia, with FARC dissidents and the ELN accounting for roughly 2,500 fighters each.
The remaining combatants were split across various paramilitary successor groups, the most prominent being the Gulf Clan. It is the massive profits generated by the production and trafficking of cocaine, which for decades has fueled Colombia’s multi-party low-level asymmetric conflict, that is estimated to have claimed around 220,000 lives. Control of coca cropping regions, with the leaves of the coca plant being the key ingredient needed to produce cocaine, is the primary driver of escalating violence. A historically weak state presence in many of the remote areas where coca growing occurs is further adding to the escalating conflict.
Those zones are also rich in crude oil, containing Colombia’s most important onshore sedimentary basins where most of the Andean country’s oil reserves and operational oilfields are. This includes the prolific Llanos Basin which forms the hub of Colombia’s onshore oil industry and contains the Rubiales field, which is found in the fifth-ranked coca-producing area.
The southern Putumayo Basin, one of the Andean country’s main producing sedimentary basins, is in Colombia’s fourth-largest coca cropping region. Much of the Andean country’s crude oil resources and key hydrocarbon-bearing geological formations are found in those basins. Crucial petroleum pipelines, the only economic means of transporting crude oil from points of production to coastal ports to access global energy markets, travel through Colombia’s main coca-growing regions.
The 210,000 barrel per day Caño Limon-Coveñas pipeline, which connects Colombia’s second-largest oilfield, Caño Limon, in the department of Arauca to the port of Coveñas passes through Cataumbo, which according to the UN is the Andean country’s second largest coca-growing region. It has frequently been the target of attacks by the ELN and FARC. The 190,000 barrel per day Transandino pipeline connecting oilfields in the Putumayo Basin passes through the Pacific region which the UN recently ranked as Colombia’s largest coca-growing area. Frequent pipeline outages due to sabotage also impact Colombia’s petroleum output, with drillers forced to shutter operations, once onsite storage reaches capacity, if those pipelines are out of operation.
Heightened conflict and lawlessness are deterring foreign investment in oil exploration and operations in those regions. Cocaine production is only climbing, with the UN coca cultivation survey indicating Colombia’s cocaine output during 2020 reached another record high of 1,228 metric tons, which was 8% greater than in 2019. This is significantly higher than Colombia’s cocaine output when the Medellin Cartel was at the height of its power during the 1980s.
Even the Duque administration’s focus on eradication and interdiction, which saw the volume of cocaine seized by authorities during 2020 rise by a notable 18% year over year, has made little inroads into what is a pressing problem for Colombia. The problem is so severe that cocaine profits are now estimated to be worth up to 4%, or $12 billion, of the Andean country’s GDP, which is more than the roughly 3% generated by crude oil. Such large amounts of funds will only further finance rising levels of conflict and attract additional violence from non-state armed actors seeking to expand their revenue. That will further deter urgently required foreign investment in Colombia’s economically crucial oil industry with low proven reserves of 1.8 billion barrels likely to run out in just over six years.
By Matthew Smith for Oilprice.com
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