Colombia’s majority state-owned oil company Ecopetrol has cut its investment plans for the second time this year due to the sharp drop in oil prices, which also means reduced production, CEO Felipe Bayon said May 12.

Ecopetrol’s capex for the year now sits in a range between $2.5 billion and $3 billion, he said.

In the middle of March, the energy company reduced its investment plan for the year to a range of between $3.3 billion and $4.3 billion, down from the original target of $4.5 billion and $5.5 billion.

“Now we are looking at somewhere between $2.5 billion and $3 billion,” Bayon said on a call with investors after the release of the company’s first quarter results.

“We are going to defer investments over time in line with the level of activity,” he added.

Ecopetrol, Colombia’s biggest oil company, reported a 95% plunge in first-quarter net profit, which fell to 133 billion pesos (US$34 million), due to the double shock of plummeting oil prices and surging supply amid falling demand caused by the spread of the novel coronavirus.

The company has reduced its production outlook for the year to a range of between 660,000 and 710,000 barrels of oil equivalent per day (boe/d), down from a previous target of around 750,000 boe/d.

Ecopetrol shares on the Colombian stock exchange rose 0.48% early in the session to 2,075 pesos.

“The criteria we have taken into account is to assure that all the projects that have an important profitability in terms of production, which are the greatest generators of cash and which best protect reserves, have the corresponding financing,” said Jaime Caballero, Ecopetrol’s vice president of finance.

Bayon warned the rest of 2020 will be difficult for the company.

The challenges facing Ecopetrol have been echoed around the region. Mexico’s Pemex recently reported a roughly $24 billion first-quarter loss and Brazil’s Petrobras scrapped its debt reduction target.

“The second and third quarters are definitely going to be very hard because we are not seeing demand, it has been destroyed, although there has been some minor recovery,” Bayon said.

($1 = 3,901.34 pesos)