Latin Finance - June 2008 - 24

ecopetrol profile Global Aspirations The company is also seeking partnerships for larger, riskier projects. It is involved in a joint venture with ExxonMobil and Petrobras in the Tayrona block, a 4.4 million hectare field on Colombia’s Caribbean coast, which the companies began to explore in 2004. “The first field [at the Tayrona block] was drilled last year and the alliance with Petrobras and Exxon continues,” Vargas says. The companies are evaluating the results of first drilling and expect to continue exploring in the offshore block. Ecopetrol is also investigating biofuels, in which it expects to invest $700 million between this year and 2015, Vargas adds. It has formed Ecodiesel, a joint venture with several palm oil producers from Colombia’s Magdalena Medio region. Ecodiesel expects to produce around 2,000 bpd of diesel at this new plant which will be mixed with output from the Barrancabermeja refinery. Even though the amount allocated for biofuels investment is relatively slight, the company is not underestimating its importance. “We want to start working in this business. Strategically this is a long term investment,” says Vargas. International exploration is another area of investment. Ecopetrol is involved in exploration ventures in Peru, Brazil and the Gulf of Mexico. “Although our focus is exploring in Colombia, for us it is important to enhance our exploration portfolio with ventures abroad,” Vargas says. In Peru, the company has three exploration blocks and six agreements for geological surveys. In Brazil, Ecopetrol operates six areas with Petrobras and others. “Our strategy aims at being a global company, not only focused on Colombia or LatAm,” Vargas adds. The official adds that the company is also looking at opportunities in Africa and the Middle East. “We are currently scanning and evaluating,” he concludes. The unprecedented rosy Ecopetrol financial position calls for a careful selection of investment to sustain the company’s future. “Ecopetrol faces the challenge to invest the financial resources it gathered with the IPO,” Camila Pérez, a Bogotá-based analyst with RGE Monitor tells LatinFinance. “With such an amount of money in cash, it is not easy to find enough projects to make good investments and make that money grow. If the money is not invested in a positive way or remains as cash in the company’s accounts, this could generate inefficiencies,” she adds. New projects also raise risks. “The company has expertise in exploration and production, they have associated with other companies and that allows mitigating risks,” Pérez says. But there are some new areas where Ecopetrol has little experience, such as deep water exploration, and internationalization. Lack of adequate technical personnel – even with the recent overhaul in management that has brought positive results to the company – also presents challenges, Pérez concludes. LF 24 LATINFINANCE June 2008

http://www.latinfinance.com http://www.latinfinance.com

Latin Finance - June 2008

Table of Contents for the Digital Edition of Latin Finance - June 2008