Sales and Marketing
Apr 30, 2020

General Terms and Conditions for Fob and Dap Sales of Crude Oil and Refined Products

The sales and marketing function is the last link in the value chain, which connects Ecopetrol with the markets in Colombia and the world, seeking to maximize value added for the Ecopetrol Group through excellence in the sale of crude; products; clean, safe and sustainable petrochemical products, gas and energy, leveraging its human talent, internal optimization, digital tools and building longterm relationships with our customers.

Sales and Marketing is responsible for the following issues:

• Sale of the crude and gas extracted in the fields, as well as the petrochemical and industrial products produced in the refineries, which are commercialized in the most profitable national and international markets.

• Purchase of crude oil from royalties and from third parties to optimize the refinery throughput and the import of diluents required for the transport of heavy crude by the pipeline systems. Likewise, it purchases in the international market the fuels and petrochemicals that are required to complete its own product portfolio in order to meet customer commitments.

• Leads the Company's energy planning and optimization strategy exercise, manages the purchase of energy for Ecopetrol and its subsidiaries and carries out the sale of surpluses from its production units and from the Ecopetrol Group.

Ecopetrol's sales and marketing strategy

Ecopetrol is committed to being a system optimizer and asset-based marketer. Additionally, it has the challenge of providing Colombia and the world with quality fuels that contribute towards improving the air we breathe, as well as the petrochemicals required as raw materials for the productive development of the country.

Business results

In 2019, Ecopetrol implemented the transformation process of this area, which began in 2018 with the objective of achieving commercial excellence and internal optimization, seeking to generate greater value for the Ecopetrol Group, in order for Ecopetrol to become a value chain optimizer and an asset-based marketer.

This transformation led to adjustments in the structure and processes of this area, seeking to further functional and product specialization, which has allowed for a greater focus on the client, as well as the construction of a culture based on four pillars: external focus, proactivity, collaborative work and risk management.

In 2019, 99% of Ecopetrol's revenues came from the sale of crude, gas and products (including fuels and petrochemicals) and the remaining 0.1% came from the provision of services.

Sales revenue amounted to COL $63 trillion,an amount that represents a growth of 4% compared to 2018, owing to higher sales volumes (3%), higher exchange rate (10%), and the implementation of sales and marketing strategies aimed towards improving the spreads of the crude basket.

The benchmark average price of Brent export crude oil in 2019 was quoted at USD $64 / bbl, which showed a decrease of USD $7.5 / bbl versus 2018, due to factors such as the increase in hydrocarbon production in the United States.

In volumetric terms, crude oil exports showed an increase of 5% between 2018 and 2019, reaching 396 Kbpd. This increase is attributable to the increase in production and purchases from third parties, which offset higher sales to local refineries.

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