Colombia court to study ChevronTexaco gas contract

Reuters, 03.31.03, 5:01 PM ET BOGOTA, Colombia, March 31 (Reuters) - The Colombian government will ask a local court whether state-owned Ecopetrol should renegotiate a contract with U.S. firm ChevronTexacoCorp. (nyse: CVX - news - people) to develop the offshore Catalinas natural gas field at a cost of $150 million, officials said on Monday. The State Council, a court that arbitrates contractual disputes between the government and the private sector, will determine whether the current terms of the Catalinas contract mean the government would forfeit potential royalties, Comptroller General Antonio Hernandez told reporters. If so, then Ecopetrol would renegotiate the contract, said Hernandez, the chief auditor of government spending, speaking after a meeting with President Alvaro Uribe. The auditor argues that if the project is, in effect, an extension of two fields already operated by a ChevronTexaco subsidiary then the state would receive $100 million less in royalties. Under Colombian law, if the court decides that Catalinas is just an offshoot of the existing operation according to the current contract, then royalties would be only 7 percent of production, compared with 20 percent if the project is totally new. "We have decided in this meeting that the national government will consult the State Council," Hernandez said. "It shouldn't take a long time, I estimate it will be two or three months," he said, adding, "Depending on its ruling, we will continue or renegotiate the contract." Ecopetrol signed the Catalina contract with Texas Petroleum Co., a ChevronTexaco subsidiary, on Feb. 8 but the controversy has slowed development of the project, which would cost $150 million. Catalinas, off the coast of the northeastern Colombian province of La Guajira near Venezuela, would ensure the natural gas supply to much of central Colombia for decades, with some left over to export to Venezuela. Texaco already operates the offshore Chuchupa field in La Guajira, and the onshore Ballenas field, producing a total of 500 million cubic feet a day, with which it supplies much of the gas needs of the country's capital, Bogota. Total proven reserves at the fields are estimated by Ecopetrol at 2,266 billion cubic feet. ChevronTexaco has not commented here on the dispute.