WHY INVEST IN COLOMBIA?

COLOMBIA, DESTINATION FOR INVESTMENT

Colombia Reached Record FDI Flows in 2013. Colombia received a record USD 16.8
billion in Foreign Direct Investment in 2013, an increase of 7 percent compared to 2012,
according to preliminary estimates by the Colombian Central Bank. The extractive
industries continued to lead the pack. Hydrocarbons and mining received USD 13.3
billion in FDI, which amounted to 81.6 percent of the 2013 total. (US Embassy in
Colombia, Jan. 10, 2014)

ENERGY SECTOR DEVELOPMENT:

Oil, Gas and Coal

Colombia has seen a dramatic increase in oil, natural gas, and coal
production in recent years after the implementation of a series of
regulatory reforms.

Colombia's oil production has increased since 2008 because of

increased exploration and development. New exploration and
development were spurred by regulatory reform.

According to the Oil and Gas Journal (OGJ), Colombia had

approximately 2.4 billion barrels of proven crude oil reserves as of
January 1, 2014. Although
exploration continues and
discoveries are announced,
Colombian officials estimate that,
at current reserve levels, the
current oil reserves would last
about seven years. Much of
Colombia's crude oil production
occurs in the Andes foothills and
the eastern Amazonian jungles.
Meta department, in central
Colombia, is also an important
production area, predominately of
heavy crude oil. Its Llanos basin
contains the Rubiales oilfield, the largest producing oil field in the country.
 Colombia is self-sufficient in
natural gas supply and recently
began exporting to neighboring
Venezuela. According to the ANH,
Colombia had proven natural gas
reserves of more than 5.7 trillion
cubic feet (Tcf) as of December
31, 2012. The bulk of Colombia's
natural gas reserves are located in
the Llanos basin, although the
Guajira basin accounts for the
majority of current production.
Natural gas production, like oil
production, has risen substantially in the past few years, because of increasing
international investment in exploration and development. The country has also
encountered rising domestic consumption and new export opportunities.

Coalbed methane (CBM) is a gaseous hydrocarbon that occurs along with coal
reserves. This source of natural gas is transported and used in the same way as gas
found in shale or other deposits. Drummond, a U.S. coal company with interests in
Colombia, has stated that its Colombian mines could contain up to 2.2 Tcf of CBM. The
company has signed contracts with Ecopetrol to extract CBM from both the La Loma
and El Descanso mines. CBM has the potential to increase Colombia's proven natural
gas reserves dramatically, facilitate greater domestic production, and allow additional
natural gas exports to neighboring countries.

Colombia had 5,557 million short

tons (MMst) of probable coal
reserves, mostly bituminous, in 2012,
the largest in South America
according to the Latin American
Energy Organization. These deposits
are concentrated in the Guajira
peninsula bordering the Caribbean
and in the Andean foothills. The
majority of Colombia's coal
production and export
infrastructure is located on the
Caribbean coast. Colombia's coal is
relatively clean-burning, with a sulfur
content of less than 1%. The country
exports most of its coal production. In 2011 it was the fifth-largest coal exporter in the
world after Indonesia, Australia, Russia, and the United States. Colombia produced 98.1
MMst of coal in 2012, while only consuming 5.1 MMst. Colombian coal production is
exclusively carried out by private companies and has increased about 78% in the past
decade. (U.S. Energy Information Administration, January 7,2014)

FAVORABLE CONDITIONS

With policies implemented by the last governments to encourage foreign investment,

Colombia expects to increase its hydrocarbon exploration and production, to reach
levels that allow it to enter the list of future energy powers in the international arena.

The interest aroused by the country is related to

the growth in production levels, unexplored
high-potential areas, and oil prices. But what has
encouraged investment in Colombia are the
government's efforts to attract foreign
investment, with changes in the types of
contract, legal stability, economic growth,
democratic security and clear taxation
regulations.

