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

1. INVESTMENT CLIMATE IN COLOMBIA Isaac Yanovich F. President ECOPETROL S.A. Cartagena, Mayo 20, 2005

2. AGENDA • Investment Climate in Colombia • Partnership Opportunities with Ecopetrol • Why Partner with Ecopetrol S.A.

3. 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

4. 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

5. ECOPETROL INVESTMENT PROGRAM Ecopetrol is spending the highest E&P budget in recent years Exploration Budget (US$MM) Production Budget (US$MM)

6. AGENDA • Investment Climate in Colombia • Partnership Opportunities with Ecopetrol • Why Partner with Ecopetrol S.A.

7. 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

8. 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

9. 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)

10. PARTNERSHIP OPPORTUNITIES 3. Develop heavy oils – Castilla Project

11. 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

12. 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

13. AGENDA • Investment Climate in Colombia • Partnership Opportunities with Ecopetrol • Why Partner with Ecopetrol S.A.

14. 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

15. 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

16. 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)

17. 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)

18. 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).

19. 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

20. THANK YOU • Contact info: Isaac Yanovich F. President Ecopetrol S.A. yanos@ecopetrol.com.co Ph: (571) 2344112 Bogotá, Colombia www.ecopetrol.com.co

21. 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

22. 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

23. 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)