Latin America: history, politics, and culture

Ecopetrol

Company Profile

Ecopetrol is the state-owned petroleum and natural gas producing (extracting and refining) company of Colombia, and is publicly traded in addition to operating as a government business (Ecopetrol 2010). The company is headquartered in the capital district of Colombia, and it's hydrocarbon extraction activities are carried out in more than twenty different regional blocks as a part of the company's monopolistic operations, and as a partner with other firms in eleven other locations (Business News Americas 2010). Ecopetrol's oil and gas pipelines stretch more than eighty-five-hundred kilometers (more than five thousand miles), delivering the company's products domestically and to international transport locations for exportation (Business News Americas 2010).

Ecopetrol is the largest company operating in Colombia; ninety-percent of the company is owned by the government, but through joint ventures with neighboring governments (Brazil, Peru, and the United States through its Gulf of Mexico exploratory operations) and public trading that percentage may begin to shrink somewhat in the coming years (Hoovers 2010). Nearly half of all Colombian exports of crude oil and refined products -- which make up a third of Colombia's overall exports each year -- are conducted by Ecopetrol through either the main corporation or its many affiliate branches and subsidiaries (Google Finance 2010). With operations in all major areas of the country and several abroad, dedicated ports in the Pacific and the Caribbean, and other factors, Ecopetrol is one of the four largest Latin American petroleum companies (Sourcewatch 2010).

Market Capitalization, Employees, and Financial Strength

Due to it's state-owned status and its general status as a petroleum-producing company, the market capitalization that Ecopetrol is able to command is fairly significant, though difficult to expand. The company recently acquired several smaller oil producing and distributing companies, adding to its available resources, and at this time it's resources are all spoken for either domestically or through international trade (Google Finance 2010). The market, that is, more than keeps pace with available production, and though -- indeed perhaps because -- Ecopetrol (like all major oil companies) keeps a substantial reserve of crude and refined oil on hand at all times, it has been fairly successful in its efforts to maximize its market share alongside other companies (Hoovers 2010).

There were over six thousand workers employed full time in various positions at Ecopetrol in 2008, and though exact figures for 2009 and currently are unavailable due to massive changes in the company's holdings and organizations, this number has likely climbed by as much as another thousand (Ecopetrol 2010). The vast majority of these employees are located in Colombia, but many of Ecopetrol's workers are in neighboring countries, and the company's plans for increased international expansion could definitely affect this balance (Business News Americas 2010). These expansions are all possible due to the company's continued financial strength -- Ecopetrol had a substantial profit margin throughout the global recession; though the company's profitability was somewhat reduced by the worldwide capital issues and spending drop, it remains highly viable (Google Finance 2010).

Product Line and Market Segment

Ecopetrol's product line consists purely of hydrocarbon resources, either in their crude state as pulled from the ground or in refined and consumer-ready forms transported directly to retailers or to distributors. The company's specific products include Crude Oil, LPG, Butane, Virgin Naphtha, Cracked Gasoline, Motor Gasolines, Jet Fuel, Diesel No. 2, Fuel Oil (Sourcewatch 2010). The company's own distribution network, including pipelines and transportation vehicles for both land and sea, also form a part of the company's business through their utilization by smaller production companies; Ecopetrol's continued expansion and acquisition of distribution networks and systems could potentially make this a larger part of the company's profits in the future (Hoovers 2010).

As stated above, Colombia has a fairly extensive market segment, and there is little the company can do in expanding this segment without increasing production (and such attempts are being carried out, both through acquisition and a simple expansion of operations) (Ecopetrol 2010). Though not the sole operator in its industry in Colombia, the company provides the vast majority of oil and natural gas products to the domestic market, and its international market share makes it one of the world's thirty-five largest petroleum companies (Sourcewatch 2010). Ecopetrol has also established a very strong market presence in the Caribbean and South America; fluctuations in purchasing overall and through competition with other regions -- particular the Middle East -- make the establishment of a single concrete measure of market segment fairly difficult (Ecopetrol 2010).

Domestic and Export Strategy

Again, Ecopetrol's state-owned status plays a large role in determining the company's strategy for in its domestic market. The company has essentially monopolized much of the hydrocarbon resources that exist within Colombia's borders, and through its existence as a governmental organization has a much greater deal of price flexibility than its domestic competitors (Ecopetrol 2010; Sourcewatch 2010). Through resource control and pricing, Ecopetrol remains poised as the leading provider of petroleum, gasoline, and natural gas products without needing any major adjustments or plans for future events 9 Sourcewatch 2010). The company's highly profitable export operations also assist in the company's ability to control domestic prices (Sourcewatch 2010).

These export operations utilize a very different strategy given the far more competitive nature of the market. As one of the world's largest petroleum companies, Ecopetrol was able to take advantage of the economic turmoil and shrinkage that occurred over the past two years and has acquired smaller firms that aid in its expansion of its international efforts and market share (Google Finance 2010). A great deal of the company's profits are derived from exportation, and as developing new resources is both highly costly and somewhat uncertain the regular and even eager practice of acquisition that Ecopetrol has demonstrated in recent years can be taken as a safer, more assured, and cheaper method of increasing both product supply and international market share (Google Finance 2010; Hoovers 2010). This strategy will doubtless continue to be utilized by the company in the future.

Future Prospects