Colombia's government has taken measures to make the investment climate more
attractive to foreign oil companies. Upstream sector initiatives give foreign oil
companies the right to own 100% stakes in oil ventures and compete with Ecopetrol. In
addition, the government has sold shares of Ecopetrol to private investors, reducing its
share to roughly 90%. These reforms have sparked a renewed interest in Colombia's
upstream sector, with record levels of exploratory and development drilling underway.

Business Monitor International View on January 15, 2014: There is optimism with regard
to the future of Colombia's energy sector; particularly as improved security dynamics
and a more liberal business environment have led to increased investment in
exploration and production. The most recent licensing round and increased interest in
the country's offshore potential will also contribute to greater foreign investment and
exploration into the sector, leading to further growth in proven reserves and buoying
the robust long-term production picture.

The main trends and developments for Colombia's oil and gas sector are:

An improving security situation and the country's attractive fiscal regime are likely to
continue to attract significant levels of foreign investment into Colombia's oil sector.
Production has grown by more than 70% since the mid-2000s and we expect that
upward trend to continue. Preliminary monthly data from the EIA shows that
production has exceeded the 1mn barrels per day (b/d) threshold in 2013, and by 2017,
we forecast crude, NGL and other liquids production to reach 1.2mn b/d, making it one
of Latin America's top oil producers.
OIL INFRASTRUCTURE IN COLOMBIA
REFINERIES
In Colombia there are two large refineries: the Industrial
Complex of Barrancabermeja and Cartagena Refinery.
According to OGJ, Colombia had 290,850 bbl/d of crude
oil refining capacity in 2012 at five refineries, owned by
Ecopetrol. The 205,000 bbl/d Barrancabermeja-Santander
facility and the 80,000 bbl/d Cartagena refinery possess
most of the country's crude distillation capacity.
Ecopetrol assumed complete ownership of the Cartagena plant after purchasing the
stake formerly held by Glencore. Although Colombia is a net oil exporter, it must import
some refined products, especially diesel fuel, as domestic demand outstrips refining
capacity. As a result, Ecopetrol has begun efforts to expand refining capacity in the
country. The $6.47-billion expansion of the Cartagena refinery, scheduled to be
completed in 2015, will more than double its current capacity to 165,000 bbl/d.
Ecopetrol is also expanding the Barrancabermeja plant, which will increase its capacity
to 300,000 bbl/d and improve the refinery's ability to process heavier crude oils. The
expansion, currently under construction, is expected to be completed in 2016. (U.S.
Energy Information Administration, January 7,2014)

WHY INVEST IN THE COLOMBIAN PACIFIC

AN OCEAN OF OPPORTUNITIES IS
DEVELOPING

The Pacific region officially became the first in

Colombia to have the projects to be financed
structured with the new national system of royalties,
which reform is being forwarded in Congress.

According to government estimates, the four

departments (Valle, Cauca, Nariño and Chocó) will
receive a combined $ 1.12 trillion in government
investments during President Santos period.

The Government will be able to co-finance some of

the infrastructure projects for roads, ports and rural
development, among others, provided they are
consistent with the National Development Plan.

Lowering levels of poverty and improving the quality

of life of the inhabitants of Valle del Cauca, Chocó,
Nariño and Cauca are the goals to be achieved with
the Pacific Region: Land of peace, a sea of opportunities and for which work has
already begun hand-in-hand with the leaders of each department.

The idea is, that from now this block of four departments works together for the needs
of the area and get resources from the National Government to forward infrastructure
projects that generate new sources of employment, allow a better land and water
connection, strengthen seaports and develop the productive potential.

Source: Presidencia de la República, Encuentros Regionales 2014

MAJOR POTENTIALS

 Port: there are several ports including Buenaventura, Tumaco and Guapi, among
others.
 Touristic: a large variety of natural attractions such as Gorgona, Malpelo and Bahia
Solano, among many other.
 Forest Reserves: accounts for 16% of the national total and the second after the
Amazon. Provides 45% of domestic consumption of wood.
 Fishing: its potential is estimated at 450,000 tons / year and only about a quarter is
being exploited.
 Biodiversity: second most biodiverse region in the world after Brazil.
 Water and solar resources: the world's highest rainfall and hours of solar exposure.
 Watersheds: rich and untapped and one of the largest reservoirs of freshwater in
the world.
 Mining: largest producer of platinum and second of gold in Colombia.

