INVESTMENT CLIMATE IN COLOMBIA
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INVESTMENT CLIMATE IN COLOMBIA Isaac Yanovich F. President ECOPETROL S.A. Cartagena, Mayo 20, 2005 - PowerPoint PPT Presentation


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INVESTMENT CLIMATE IN COLOMBIA Isaac Yanovich F. President ECOPETROL S.A. Cartagena, Mayo 20, 2005. AGENDA. Investment Climate in Colombia Partnership Opportunities with Ecopetrol Why Partner with Ecopetrol S.A. INVESTMENT CLIMATE.

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INVESTMENT CLIMATE IN COLOMBIA

Isaac Yanovich F.

President

ECOPETROL S.A.

Cartagena, Mayo 20, 2005


AGENDA

  • Investment Climate in Colombia

  • Partnership Opportunities with Ecopetrol

  • Why Partner with Ecopetrol S.A.


INVESTMENT CLIMATE

Colombia has adopted bold measures to enhance investment climate

  • Key Measures – Government Level

  • Creation of National Hydrocarbon Agency (ANH)

  • Enhanced fiscal terms for E&P contracts

  • Improved physical security

  • Increased exploration budget for Ecopetrol and ANH

  • Key Measures – Ecopetrol S.A.

  • Leadership role of promoting new projects and ventures in Exploration and Production


INVESTMENT CLIMATE

We have seen a strong industry response

  • Incumbent players strengthening their position

    • Occidental Petroleum, ChevronTexaco, BP, Total, Petrobras, Perenco

  • New players entering the market

    • ExxonMobil return after 10 years, BHP Billiton, Repsol, Burlington Resources, Lukoil

  • Overall, E&P investment has increased significantly


ECOPETROL INVESTMENT PROGRAM

Ecopetrol is spending the highest E&P budget in recent years

Exploration Budget (US$MM)

Production Budget (US$MM)


AGENDA

  • Investment Climate in Colombia

  • Partnership Opportunities with Ecopetrol

  • Why Partner with Ecopetrol S.A.


PARTNERSHIP OPPORTUNITIES

Priorities

Ecopetrol priority in E&P is to halt declining production

Current partnership opportunities with ECP

Ecopetrol Priorities in E&P

  • Lead industry into high impact exploration areas

  • Maximize output from existing fields

  • Develop heavy oils

  • Attract investment into small and medium size prospects

  • Expand internationally

  • Acquire licenses jointly for new areas from ANH

  • Develop mature fields (e.g. Tibú Project)

  • Develop heavy oil potential (e.g. Castilla Project)

  • Joint ventures with Ecopetrol to operate in other Latin American countries

  • Invest in the Private equity Exploration Fund


PARTNERSHIP OPPORTUNITIES

1. New Areas offered by ANH

General Description

Potential

  • Diverse project sizes

  • Colombia is vastly unexplored

  • ANH has wide acreage available for licensing

  • Fiscal terms of new contract are very attractive.

  • Ecopetrol is willing to invest in exploration and diversify risk through partnerships

Requirements

  • Technical studies

  • $20 to $30 US$ million in Piedemonte areas

  • $5 to $15 US$ million in other areas


PARTNERSHIP OPPORTUNITIES

2. Develop mature fields – Tibu Project

Potential

General Description

  • 90 – 255 mmbls proven Undeveloped Reserves.

  • Incremental production: 8 - 33 kbopd

  • Required investment: 150 - 300 $USMM

  • Existing “Tibú” field with current production: 2,000 bopd, 30 - 50 °API

  • Low Recovery Factor: 27%

  • Low efficiency water flood system (Tertiary formations).

  • Opportunity

    • Tertiary

      • Infill Drilling

      • Redesign of Waterflood Pattern

    • Cretaceous

      • Horizontal or highly deviated drilling (Cretaceous).

Timetable

  • Prequalification round in progress

  • Deadline for prequalification documents

  • June 30, 2005

ECOPETROL invites all of you to a special presentation about Tibu Project tomorrow at 11:30 (Pegasso Room)


PARTNERSHIP OPPORTUNITIES

3. Develop heavy oils – Castilla Project


PARTNERSHIP OPPORTUNITIES

4. JV´s with Ecopetrol to operate in other Latin American countries

  • We are looking for investment opportunities with existing production and low and medium exploratory risk

  • Focus:

    • Target markets: Ecuador, Argentina, Brazil, Venezuela

    • Target Size of net reserves: 50 - 70 MBLS.

    • Target size of minimum production: 10.000 BOPD

    • Preferably crude, not gas.

    • Preferably producing basins, with exploratory upside


PARTNERSHIP OPPORTUNITIES

5. Private equity exploration Fund

Potential

General Description

  • More than 30% net return to investors

  • Royalties reduced to 8% for most small and medium size fields

  • Colombia is unexplored; 38% of the potential reserves are in below 10 mmboe reservoirs

  • Establish Colombia’s first Oil & Gas Private Equity Fund raising US$ 100 million

  • Invest in often left-out oil & gas properties

  • Enhance value by raising productivity and diversifying exploration and new incremental / secondary production projects

  • Exit via trade sale within a 10-year time frame, 5-year investment period

  • Fund manager with proven track record

Requirements

  • Target funding: US$100 MM

  • ECOPETROL will fund US$25MM

  • Fund closing: 2Q 2005


AGENDA

  • Investment Climate in Colombia

  • Partnership Opportunities with Ecopetrol

  • Why Partner with Ecopetrol S.A.


