THE OILFIELD SERVICES SECTOR IN COLOMBIATHE OILFIELD SERVICES SECTOR IN COLOMBIAOPPORTUNITIES AND CHALLENGES

1April 2012

SUMMARY• The Oil & Gas sector

• Market trends in Colombia• Market trends in Colombia• Exploratory and development wells drilled in

Colombia• Oilfield services sector

• SSPP Participation in Colombia's GDP and oil sectorGDP

• Oilfield companies: operational income• Oilfied companies imports

F t d t (C l US)• Free trade agreement (Col ‐ US)• Challenges for the oil and gas sector in Colombia.• CAMPETROL ‐ EXPO OIL&GAS COLOMBIA 2012C O O O &G S CO O 0

QUICK FACTS:www.campetrol.org

QUICK FACTS: COLOMBIA’S OIL&GAS INDUSTRY

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Market trends for hydrocarbons in l bColombia

CURRENT FIELDS HEAVY OIL

In 2020 65% of expected production (1,300 MBOED) of Ecopetrol, will come from existing fields.

Source: Ecopetrol S.A., Investor Presentation. Jan, 2012.

The production of heavy crude currently corresponds to 56% of total domestic oil production.Source: Acipet. Cálculos: CAMPETROL.

The first estimate of recoverable reserves will be taken after completion of first phase of exploration in two years and are expected to be between 4 and 7 billion barrels.Source: ANH, Commercial potential of heavy oil reserves in Colombia, HOLA Congress.g

UNCONVENTIONAL

Potential of unconventional resources: 

OFFSHORE

The marine basins represent 50.6% of the country's sedimentary basins.

Methane Hidrates (434,2 TCF)Shales (31,7 TCF)Coal Bed Methane (7,5 TCF)Thight Sands (1,2 TCF) Tar Sands (23 762 MMBPE)

y ySource: ANH

For 2012 are expected to drill 3 wells in the basins of the Colombian Caribbean Sea.Tar Sands (23,762 MMBPE).

Source: Arthur D’Little. Potential Resources of Unconventional Hydrocarbons in Colombia. Tomado de Ecopetrol S.A., Investor Presentation. Jan, 2012.

Source: ANH

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Main Players in Colombia

Exploratory and development wells drilled in Colombia

OILFIELD SERVICES SECTORwww.campetrol.org

OILFIELD SERVICES SECTOR

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SSPP Participation in Colombia's GDP and oil GDPsector GDP

1.40%30%

23.66%

1.16%

1.00%

1.20%25%

% SSP Partec

tor G

DP

0.61%

0.80%

15%

20%

ticipationin N

on in

the

oil s

e

9.72%

0.61%

0.40%

0.60%

10%

NationalG

DP

P pa

rtic

ipat

io

0.00%

0.20%

0%

5%

% S

S

8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Participación del SSP en el PIB del sector petrolero Participación del SSP en el PIB NacionalSource: DANE, Supersociedades. Calculations: CAMPETROL

% SSP participation in the oil sector GDP % SSP Participation in National GDP

MARKET DYNAMICS: OPERATIONAL INCOMEMARKET DYNAMICS: OPERATIONAL INCOME

• Average annual growth (2005‐2010): 34.4%

• In just five years net revenues have increased USD$ 2.300 million.

9Source: Supersociedades (196 firms). Calculations: CAMPETROL

OILFIED SERVICES IMPORTSOILFIED SERVICES IMPORTS

$882

• Average annual growth (2005‐2010): 44.73%

$688

)

• In just five years, imports of goods and services companies have increased $ 724 million USD.

• Main imported goods: machinery$589

illions

(cif) Main imported goods: machinery

and mechanical appliances, wire, cable, vacuum air pumps, compressors of air and another.

$235

$376

USD

$ M

$174 $172$207 $207

$100

$158

$235

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Source: DIAN

The Oil&Gas Sector: Supplier’s Opportunities

Industry attractiveness

M. Porter Matrix: Industry/Local Industry Strengths

High Medium Low

1 2 6 7 21 24 173,4,12,13,15,ig

h

High Medium Low

1,2,6,7,21,24 1716,19,23,30

tren

gths

H

14,22,26,28,29,32,35,36,37,38

345,8,9,10,

18,20,25,27

l ind

ustry st

Med

ium

31

Loca

Low

Source: Oportunidades de la cadena de hidrocarburos para la industria nacional (2009‐2020), ANDI y ANH

The Oil&Gas Sector: Supplier’s Opportunities

HighIndustry attractiveness

Attractiveness towards industry vs. Local industry strengths.    

• Drilling & Workover.• Environmental s management.

1 2 6 7 21 24igh

High • Operations of oilfields. • Oilfield integral maintenance • Crude and water treatment.• Maintenance  of rotary equipment for refining plants.

1,2,6,7,21,24

14 22 26 28

H

tren

gths • Drilling fluids.

• Filters.• Wellding supplies. 

14,22,26,28,29,32,35,36,37,

38Med

ium

l ind

ustry st • Chemicals

• Thermic isolation• Packing units.• Drilling pipes (and pipes accessories) • Maintenance of electrical and instrumentation for

31Low

Loca

Maintenance of electrical and instrumentation forrefining units.

