Providers

to commit to transparency and
clearly defined rules within
a relationship of mutual benefit.

The contracts awarded during 2007 in the different selection processes had a total value of $3.81 trillion pesos, some US$1,89 billion.* Of that figure, $3.35 trillion (88%) was awarded to national providers. The work done in contracts in 2007 at Ecopetrol resulted in 12,552 orders to 4,989 providers to meet the company’s different operative and administrative needs. Local Hiring In Ecopetrol’s direct areas of influence local contracts were signed and purchases were made in the amount of $390 billion (10% of the year’s contracts). Goods and services are supplied to Ecopetrol based on the concepts of planning, costs, quality, timeliness, and transparency, with support from the Supply Position Matrix and Procurement Position System and the Strategic Supply Methodology. From Ecopetrol’s Supply Policy

*Dec 31, 2007 exchange rate $2,014.76
Only key figures in this Report are in
thousands dollars, using convenience translation.

Clear Rules

Ecopetrol’s strategic supply methodology has been studied in recent years in order to make the rules in the area of contracts explicit and understood by company employees, including contract managers, and by potential and current providers. Ecopetrol thus meets its commitment to “clear rules in a relationship of mutual benefit.”

Second National Providers’ Encounter

On September 18th the Second National Providers’ Encounter was held in Bogotá to promote close ties between the company and its providers. Three hundred and thirty people attended, plus 200 more in Barrancabermeja, Neiva, and Cartagena through videoconference.

The capitalization and internationalization projects were presented, as well as the company’s business perspectives on advances made in the supply of goods and services.

The agenda also included sharing three successful cases in the supply area with the guests: an example of integration between large and small businesses, the synergy for surface chemical and “down hole” treatments in the fields in Huila and Tolima, and Ecopetrol’s integrated logistics operation.

The guests participated in thematic workshops related to the strategic lines, payment procedures, market intelligence, provider development, the Citizen Participation Office, and attention to providers, among others.

Advantage was also taken of the event to launch the first edition of “Eco Providers and Contractors.”

Contact Methods

Ecopetrol providers have three ways of getting in touch with the company: the call center, the accounts payable and invoicing web page, or personalized attention in the various offices of Ecopetrol’s Administrative Management throughout the country.

The accounts payable and invoicing application recorded more than 177,000 contacts between providers and the company in 2007.

Business Strengthening

One of the most important problems for local providers is the unavailability of financial resources, as shown by business analyses done in different zones where the company operates.

To meet this need, Ecopetrol reached an agreement with Organismo Microempresarial de Colombia Emprender (Micro Enterprise Organization of Colombia), which, in addition to having a strict methodology for micro credit, does not give out subsidies and has the philosophy of preparing micro, small, and medium-sized enterprises for using banks.

During 2007, 617 micro enterprises in the company’s areas of influence made use of this micro credit. Loans were granted in the amount of $1,139 million pesos.

The resources contributed by Ecopetrol are loaned to local businessmen who work on different types of provider development, in an attempt to increase the financial strength of those who have a direct or indirect relationship with the company. As value added, this agreement also offers training for businessmen in subjects such as money management and using banks.

Local Market Analysis

After diagnosing the local market supply in the Region of the Middle Magdalena in 2005 and 2006, Ecopetrol carried out similar studies in the cities of Tibú, Orito, Neiva, and Apiay.

For the study of the Middle Magdalena, a total of 4,491 businessmen were interviewed.

As a result of the studies, a SWOT analysis was produced on local business offerings, which has allowed Ecopetrol to design development and strengthening activities oriented toward the company’s priorities for each one of its businesses.

Petroleum Cluster

In order to promote association and competitiveness between local businesses, and taking into account the results of the Local Market Analysis for the Region of the Middle Magdalena, Ecopetrol signed an agreement for the development of a cluster initiative around the oil industry in Barrancabermeja, in that Region, and in the province of Santander.

The agreement was signed with the Chambers of Commerce of Barrancabermeja and Bucaramanga, and has the active participation of the Regional Competitiveness Commission in Santander.

Cluster initiatives involve associations between local companies, authorities, the scientific community, and other institutional actors such as the academic world and industry associations. Together they undertake a strategic planning process with the actors on the cluster map and ensure shared initiative.