Colombia Oil & Gas Investment Conference Libertad y Orden The Colombian hydrocarbons sector Armando Zamora Director General National Hydrocarbons Agency Colombia Oil & Gas Investment Conference Cartagena, 20 May 2005

Agencia Nacional de Hidrocarburos It all started 100 years ago… 1905 – De Mares and Barco concessions 1918 – First discoveries: La Cira and Infantas (Tropical Oil Co.) 1951 – Reversion of De Mares Concession – Ecopetrol is established 1953 – Petroleum code 1974 – Crude imports Chuchupa – Ballena discovery (TPC) Association contract Agencia Nacional de Hidrocarburos

The 80s witnessed the highest activity A-3 Wells WTI Oil price (US$/bl) Cusiana Opening of new areas worldwide Caño Limón 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 Sliding-scale participation R Factor Variable Royalties Association Contract International Prices War taxes and remittances 70%/30% Participation Crude imports Source: ACP, DOE Agencia Nacional de Hidrocarburos

Production level (000boe / day) Agencia Nacional de Hidrocarburos The new royalty scheme (2002) is competitive Royalties % of production (per field) 25% 20% 10% 8% 5 5 125 125 400 400 600 Production level (000boe / day) Discount in relation to light crudes Gas - 20% Heavy Crude - 25% Offshore Gas (>1000 ft) - 40% Agencia Nacional de Hidrocarburos

Agencia Nacional de Hidrocarburos Active areas are located in a few basins Technical evaluation E&P ANH CONTRACTS - D T L E A Exploration Production ECOPETROL CONTRACTS D T A L E - CHUCHUPA - BALLENA LA CIRA INFANTAS CUSIANA CUPIAGUA CAÑO LIMON Agencia Nacional de Hidrocarburos

Agencia Nacional de Hidrocarburos The new contractual scheme is attractive E&P Contract Taxes + Royalties Flexible Periods Automatic extension possible Materiality + autonomy Award process First come, first served Prompt and transparent Pre-set negotiation periods Agencia Nacional de Hidrocarburos

Competitiveness map Objective Not very competitive Very competitive 100% Not very competitive Venezuela Indonesia 90% Norway Turkmenistan Angola Bolivia Gabon China 80% Colombia (2003) Australia 70% Objective State Take – Economic Fields PEPS Kazakhstan India Brazil Argentina 60% Colombia (now) 50% Peru Pakistan Very competitive United Kingdom 40% 5 10 15 20 25 30 35 40 45 50 Prospectivity Index Source: PEPS-USGS

Contracts signed since June 2004 with:* Libertad y Orden Contracts signed since June 2004 with:* Alpha Consultores Ltda Argosy Energy International BHP Billiton C&C Energy S.A. Cel Consorcio Petrotesting - Colregistros Drummond Ltd Ecopetrol Emerald Erazo Valencia y Cia ExxonMobil Geoproduction Oil&Gas Co. Harken de Col. Hocol S.A. Hupecol LLC Kappa Resources Ltd. Mecantile Colombia O&G Monsa Occidental Andina LLC Petrobras Petrocolombia Repsol Exploración Colombia S.A. Petrocol R3 Exploración y Producción Solana Petroleum Exploration Colombia Ltd. Stratus Oil & Gas Tecnopetrol PEI Winchester Oil&Gas Petrominerales Colombia Ltd. Sucursal Colombia * New entrants in bold

Agencia Nacional de Hidrocarburos Number of E&P Contracts 39 approved (27 signed) 35 32 ANH 31 30 30 28 25 25 21 20 21 14 11 15 10 5 7 4 1999 2000 2001 2002 2003 2004 2005(p)* Ecopetrol ANH-signed ANH-for signature Goal * Planned Agencia Nacional de Hidrocarburos

Agencia Nacional de Hidrocarburos Exploration activity is increasing 2D-equivalent Kms of seismic Number of A-3 wells 14000 45 40 12000 35 10000 30 8000 25 20 6000 15 4000 10 2000 5 2000 2001 2002 2003 2004 2005 (P)* * Planned Agencia Nacional de Hidrocarburos

Agencia Nacional de Hidrocarburos An unexplored country… Only 13% of total sedimentary area has been licensed: 5% by ANH 8% by Ecopetrol 87% available Total sedimentary area:  1 million km2 20%: off-shore basins 80%: on-shore basins Non- sedimentary areas Agencia Nacional de Hidrocarburos

New discoveries scenarios (to 2020) Agencia Nacional de Hidrocarburos Geological potential (to 2020) New discoveries scenarios (to 2020) 106bls 12 10 8 ? 6 4 2 Self-sufficiency ANH optimistic IHS Potential Source: IHS, ANH analysis Agencia Nacional de Hidrocarburos

Agencia Nacional de Hidrocarburos Production profiles contingent to potential scenarios Geologic potential scenarios: 000barrels/day 2.000 1.600 IHS optimistic 1.200 800 ANH 400 Self-sufficiency Current fields 2005 2010 2015 2020 Sources: UPME, Ecopetrol, IHS Agencia Nacional de Hidrocarburos

Agencia Nacional de Hidrocarburos Required activity according to scenarios of reserves to be discovered up to 2020 150 75 60 40 30 60 20 10 5-6 Self-sufficiency ANH Optimistic IHS Contracts A3 Wells Discoveries (20mmbl) Agencia Nacional de Hidrocarburos

Agencia Nacional de Hidrocarburos An aggressive campaign of new information acquisition is at the core of the ANH’s strategy Promotion Identification of opportunities Investor support Contract Management Promotion Negotiation ANH´s investments in acquisition of new geological information: ~ US$70million in 2005 ~ US$800million to 2020 New information Identification of opportunities Promote them to investors Agencia Nacional de Hidrocarburos

Agencia Nacional de Hidrocarburos Investment campaign 2005: seismic SINU SAN JACINTO CAYOS 2D VMM PACIFICO OFFSHORE - ONSHORE LLANOS Agencia Nacional de Hidrocarburos 3

SEQUENCE STRATIGRAPHY Agencia Nacional de Hidrocarburos Investment campaign: general studies SINU- SAN JACINTO SEQUENCE STRATIGRAPHY EASTERN CORDILLERA SOAPAGA CARTOGRAPHY VMM HEAVY OIL LLANOS HEAVY OIL LLANOS FOOTHILLS CARTOGRAPHY Agencia Nacional de Hidrocarburos Agencia Nacional de Hidrocarburos 5

The State will be ‘priming the pump’ Plan 2020: to discover > 4Bn boe ANH and Ecopetrol to invest ~$15Bn in exploration and development (to 2020) ANH alone to invest around ~$800m in frontier areas (to 2020) Activity objective: ~ 30 new E&P contracts / year ANH flag projects: Heavy oil Tayrona Pacific basin Sinu-San Jacinto Tello field

Agencia Nacional de Hidrocarburos Thank you! www.anh.gov.co Agencia Nacional de Hidrocarburos 5

ANH heavy oil project –Llanos Basin Objective: To prepare a bidding round in heavy oil prone areas in the Llanos basin Background: Heavy Oil is an abundant non-conventional oil resource Shallow reservoir: ~ 3,000 ft The existence of a Heavy Oil “Belt” is inferred through the presence of three currently producing fields along a very large triangle in the area: Castilla, Rubiales and El Miedo Estimated OIP ~ 400mbl Preliminary studies to be carried out by the ANH – 2005 Calibration & Reprocessing of ~ 10,000 kms of seismic information Identification of potential plays   Bidding Round Preparation: Early 2006 Planned Bidding Round: Mid 2006