• Cables and electric accessories. 

• Mechanical seals and bearings

FREE TRADE AGREEMENT (COL‐US): OPPORTUNITIES FOR THE OIL&GAS SECTOROPPORTUNITIES FOR THE OIL&GAS SECTOR 

‐ The FTA will allow us in the next 10 years to import goods at 0% 20%

25%

y p gtariff.

‐ For some goods such as chemicals, will no have any import tariff since year one

15%

20%

import tariff since year one. 

10%

0%

5%

‐5%

0%Tariff year_1 year_2 year_3 year_4 year_5 year_6 year_7 year_8 year_9 year_10

f f h d f f b lManufacture of machinery and equipment Manufacture of basic metals

Manufacture of chemicals and chemical products Fabricated metal products

CHALLENGES FOR THE OIL AND GASwww.campetrol.org

CHALLENGES FOR THE OIL AND GAS SECTOR IN COLOMBIA.

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HSE INDICATORSHSE INDICATORS

9.00500)

MH LTI FREQ Rate Mundo LTI FREQ Rate ColombiaLTI FREQ Rate World

7.00

8.00

400

450

an‐hou

rs(M

H)

4.66 5.00

6.00

250

300

350

Millionma

2.32

2.823.00

4.00

150

200

250

0 00

1.00

2.00

0

50

100

0.000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Fuente: IADC. LADS Colombia. 

INVESTMENT IN R&D AND PARTICIPATION IN GROSS INCOME ‐ 2011

$ 470,171 3%$ 500,000 $ ,

$ 375,5172.14%

$ 400,000

$ 450,000

% inve

ons

$ 331,052

$ 244,371

2%

$ 250 000

$ 300,000

$ 350,000

est R&D 2011

USD

 Millio

$ 195,320 $ 184,693

$ 120,636$ 143,5610.90% 1%

$ 150,000

$ 200,000

$ 250,000

$ 36,7230.24%0.32% 0.30%

0.17%0.26% 0.33%

0.17%0.14%

$ 50,000

$ 100,000

0%$ 0Petrochina Shell ExxonMobil Total BP Chevron StatOil ENI Ecopetrol* Oilfield 

Companies

Income 2011 (% R&D / Income) ‐ 2011Source: Annual reports of all companies

HUMAN RESOURCES IN COLOMBIA(Petroleum engineers graduates)

380360

900

1,000400

300

330

300

700

800

900

300

350

200 200

250240

230

500

600

200

250

KBPDgrad

uates

155 150

300

400

100

150

DNum

ber of g

0

100

200

0

50

002000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

number of graduates KBPDSource: Ecopetrol and ANH

Challenges for the oil and gas sector in l bColombia

• OperationsOperations Industrial safety: improve the indicators of industrial incidents.

Technology and Investment in R & D: increase the development of Colombian technologies.

Human resources: high technical and professional labor capacitycapacity.

• External factors: Transport: adequate infrastructure to transport crude Transport: adequate infrastructure to transport crude.

Physical Security: provide security for all workers in the oil fields.

CAMPETROL – WHO ARE WE?www.campetrol.org

CAMPETROL  WHO ARE WE?

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CAMPETROLCAMPETROL

• Non-profit entity that seeks the economic, socialNon profit entity that seeks the economic, socialand technical oilfield services sector in Colombia.

• We will be the guild leader of the oil industry inColombia.

• We represent 168 companies and oilfieldp pservice assets present in Colombia. Representing70% of total revenues in the sector of goods and oilservices in Colombia.

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From october 30th to november the 2ndI B á D C C l biIn Bogotá D.C., Colombia

AgendaAgenda

Technological Conferences: Building Up StrategiesTopics Conference Theme

Mature fields Keynote Speech Colombia 2020: Vision of the future

Panel Case studies: How to increase the recovery factor?

Security Keynote Speech Security and defense a path to prosperity in the oil and gas sector in Colombia.

Keynote Speech Prospectivity and Development

Unconventional resources

Keynote Speech Prospectivity and Development

Panel How to accelerate the learning curve in Colombia?: Reality and Future

Science & TechnologyKeynote Speech Success Stories: International strategies and Colombia’s challenges to promote

R&D+i.Science & TechnologyPanel R&D in the Oil and Gas Sector: How to do it?

CSR Panel CSR horizons in Colombia: 2012 - 2020

Off h D l tKeynote Speech

H t l t th l i i C l bi ? D l t d lOffshore Development How to accelerate the learning curve in Colombia?: Development modelsPanel

HES Keynote Speech Reflections on the HES best practices in the oil and gas sector.

Exhibition SpaceExhibition Space• 2010: 2 050m22010: 2.050m2

• 2012: 8.000m2

20 9 000 2• 2014: 9.000 m2

• 2016: 10.000 m2

One‐on‐One Business Match MakingOffOffer:

•Oilfield Service Companies•Complimentary goods and service companies•Providers•Providers.

Demand:•Operators that have or are planningOperators that have or are planning to have E&P activities in Colombia.

•Oilfield Service Companies.•Investors.

Every company will have an assigned agenda comprising  of around 10 one‐on‐one business meetings according to the previously expressed interest in the subscription form.

Thank You!Thank You!