Colombia’s state controlled petroleum company Ecopetrol (BVC:ECOPETROL, NYSE:EC, TSX:ECP) has announced that last Wednesday as part of its divestment plan, its board of directors approved proceeding with the process of selling 100% of its shares in the company Polipropileno del Caribe S.A. This decision is part of Ecopetrol’s new strategy to confront sustained low oil prices, and the proceeds of the sale will be used to strengthen the exploration and production businesses, which are the focus of the company.
Polipropileno del Caribe S.A. markets polypropylene, polyethelyne, and resins for the plastics industry under the trade name Esenttia, and has corporate offices in Bogotá and manufacturing facilities in Cartagena. This sale process will proceed in accordance with Colombia’s Law 226 of 1995, which requires Ecopetrol S.A. to apply for and obtain the approval of the national government of Colombia.
New offshore exploration and production company to take advantage of tax benefits
Meanwhile, Ecopetrol also reports that Hocol Petroleum Limited, a fully owned subsidiary of Ecopetrol S.A., has formed a new company, Ecopetrol Costa Afuera Colombia S.A.S., as approved by Hocol Petroleum Limited’s board of directors. The new company will be responsible for offshore exploration and production activities in Colombia, which are currently being carried out by Ecopetrol S.A. as operator and non-operator.
Ecopetrol Costa Afuera Colombia S.A.S. will benefit from the tax, tariff and other benefits of Decree 2682 of 2014, as recently modified by Decree 2129 of 2015, which establishes the conditions and requirements for forming permanent offshore free trade zones in colombia.
Ecopetrol Costa Afuera Colombia S.A.S. is an indirect subsidiary of Ecopetrol S.A. and located in Colombia. It has an authorized capital of $2 billion COP and subscribed capital of $400 million COP.