Ecopetrol defined guidelines to govern its activity and presence in the market in the medium to long term, in order to adjust to changes in the industry and to ensure a stable future.

The first guideline aims at organizational consolidation based on an agile and flexible structure.

Human, technological, and information resources provide support for reaching the strategic objectives established for maintaining sustained growth.

This growth, considered a strategic core, will be fueled by eight lines of development that, jointly and dynamically, will strengthen Ecopetrol´s presence in Colombia’s oil and gas industry.

To begin with, Ecopetrol has undertaken initiatives throughout the year in order to develop heavy crude potential together with its strategic partners. In addition, the company is focused on a more ambitious participation in the natural gas business, in order to increase its share in different projects that will mean an increase in reserves and production.

Another line of development defined during 2004 and promoted in 2005 has to do with the globalization of the company and the possibilities of participating in exploration and production businesses in other countries.

This participation, however, must be accompanied by a solid organizational culture based on respect for people, responsibility, results orientation, customer and market orientation, and teamwork.

Thus, 2006 will be the year to set Ecopetrol’s strategic objectives and actions in motion to cultivate the culture desired by the Company.

Performance management

As part of the goal of being able to measure performance, the company matured in its implementation of an integrated performance management system, based on the definition of strategic maps linked to balanced management scorecards.

In 2005, the process of measuring and analyzing performance using Performance Committees was internalized. This made it possible to link strategy with daily performance, assuring room for reflection, analysis, and feedback in order to generate corrective measures in a sustainable culture that supports the organization’s processes.

For 2006, the implementation of the Integrated Business Management Model will group together all the different existing focuses and methodologies in the Company under a single vision.

The model has three components: Strategic management, process management, and culture management. The challenge will be to ensure its implementation and alignment with the strategic direction, with all of it focused on the results expected by shareholders.

The year 2005 brought great changes in the technological support received by business planning and management processes. The implementation of the Sine Business Intelligence Solution as part of the Sensor project gave Ecopetrol more precise and timely information for decision-making.

As of 2006, technological tools will facilitate follow-up on the Company’s business strategy through Balanced Management Scorecards.

Likewise, they will be key to consolidating the Integrated Management System.

Results and perspectives

Ecopetrol expanded its business, met the goals it set for 2005, and increased the volume of its investments. As a matter of fact, while from 2000 to 2004 the Company invested an average of US$600 million a year, in 2005 it invested US$900 million. This trend will continue rising, since it is estimated that in 2006 the investment budget will hit US$1.405 billion.

The investment portfolio for 2006 will be broken down as follows: 78% for exploration and production activities, 18% for refining, 5% for transportation, and the remainder for corporate projects.

It can be seen from this investment plan that the Company will invest approximately 35% of its EBITDA generated in 2005. The internal generation of resources will cover 100% of the 2006 investments, without resorting to any loans.

Furthermore, the company has covered 90% of its pension liabilities in funds placed in independent assets, and it may therefore dedicate more resources to its growth.

The investments dedicated to exploration and production in 2006 will allow Ecopetrol to move closer to the industry standard of US$8 per barrel produced. The average for 2002 and 2004 was US$3 dollars per barrel produced.

It is estimated that oil production for Ecopetrol will increase by 3% in 2006 and that it will reach the established mid-term goal (for 2011), in other words, a 500KBD oil equivalent in hydrocarbon production.

This level of production and the improvement in operational reliability allowed the expansion, in just one year, out to 2011 in terms of Colombia’s petroleum self-sufficiency figures established last year.¹