May 2009

Petrochemical Sector

Agenda

1. Trends of Petrochemical Industry in Colombia.

2. Potentiality for Petrochemical industry in Colombia.

3. Conclusions

Apparent Consume of main platics resins(Thousand Tons)

Consume in constantly growth: 23% in three years

Although consume has growth in all resines, It is important to highlightthe consume in PET, polymers and polyethylene.

Source: Acoplásticos, Plásticos en Colombia 2008 -2009

19,8%

In just three years the installed capacity has benn growth 20%

The increase in consuption is watched in the increase of productivity in thepetrochemical industry, which is reflected in the fasst growth that is taking itsinstalled capacity

Source: Acoplásticos, Plásticos en Colombia 2008 -2009

Employment, production and sales in plasticas have been growing constantly

Soure: Dane, Banco de la República, Colombia y Fedesarrollo.

Plastic Products Exports

Exports of platic products have growth in the last three years

Over the past three years, exports have increased in value by 52% andvolume by 21%

Source: Acoplásticos, Plásticos en Colombia 2008 -2009

Source: DANE

Major purchasers of Plastics

It has seen that the main countries which we exports plastic products arecountries that belong to the region including United States.

Colombia begins to be the distributor of countries in the region

However, It has no covered local demand with domestic production.

Fuente: Fedesarrollo and ANIF.

Stock level and Volume of orders for the production of plastics(2005 -2007)

Current volume of Orders

Stock Level

Agenda

1. Trends of Petrochemical Industry in Colombia.

2. Potentiality for Petrochemical industry in Colombia.

3. Conclusions

Colombia has a potential of 47 trillion of barrels

• Colombia has proven reserves of 1.4Trillion barrels, while its proven naturalgas reserve stand at 6.7trn cubic feet (Ft3).

•The Colombian petrochemical sectorproduces 600,000 tones per annum ofpolymers including polyethylene (PE), PP,PVC, polystyrene (PS) and otherspolyolefin.

•A large part of Colombia territory has notyet been explored.

•Blocks handed over for E&P:

• 2007: 7 blocks adjudicated.

• 2008: 51 blocks adjudicated

MAPA DE TIERRAS

Source: Business Monitor International Ltd. – Colombia Petrochemicals Report 2008 ; Study of IHS –International Conusltant

Source: Banco de la República, ColombiaTCN: 2001: 2.300; 2004: 2.626; 2007:2738, pesos por dólar

The increase in oil production due to an increase in exploration

Petroleum production US$ million

The value of oil production, natural gas and minerals if uranium and thourium have anincrease of US$ 3.905 million in 2004 to US$ 5.080 million in 2007

Colombia strategy for modernizing refineries

• Cartagena y Barranquilla, the two largest refineries, are undergoingsignificant expansions, capacity is forecast to reach 360,000b/d in2007/2008, which will provide potential for naphtha feedstock.

• The production capcity will increase in almost 100% from 75 KBPD to140 KBPD in 2010.

Souercce Business Monitor International Ltd. – Colombia Petrochemicals Report 2008 .

We could produce all resins that we areimporting nowdays

A domestic market with potential

• Olefins and aromatics demand not covered due to non-existence of a cracking plant for this purpose.

•Polyethylene and other polymers and resins demand notcovered are worth over US$ 508 million and approximately226,000 tones.

•Colombia has about 230 plastic processing companies, most ofwhich are small sized and require access to international pricesand other resins in order to remain competitive and stay afloat.

•The large multinationals established in Colombia supply thelocal supply to the local market and export to the AndeanCommunity as well.

Fuente: Acoplásticos

•This sector is backed by a Development Master Plan, whichsupports growth of the industry and integration of the Productionchain, thus facilitating viability and development of refining andpetrochemical projects in the Mamonal Industrial Zone, therebyconsolidating the leading industrial complex in South America.

• The Chemical and Petrochemical processing industries are locatedin industrial parks as Barrancabermeja and free trade zones atBarranquilla and Cartagena, and are considered to be the largestusers of industrial inorganic chemicals

(Fuente: Acoplásticos – Asociación Colombiana de Productores de la Cadena Petroquímica )

In Colombia is a petrochemical cluster

Energy tariff byKw

Colombia with the best infrastructure of energy and a good tariff

Country US$/Kw

Brasil 0,12

Argentina 0,07

Venezuela 0,03

México 0,10

Chile 0,09

Colombia 0,09

6,45 4,6 3,89 3,88 2,91 0,89

Colombia Venezuela Chile Brasil México Argentina

Energy InfrastructureGood infrastructure= 10    Bad Infrastructure=0

6,05 4,68 3,08 3,03 2,46 0,83

Colombia Venezuela Chile Brasil México Argentina

Energy suppy  to the futureEnergy security= 10     Energía no  security = 0

Source: IMD, World Competitiviness Year Book, 2008

Agenda

1. Trends of Petrochemical Industry in Colombia.

2. Potentiality for Petrochemical industry in Colombia.

3. Conclusions

Conclusions

The behaivor of the production, consumption,employment and exports in the sector, showthat in a market in continous development inColombia

However, the Colombian potential is reflectedin that despite the steady growt, it is still notenough to meet domestic and external demand.

The Colombian strategy to expand thecapacity of the exisiting refineries, which willmake easier the production of raw materials

There is a field of oil exploration in therelevant country