BOMBINGS CUT INTO COLOMBIAN OIL FLOW

BOGOTA - When rebel dynamite blew a hole in Colombia's second-largest
petroleum pipeline on July 23, oil officials here did not think much about
it. After all, this was a typical rebel protest against what the insurgents
regard as excessive multinational presence in the oil sector.

But that explosion turned out to be the beginning of the longest sustained
bombing blitz against the Cano Limon-Covenas pipeline since it was built in
1986.

In the past eight weeks, the leftist National Liberation Army has punctured
the line at least 23 times and has paralyzed the operations at the Cano
Limon wellfield, which is operated by Los Angeles-based Occidental
Petroleum. The line was attacked again Tuesday, and the pipeline remained
out of service until late Thursday.

Before the bombardment began, the line carried about 110,000 barrels a day
of crude from the Cano Limon field in northeastern Colombia to the Caribbean
port of Covenas for export to the United States and other countries.

At a time of soaring fuel prices, when oil-producing countries might be
smiling as their coffers overflow, the rebel bombing blitz has unleashed new
worry in Colombia. The attacks have deprived the government of hundreds of
millions of dollars in revenue - and eroded business confidence, challenging
President Andres Pastrana's efforts to boost foreign investment in the oil
business.

"The security issue is very negative for companies doing business in
Colombia," Alejandro Martinez, head of the Colombian Petroleum Association,
acknowledged Friday.

Colombia produces about 700,000 barrels per day - small by comparison with
the world's major oil powers but critical to Colombia's economy. Oil is this
Andean nation's leading legal export, accounting for about 30 percent of
foreign export income, according to a spokesman for Ecopetrol, the
state-owned oil company.

Unless large new reserves are found soon, Colombia will become a net
importer of crude for the first time. The National Liberation Army,
Colombia's second-largest rebel group after the Revolutionary Armed Forces
of Colombia, has claimed responsibility for the rash of attacks. The rebels
say the bombings are in part a response to Pastrana's $7.5 billion,
US-backed strategy to destroy the cocaine industry and rebuild the country's
provincial economy and society.

Just before President Clinton's visit on Aug. 30, the group declared that
foreign firms were "looting and robbing" petroleum.

But according to the army commander in the area where the line has suffered
the most attacks, the bombings may be a show of strength in the midst of
fledgling peace initiatives between the National Liberation Army and
government representatives. The rebel group has been pushing the government
to create a demilitarized sanctuary in north-central Colombia as a
prerequisite for formal peace talks - similar to the demands made by the
Revolutionary Armed Forces of Colombia, which was given its own
Switzerland-size safe zone and is now involved in slow-moving talks with the
government.

General Luis Fernando Barbosa said that the National Liberation Army has
also dynamited the country's electricity towers and road blockades.

"It's absurd that they are meeting with diplomats, talking about peace, and
at the same time destroying the country," Barbosa, commander of the 18th
Brigade in Arauca state, said recently.

The Cano Limon-Covenas line, their principal target, has been hit about 700
times since it began operations in 1986. But the blitz is being described as
unprecedented for its duration and ferocity. Occidental, with its on-site
storage tanks full, and with no means by which to send its crude to the
Covenas port or to Colombia's refineries, has been forced to turn off its
wells. In addition, five ships that had been due to load crude from the
field have been canceled or postponed, according to officials at Occidental
and Ecopetrol.

The line has been out of action for 117 days this year, because of 62 bomb
attacks.

A spokesman at Occidental's headquarters in Los Angeles, however, insisted
that the wave of attacks has hurt the Colombian community much more than it
has hurt the multinational firm.

"It will not have a material financial impact on Occidental," said Lawrence
Meriage, Occidental's vice president for communication and public affairs.
"About 85 cents on every dollar" made from crude "goes to the Colombian
community" through royalties, state take, and taxes.

According to Alberto Calderon, president of Ecopetrol, the country is
suffering losses of about $900,000 per day in royalties, taxes, and state
participation due to the interruption in service on the line.

The 420-mile-long line is extremely vulnerable because it runs mostly above
ground, through sparsely populated countryside, in areas with high rebel
presence and weak government control.

The oil-rich Arauca state in northeast Colombia, where the Cano Limon field
is located, is heavily disputed among the two rebel forces and the national
army. Vast areas of the region are under strong rebel influence.

Despite a "very good effort" on the military's part to ensure the safety of
multinational oil contractors in Colombia, the guerrillas are able to
cripple the nation's pipelines just about anytime they want, said Martinez
of the Colombian Petroleum Association.

"All it takes is two guys to come along, put a bomb underneath the pipe, and
that's it!"

The solution, he said, will lie in successful peace negotiations and a
cease-fire.