Regulatory Due Diligence for Oil Pipeline Purchase, Colombia

Client needs

I Squared was interested in purchasing an equity stake of in oil pipeline owned by Oleoducto Central S.A. (OCENSA), a midstream subsidiary of ECOPETROL, the national oil company. The pipeline connects Colombia’s most prolific oil basins with the country’s main crude oil export terminal and acts as a gateway to the country’s largest refineries. The investor needed to understand the revenue model and regulatory risk as part of its due diligence.

How Castalia helped

• Assessed Colombia’s regulatory framework and the role of key market participants
• Modelled the regulatory weighted average cost of capital for oil transport and the tariff for oil transport for 2019-2023
• Presented the regulatory risks and mitigants and potential changes in market conditions, such as production volumes that would affect OCENSA’s revenues.

The outcome of our work

Based on our advice, I Squared bid on OCENSA and successfully acquired an equity stake in the company.