BUENAVENTURA IN VALLE DEL CAUCA

Buenaventura Bay

The Naya begins to penetrate the coast line giving way to the Bay of Buenaventura, the
largest in the Pacific Coast of Colombia. It has a single entrance, known as “La Bocana”,
enclosed by Punta Soldado, in the south, and Punta Bazán to the north. The distance
between these two points is of 1,582 meters. This bay is approximately 31 kilometers
from buoy 1. At the bottom of the bay is the island of Cascajal, where the port of
Buenaventura is located.

Hazardous areas in this sector are marked by 4 lighthouses located in the island of
Chambira in the delta of the San Juan River, Punta Soldado and Las Palmas Island.
Buenaventura

It is located near the Panama Canal, midway between

Vancouver and Valparaiso. It is one of the closest
harbors to the Far East in the American continent. It is
in the center of the world, near the major shipping
routes which cross the globe from north to south and
from east to west. The geographical conditions allow
it to be a holding and transfer port, optimizing the use
of large-sized ships.

Transporting a container from Buenaventura to the

United States and Europe costs 40% and 13% less
respectively, as it requires 50% and 25% less time
compared to the port of Valparaiso (Chile). Likewise, a container transported from the
port of Santos in Brazil to Japan costs 30% more and requires 34% more time compared
to the port of Buenaventura. Moreover, through Buenaventura it is possible to connect
to nearly 300 different ports or places around the world, a status unsurpassed by the
country's airports, because of its strategic position in relation to the international
maritime cargo traffic routes.

During the first three months of 2013 Colombia, 31.4 million tons moved through
Colombia’s seaports, which included both exports and imports.

More trade means more transport and more jobs at ports and in the logistics sector.
Between 2003 and 2013, transport through the nation’s ports has grown at an annual
average of 5.7%.

Its great importance to the country's economy is indisputable and is reflected in the
fact that through its facilities 100% of the sugar, 80% of coffee and 100% of the molasses
produced in Colombia are exported. Likewise, 83% of inorganic chemicals, 81% of the
metal sheets, 72% of corn and wheat and 60% of industrial chemicals are imported

Marine Terminal

In 2015, Buenaventura will have five marine terminals which will allow it to become one
of the most important port nodes in Latin America: the Regional Port Society of
Buenaventura, the TCBuen, Pier 13 from Port Company, the Sociedad Puerto Industrial
de Aguadulce y Cemas , a port of Cementos Argos.

The Port of Buenaventura, administered by the Regional Port Society of Buenaventura,

better known as the SPRBUN, is no longer just the most important on the Colombian
Pacific but in the last 11 years, thanks to the gradual implementation of the
Modernization Plan, it has consolidated itself as the most valuable of the national ports
given the fact that the goods entering and leaving through it are close to 60% of the
country's total, with an average annual growth of 7.5% in cargo, and 15% in containers
specifically.

TCBuen (Terminal de Contenedores en Buenaventura), a

new and modern container terminal was officially opened
in May 2011, consolidating Buenaventura as the main
Colombian harbor.

This terminal has made the latest technologies in the port

industry available for all domestic trade. With a harbor
480 meters long and equipped with two gantry cranes, it
allows loading and unloading of two vessels simultaneously. It also has 26 hectares
used as storage yards and 150 sockets for refrigerated containers, what makes it
possible to visualize the enormous potential.

Puerto de Aguadulce will have an area of more than

100 hectares and its investment will require U.S. $
400 million, of which 92% is foreign capital,
specifically from the International Container
Terminal Services group, Ictsi, a Philippine company.
This will generate a different business dynamic for
Buenaventura and the rest of the Colombian Pacific.

With the completion of this port in 2013, the bay will be able to mobilize 1,200,000 tons
of cargo hence responding well to the needs of the country's foreign trade to improve
their competitiveness.