Services for the Oil & Gas Industry

Bogota is becoming a new hub for services to the oil and gas industry in northern South America thanks to:

Growing demand for services. The arrival of new E&P companies and the challenges of being a heavy oil country have stimulated the demand for more and innovative services.

Attractive business environment. A stable economic performance, consistent policies and strong institutional support for the oil and gas sector have generated a favorable environment for new investors.

Skilled and available human capital. Bogota has skilled personnel with experience in this industry.

Large base of E&P companies. In Colombia there are over 100 E&P companies of all sizes.

Bogota has

Bogota, the capital of Colombia, is a dynamic and cosmopolitan city of more than seven million inhabitants. Thanks to its economic performance, pro-investment environment and excellent quality of life, it is one of the best destinations to do business in Latin America.

everything you need for a successful oil and gas services operation

There are over 180 oil and gas services companies in Colombia, according to the Superintendencia de Sociedades.

From all oil and gas services companies, 84% are located in Bogota and its region.

These companies generate over 80% of the total revenues of this industry in Colombia.

This trend has been steady in the last years.

A Dynamic Oil and Gas Services Industry

Services for the oil and gas industry have grown by an annual average rate of 31% in the past five years. Total sales in 2012 were approximately US$ 5 billion.

Oil and Gas Services Revenues in Colombia (2006-2012)

Note: Based in classification CIIU 1120. Current exchange rate.Source: Superintendencia de Sociedades (2006-2012). Invest in Bogota calculations.

5.0

6.0

4.0

3.0

2.0

1.0

0.02006 2007 2008 2009 2010 2011 2012

1.3

1.8

2.9 2.7

3.7

4.9

4.5

5.0

4.6

3.4

2.32.6

1.61.2

US$

Bill

ions

Bogota is becoming a major center for this industry…

Bogota Colombia

2,400 mboe proved reserves and potential 54,600 mboe in unexplored territories.

Current production of over 1 million barrels a day and a goal of 1.7 million barrels of oil equivalents per day for 2020.

Dynamic exploratory activities: 75 new contracts to be signed within end of 2014, over 45,000 km seismic acquisition and 275 new exploratory wells to be drilled.

Competitive, flexible government take (45 to 75%)

Tiered royalties for operating companies (8 to 25%)

25% income tax + 9% then 8% social equity tax (CREE)

Deductible local taxes

No remittance tax

Escalation in payment of the obligations for new micro and small companies. Obligations: registration of companies, income tax, payroll contributions.

Tax incentives for employment generation: Payroll contributions can be deducted from income tax, according to specific requirements on employment generation.

E&P and TEA Contracts (2005-2014p)

Source: ANH, National Hydrocarbons Agency; Bogota Chamber of Commerce.p: Projections.

…and a flexible and competitive regime for exploration, production and service companies.

Growing Demand for Oil and Gas Services

In recent years a growing number of local and international operating companies have established operations in Bogota.

More than 40 new E&P companies have established in Colombia since 2007. These companies have acquired important exploration and production commitments.

Foreign investment in the Oil & Gas industry has increased almost 75% from 2007 to 2012.

Projected investments for the next 4 years will reach 2.6 billion USD.

In the last 7 years E&P companies have signed over 350 contracts and it is expected that 75 more will be signed by 2014.

Wildcats (2005-2014p)

Source: ANH, National Hydrocarbons Agency.p: Projections.

Colombia has a large oil potential…

A large potential for oil and an attractive regulatory environment have spurred exploration and production activities, and generated a significant demand for oil and gas services.

0

50

100

150

200

2005 2006 2007 2008 2009 2010 2011 2012 2013p 2014p

35

56

70

99112

126131 135 135

75

80

70

60

50

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30

20

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02005 2006 2007 2008 2009 2010 2011 2012 2013p 2014p

28

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1016

31 3244 43

58

6

17

67

4625

50

59

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5459

64

8

76

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E&P TEA Conventional

Wild

cats

An Attractive Business Environment Colombia has been recognized for improving its business environment.

Best Cities for Doing Business (2012)

Index which compares 183 economies worldwide and measures regulation regarding business and the protection of ownership rights. A lower value indicates greater ease of doing business. Source: World Bank, Doing Business Report 2011.

Ranking

Miami

Sao Paulo

Santiago

Mexico City

Buenos Aires

Rio de Janeiro

Panama City

Bogota

Brasilia

Lima

Montevideo

San Jose

0 2 4 6 8 10 12

1

2

3

4

5

6

7

8

9

10

11

12

It is the third best country on “Ease of doing business in Latin America (2012)”, over Mexico, Argentina and Brazil.

It is the fifth most competitive country in Latin America: IMD, World Competitiveness Yearbook 2012.

According to the Global Competitiveness Report 2012-2013 from the WEF, Colombia displays competitive strengths in macroeconomic environment quality, large market size, fairly sophisticated business, successfully adopting technology and enhancing innovation.

Skilled and Available Human Resources Bogota concentrates 40% of the total graduates in fields related to the Oil & Gas industry.

Graduates in Fields Related to the Oil & Gas Industry (2001–2012p)

Source: National Ministry of Education. Invest in Bogota calculations for 2012.

Bogota Colombia

Other engineerings

Mining and Metallurgy

Geology

0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 150,000

7,388

2,912

8,405

12,617

13,181

31,602

37,866

44,089

57,163

80,202

135,418Computer science

Industrial engineering

Electronics and telecommunications

Civil engineering

Mechanical engineering

Environmental

Electrical

Chemical engineering

Important investments will be dedicated to the increase of reserves and recovery factor

Investment Plans of the Main E&P Companies for 2013 (USD$ Millions)

Source: E&P companie’s investment plans.

Important resources will be dedicated to R+D for increasing the country’s competitiveness in heavy oil and mature fields exploration and extraction.

Improving the recovery factor is a major target for the Government and the E&P companies.

Another big challenge is the necessity of increasing Colombia’s proven reserves.

The new born off-shore activity is another challenge that needs to be supported with important investments in specialized goods and technology.

Others309

Transportation1,799

Exploration2,225

Production4,684

Refining and facilities2,232

Bogota Colombia

Bogota hosts important multinationals in the O&G services sector...

...and strong institutional support for the industry.

Operating Companies

In addition to Ecopetrol, which produces 60% of the country’s oil, there is a large number of multinational operating companies that require services.

Main Sector Entities

Service Companies

The main multinational oil and gas services companies are located in Bogota; there is also an important presence of experienced local companies.

www.acipet.com

www.minminas.gov.cowww.campetrol.org

www.anh.gov.co

Invest in Bogota

Contact us

Bogota, ColombiaPBX: +57 (1) 742-3030Email: info@investinbogota.orgwww.investinbogota.orgtwitter.com/investinbogotafacebook.com/investinbogota

Investment promotion agency for Bogota and Cundinamarca.

A public-private partnership between the Bogota Chamber of Commerce and the Bogota Mayor’s Office.

Offers investors support and services during each stage of the investment process: exploration, start-up, operational and reinvestment phases, free of charge and in absolute confidentiality.

It has supported over 100 investment decisions exceeding US$432 million and generating approximately 12,600 jobs.

The agency runs Talk to the World, the English program whose objective is to offer a bilingual labor force to companies with English operations in the city, and improve job opportunities for people living in Bogota.

It heads Bogota’s marketing strategy through various projects aiming at promoting the city’s main strengths in creativity and innovation.