FOR THE BENEFIT OF ALL

Colombia 2020 | ENERGY | INTERVIEW

Ecopetrol has been operating in a large part of the country for decades, energizing local economies while generating profits for its shareholders.

Felipe Bayón
BIOGRAPHY

Felipe Bayón has been the CEO of Ecopetrol since 2017. He holds a degree in mechanical engineering from the Universidad de los Andes. He has over 26 years of experience in the oil and gas industry. Prior to being CEO, he was COO and worked at BP plc for 20 years as senior vice president of BP America and head of its global deep-water response. From 2005-2010, he was the regional president of BP Southern Cone (South America), and before 2005 he worked in BP's headquarters as chief of staff to the CEO and the head of the executive office for exploration and production. He began his career in BP Colombia in 1995 as a project engineer, where he held various positions until becoming vice president of operations in Colombia.

What is Ecopetrol's role and relevance for the Colombian economy?
Ecopetrol generates impact in many ways. For example, in Colombia, we operate in 337 municipalities, a large part of the country, and we have been present in most of these places for decades. Each peso we invest in a municipality has the potential to multiply in the regions where we operate. For example, in 2019 Ecopetrol increased local procurement of goods and services by 6% to COP7.2 billion, clearly energizing regional economies. Ecopetrol also contributes through taxes and dividends to shareholders. In 2019, Ecopetrol Group contributed COP26.3 billion to the nation, in the last 10 years contributing over COP230 billion. Additionally, we have close to 260 direct shareholders, and more than 16 million Colombians have part of their savings in the company through pension funds and severance payments.

What have been the main drivers of Ecopetrol's growth in recent years?
Our business plan is based on three fundamental pillars: growth of reserves and production, protection of the cash flow, and cost efficiency with strict capital discipline. Today, more than ever, capital discipline allows us to carefully analyze where we place every dollar and ensure that it gives Ecopetrol the expected profit. For the past five years, we have focused on developing a robust transformation plan accounts approximately to COP13 billion in productivity improvements and reduced cost structures and has enabled us to better withstand industry volatility. Our vision is to continue to be efficient. We are well positioned in the region; we have a reputation for being flexible and agile and for being able to transform ourselves.

The National Hydrocarbons Agency (ANH) has assigned new blocks in Colombia. How does that impact Ecopetrol's and Colombia's exploration and production activity?
For us, Colombia continues to be the focus of our investments. In fact, in 2019/2020 about 80% of such investments will be allocated to projects in the country. Our country still has great potential to explore and find new hydrocarbon reserves, both in the mainland and offshore. During the second cycle of the area allocation process carried out by ANH in 2019, we presented the best offers for five blocks. These blocks that we are bidding on will strengthen our portfolio in Colombia. We hope they will translate into new jobs, more barrels, and additional resources for the benefit of all Colombians.

There is growing interest in Colombia for the development of fracking. How does Ecopetrol evaluate this potential, and how will it enter the market?
If we can extract hydrocarbons from unconventional reserves, we can have oil reserves that can last up to 30 years and gas reserves that could last 50. The Council of State has allowed pilot research projects to be carried out. Ecopetrol is working on the planning and careful design of these pilots because it is not about doing things quickly, but about doing them well. The fracking pilot projects will work like a fish tank. Anyone will be able to look inside to understand how we operate in areas such as sustainability or water management. That way, the country can make a decision based on facts.

What is the plan to develop a strong downstream sector that can support Colombia's diversification efforts?
In our business plan 2020-2022, we will allocate about 11% to the downstream activities, focused on the use and optimization of the current infrastructure. One of the most relevant projects that will allow us to continue delivering high value, and above all excellent quality fuels in terms of lower sulfur content, is the interconnection of the original unit with the new Cartagena refinery. An expansion of the Esenttia plant, a subsidiary of the Ecopetrol Group, that is dedicated to the production of polypropylene, is also planned.