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* Ecopetrol to start pilot project for unconventionalreserves

* Output to remain flat or rise in 2018(Adds quotes, context, details)

By Marianna Parraga

HOUSTON, March 5 (Reuters) - Colombia's Ecopetrolwill go hunting for assets to buy this year, and bid in oilauctions in the United States and Latin America, after emergingfrom a period of deep budget cutbacks, Chief Executive FelipeBayon told Reuters on Monday.

Low crude oil prices had forced Ecopetrol and other oilcompanies in Latin America to tighten their belts in recentyears, cutting exploration investment or delaying key projects,and severely hitting output and refining.

Colombia's state-run Ecopetrol halted production at 12oilfields as it reduced spending. Last week, it reported a netprofit of $2.2 billion in 2017, the highest in the last fouryears.

Last year "was a very good year for us. Analysts wereexpecting a lower profit," Bayon said on the sidelines of theCERAWeek energy conference in Houston.

The company expects its oil and gas production to remainflat or to rise slightly this year to 725,000 barrels of oilequivalent per day (boepd), under an investment budget of $4billion almost completely focused on exploration and production.

Part of that spending will go to projects aimed atreplenishing the firm's energy reserves, including a pilotprogram to explore unconventional resources at the MagdalenaMedio basin, where Ecopetrol estimates there could be up to 7.4billion barrels, more than triple Colombia's proven reserves.

Ecopetrol last year was part of a team that won an offshoreblock in the Gulf of Mexico. Latin American countries holdingoil auctions this year include Ecuador, Uruguay, Brazil andArgentina.

REFINING MORE, CONSUMING MORE

Ecopetrol's main refinery - the recently expanded Cartagena- has increased crude processing to 154,000 barrels per day,while reducing the proportion of imported crude it needs to 30percent versus 55 to 60 percent a year ago, Bayon said.

The cost of Cartagena's modernization doubled to $8 billioncompared with the $4 billion originally planned, but it has madethe company less dependent on imports while leaving a small fuelsurplus for export.

Ecopetrol is also reducing the volume of imported naphtha itneeds to dilute its heavy crude output by making changes at itstransportation system, according to Bayon.

Using alternative transport has allowed it to avoid problemsat the closed Cano Limon-Covenas pipeline, which has been thetarget of frequent rebel attacks.

Bayon also said that tighter controls by the Colombiangovernment at the Venezuelan border had cut illegal gasolineimports, increasing the domestic need for gasoline and otherfuels.

Ecopetrol's Barrancabermeja refinery, where workers recentlywent on strike due to a salary dispute, is expected to restartin seven to 10 days after completing maintenance work, he said.(Reporting by Marianna Parraga, Editing by Rosalba O'Brien)