ECOPETROL – LEADER IN COLOMBIA

Why partner with Ecopetrol?

  • Strong Company

  • Valuable assets

  • E&P Knowledge and expertise in Colombia

  • Extensive experience in managing partnerships with world class companies


ECOPETROL – LEADER IN COLOMBIA

Net Income in Millons US Dollars

Strong Company

Total Sales in US$ Billion

5,1

4,0

3,9

3,8

59%

Exports

40%

44%

59%

41%

Local Sales

60%

56%

41%

2001

2002

2003

2004


ECOPETROL – LEADER IN COLOMBIA

Valuable assets

  • EXPLORATION

    • 19 Direct exploration blocks

    • 6 Shared risk contracts (SRC)

    • 3 E&P contracts signed with ANH

    • 4 TEAs signed with ANH

    • 34 Association Contracts under exploration

  • PRODUCTION

    • 48 direct production blocks

    • 47 Association contracts under production

  • INFRASTRUCTURE

    • Two refineries

      • Barrancabermeja:240.000 BPD

      • Cartagena: 75.000 BPD

    • About 210 production fields

    • 8.592 kms of pipelines

    • Main port on the Caribbean Sea (Coveñas)

    • Second port on the Pacific coast (Tumaco)


ECOPETROL – LEADER IN COLOMBIA

E&P Knowledge and expertise

  • Geological Knowledge

  • Local operational expertise:

    • More than 200 production fields

    • Competitive lifting costs

  • Good Neighbor (Environment, Communities)


ECOPETROL – LEADER IN COLOMBIA

Experience in managing partnerships with world–class players

Upstream

ARGOSY

BP

BURLINGTON

CEPSA

CHEVRON-

EMERALD

EXXONMOBIL

HOCOL

LUKOIL

NEXEN

OMIMEX

OXY

PETROBRAS

PETROLEUM

PERENCO

PETROSANTANDER

PETROTESTING

REPSOL-YPF

TALISMAN ENERGY TEXACO TOTALFINAELF

  • SAMPLE OF RECENT DEALS

  • ExxonMobil/Petrobras/Ecopetrol to explore gas in Caribbean Offshore

  • ChevronTexaco/Ecopetrol to expand production in existing gas fields

  • OXY/Ecopetrol to invest in enhanced oil recovery in existing fields

  • BP/Total/Ecopetrol to build gas processing plant (200 million cubic ft).


ECOPETROL S.A.

Final Remarks

Final Remarks

Security and overall business environment in Colombia has improved

A wide range of opportunities exist in Colombia

  • Upstream frontier areas, heavy oils, mature fields, marginal fields.

    ECOPETROL S.A. is an ideal partner to operate in Colombia


  • THANK YOU

  • Contact info:

    Isaac Yanovich F.

    President

    Ecopetrol S.A.

    [email protected]

    Ph: (571) 2344112

    Bogotá, Colombia

    www.ecopetrol.com.co


INVESTMENT CLIMATE

The investment environment in Colombia is improving

RESULTS

DRIVERS

  • Arrival of new companies into the country and return of others

  • Better security

  • Increased E&P activities

    • Wells

    • Seismic

    • Rigs

  • Enhanced fiscal terms for E&P terms

  • Improved security

  • Active role of Ecopetrol leading E&P activities and new ventures


PARTNERSHIP OPPORTUNITIES

CARTAGENA REFINERY EXPANSION

Potential

General Description

  • Equity participation in strategic refining location in the Caribbean

  • Estimated budget: US$800 Million

  • Cartagena Refinery expansion to:

    • Double capacity to 140 KBPD

    • Enhance conversion factor

    • Comply with environmental regulations

    • Position Cartagena as a key oil and petrochemical center in the Caribbean

  • Ecopetrol is interested in attracting private investment to the refinery

Target Players

  • Oil and petrochemical players

  • Equipment suppliers

  • Industrial Service suppliers

  • Financial institutions and export credit agencies

Timetable

  • Construction 2006 - 2009

  • Road show Mid 2005


PARTNERSHIP OPPORTUNITIES

2. Develop mature fields – Tibu Project

Potential

General Description

  • 90 – 255 mmbls proven Undeveloped Reserves.

  • Incremental production: 8 - 33 kbopd

  • Required investment: 150 - 300 $USMM

  • Existing “Tibú” field with current production: 2,000 bopd, 30 - 50 °API

  • Low Recovery Factor: 27%

  • Low efficiency water flood system (Tertiary formations).

  • Opportunity

    • Yacimientos Terciarios

      • Perforación “adicional”

      • Rediseño del patron de inyección de agua

    • Yacimientos Cretacicos

      • Perforación horizontal o de alta desviación

Timetable

  • Prequalification round in progress

  • Deadline for prequalification documents

  • June 30, 2005

ECOPETROL invites all of you to a special presentation about Tibu Project tomorrow at 11:30 (Pegasso Room)


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