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Labor unrest taking shine off Colombia's oil boom

Colombian soldiers stand guard in Campo Rubiales field in Meta
Colombian soldiers stand guard in Campo Rubiales field in Meta

By Daniel Trotta

PUERTO GAITAN, Colombia (Reuters) - Protesting oil workers have yet to buy into Colombia's grand vision for its oil industry, staging strikes that have shut the country's largest oil field and threatening further unrest.

The government says oil can help lift Colombia out of poverty but workers complain of depressed wages and of police and army complicity in thwarting attempts to organize unions.

"They think we're just a bunch of Indians," said Carlos Rodriguez, an activist in Union Sindical Obrera (USO), which has led protests at Campo Rubiales, a partnership between Canada's Pacific Rubiales and Colombian state oil company Ecopetrol .

"We proudly have indigenous ancestry but we're not a bunch of bare-asses with sandals and arrows like when the Spanish arrived. We're civilized."

When Ecopetrol's chief executive, Javier Gutierrez, visited New York in September, in the middle of the protests that shut down the Rubiales field, he described them as "growing pains."

"When you grow this fast, it is natural to face some resistance," he told reporters at the Plaza Hotel before spending the rest of the day with investors and analysts.

Pacific Rubiales declined to comment.

Rodriguez's anger is shared by many of the workers of Puerto Gaitan, a product of living in company camps while on 21-day contracts and the grinding poverty of the town, where social services remain depressed despite receiving $50 million a year in oil royalties.

What should be Colombia's boom town has become a place, workers say, where dreams of economic security come to die.

Puerto Gaitan, population 20,000, lies roughly 200 miles from Bogota in the plains below the eastern slope of the Andes. As the nearest town to Campo Rubiales, Colombia's largest oil field about 100 miles away, it is ground zero in the fight to share Colombia's oil wealth, the place where workers gather before and after their 21-day stints.

They are paid about $550 for that time plus nine days off, and say they often have little guarantee when they will be invited back.

Of some 12,000 workers at Campos Rubiales, about 1,500 form part of the permanent workforce. The rest are hired on temporary contracts. USO says it represents about 3,000 workers in both categories, and rival labor union UTEM claims 1,400.

Workers complain they are hired temporarily to perform core functions of the oil business, which denies them benefits and lowers company labor costs. The hiring is done through intermediaries such as cooperatives or service companies.

USO says the practice violates a side agreement on labor rights that is part of Colombia's free-trade agreement with the United States. Democrats in the U.S. Congress only approved the pact last month after the labor deal was negotiated.

Rhett Doumitt, a representative of the U.S. labor federation AFL-CIO who is monitoring compliance with the free-trade agreement in Puerto Gaitan, said companies are violating Article 63 of Law 1429, the side agreement, through their repeated use of contract workers, denying workers the rights they would enjoy as full-time hires.

"It's a matter of principle. They don't want to relinquish the subcontracting because it's so profitable, not just for oil industry but for every industry in Colombia," Doumitt said.

Ecopetrol did not answer questions about the labor law. Pacific Rubiales did not respond to any queries.

Colombia produces nearly 1 million barrels per day (bpd), nearly double the amount from 2005, and Campo Rubiales is on track to account for 25 percent of the national total by 2012.

Production is expected to keep climbing. From an oil prospector's point of view, Colombia is largely unexplored.

'CLEAN BARRELS'

On his trip to New York, Javier Gutierrez made a pledge.

"We want clean barrels without accidents, without environmental incidents, with normal labor relations," the CEO said, adding Ecopetrol also aims to ramp up output to 1.3 million bpd by 2020 and maintain a 17 percent profit margin.

Ecopetrol recently posted quarterly net profit of $2.2 billion, the highest in its history and good for a 29.8 percent profit margin.

During a period of calm in the labor conflict last month, Gutierrez, Pacific Rubiales CEO Ronald Pantin and Energy Minister Mauricio Cardenas flew with a host of dignitaries and journalists to the private airstrip at Campo Rubiales, which was guarded by army and police forces.

"This is the best chance we have to become a developed country," Cardenas said. "Colombia is going to be an example, showing the world it's possible to firmly develop its energy resources while the entire population prospers."

Pantin went further, telling workers, "Pacific Rubiales's intent is not to make money, it's to leave a mark on society."

A reporter asked Pantin if he had the same message for shareholders. "My intent is to make money," he responded, "but these days any responsible company in the world has to have social responsibility and environmental responsibility. I think my shareholders would be the first to agree."

Clearly labor peace is good for profits. Ecopetrol cannot meet its production goals if protesters shut down oil fields.

"The problem with workers is the more you give them the more they want. And the more successful you get, the more they want again. They can read headlines when you make $200 million in a quarter," said Rupert Stebbings, country manager in Colombia for the Latin American brokerage Celfin Capital.

Pacific Rubiales made a net profit of $194 million in the third quarter, and Stebbings said it would still break even if oil were at $30 a barrel. Benchmark Brent crude traded at around $107 on Wednesday.

"In the grand scheme of things, labor is relatively little with regard to the operating costs," said Matt Portillo, an associate at merchant bank Tudor, Pickering, Holt & Co.

Oil workers around the world are often paid a premium to travel to remote locations in high-risk jobs. Oil workers at Campo Rubiales are guaranteed around $550 per month, roughly twice the country's minimum wage.

Workers characterized the wage as "miserable". They complain of worker tents where 100 or more men sleep on cots and the nearest bathrooms are 100 meters away.

"The workers are assigned to concentration camps," said Sebastian Bedoya, 60, a pipeline worker who said his temporary contract was not renewed after the company discovered his union activism. "You have to get up at 3 in the morning if you want to get a shower. Otherwise the line is too long and you can't make it to breakfast at 5.

"You know what's the worst? The company calls us to start work on a certain day, and when we arrive they make us wait another three or four days before we can start."

So they wait in Puerto Gaitan, crashing in cheap motels, their anger building as they question where the $50 million in royalties are being spent.

"This conflict is polluting all of Colombia," said Jaiber Alfonso Mendez, 30. "This situation will have repercussions throughout the country. This is going to spread."

(Additional reporting by Julia Symmes Cobb; Editing by Kieran Murray)

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