Regulatory Due Diligence for Oil Pipeline Purchase, Colombia
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.