The Ecopetrol Group will invest between COP 25.3 and COP 29.8 trillion in 2023 to accelerate the energy transition and reach energy security

• The 2023 investment plan approved by the Board of Directors is in line with the Ecopetrol Group's commitment to continue pressing forward in the energy transition and to attain the country’s energy security, maintaining competitive returns for all its shareholders in keeping with its 2040 Strategy "Energy that Transforms".

• About 23% of the plan is aimed at strengthening the company’s diversification into new low-emission businesses, which includes investments in hydrogen production, renewable energy, carbon capture and electricity transmission, leveraging diversification at the Ecopetrol Group level.

• The plan seeks to reduce about 400,000 tons of CO2e emissions and generate about 900 MW of renewable energy and over 50,000 tons of green hydrogen by 2025.

• The commitment to gas self-sufficiency foresees investments of COP 3.6 trillion to COP 4.1 trillion allocated towards exploration and production projects in the Piedemonte and the continental and offshore Caribbean. The plan calls for the creation of at least two new regional energy communities and about 107,000 new gas-connected homes.

• Nearly COP 5.4 trillion are assigned to projects in the electricity transmission business, seeking to enable over 6,000 kilometers of new transmission lines for non-conventional renewable energies by 2025.

• In the hydrocarbons business, the Group expects to produce in 2023 between 720,000 and 725,000 barrels of oil equivalent per day, reach a refining throughput of 420,000 to 430,000 barrels per day, with transported volumes surpassing one million barrels per day, as well as ensuring the substitution of imported fuel continues and seeking the stability of the country's trade balance.

• In accordance with the Generate Value through TESG (SosTECnibilidad®) objectives of the strategy, the plan includes investments of close to COP 2.3 trillion in decarbonization, integrated water management and fuel quality improvement projects, among others.

• The resources allocated to social investment for regional development and community well-being amount to COP 472 billion, destined for road infrastructure, educationand access to public services such as water and gas.

• More than COP 405 billion will be allocated to science, technology and innovation projects, a crucial area to drive business development and accelerate progress in technologies for the energy transition.

• The plan generates competitive returns at Brent levels of 80 USD/ Bl, with a ROACE greater than 10%, an EBITDA margin above 40%and transfers to the nation of more than COP 40 trillion in 2023.

Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC)  informs that its Board of Directors approved the 2023 general organic investment plan for the Ecopetrol Group for an estimated amount between COP 25.3 and COP 29.8 trillion. Individual investment projects will be evaluated opportunely by the Board of Directors according to their significance and importance to the Company. The plan presses forward with the four pillars of the 2040 Strategy, in alignment with Colombia’s Energy Transition Roadmap.

The commitment to supporting the energy transition is reflected in projected investments of COP 5.9 trillion to COP 6.8 trillion in renewable energies, self-generation, hydrogen, transmission and toll roads and energy efficiency, as well as COP 3.6 to COP 4.1 trillion allocated to gas self-sufficiency and between COP 15.8 and COP 18.9 trillion to ensure the country’s energy security and the company’s financial sustainability and favor the country's trade balance.

The resources allocated to new energies, self-generation, hydrogen, transmission and toll roads, energy efficiency, CCUS and ISA (transmission and toll roads), represent close to 23% of the 2023 investment plan. Of these investments, close to COL 4.1 trillion are in projects that, during the next three years, are expected to generate approximately 900 MW of renewable energies, produce over 50 ktons of low-carbon hydrogen, reduce by approximately 400 ktons the CO2e emissions and advance CO2 carbon capture and storage research.  In 2023 alone, COP 315 trillion will be assigned to these projects. 

Gas investments will receive between COP 3.6 and COP 4.1 trillion in 2023, with an expected production produce between 174 and 177 thousand barrels of oil equivalent per day (which represents around 800 million cubic feet of natural gas, in addition to white products). These resources are intended to uphold current supply levels and increase them through investments in gas exploratory projects, with 12 wells planned for 2023, mainly in the Piedemonte, Caribbean offshore and in northern Colombia, strengthening gas provisioning and energy communities in this fuel of the energy transition.

Additionally, ISA will invest close to COP 6.3 trillion in 2023, with a total expected investment of COP 19.8 trillion by 2025). This includes approximately COP 5.4 trillion to build 9,657 kilometers of energy transmission systems, of which 6,227 kilometers will be employed to transport non-conventional renewable energy, solidifying ISA¿s position as the leading energy transmission company in Latin America.

Of total investments, 66% will be allocated to projects in Colombia to maximize the domestic value-added chain and increase the benefits for our stakeholders in the national territory. The investments abroad (34%) will focus on securing the long-term resources to fund the nation’s energy transition and press ahead with low-emission investments, mainly in the transmission business, concentrating mainly in the Permian of the United States (19%), Brazil (10%), Peru (3%) and Chile (3%).

In the Upstream segment, the investments will enable reaching organic production levels of 720 to 725 thousand barrels of oil equivalent per day (76% oil and 24% gas)and will be focused on improved recovery technologies to maximize the resources of existing basins and offset the natural production decline of the fields. Likewise, between 2023 and 2025, around 1,600 development wells will be drilled. In 2023, 25 exploratory wells will be drilled in the Llanos Orientales, Mid-Magdalena Valley, Piedemonte and offshore Caribbean basins.

Investments in the Midstream segment are 5% of the total 2023 plan, concentrating mainly on infrastructure integrity and reliability projects to be performed by Cenit, Ocensa, ODCand ODLand includes resources for the multipurpose pipeline expansion plan aimed at guaranteeing the national supply of refined products. Anticipated transported volumes exceed one million barrels per day, in line with the country's production expectations and demand for refined products.

Investments in the Downstream segment are 7% of the estimated total for 2023, and will continue to be focused on ensuring the reliability, availability and sustainability of the Barrancabermeja and Cartagena refineries’ operations to strengthen the country’s energy security. They are also focused on propelling the energy transition and decarbonization through fuel quality and wastewater management programs that will reduce imports, ensure low sulfur fuels and provide increasingly cleaner wastewater. The expected combined throughput of the refineries is estimated at 420 to 430 thousand barrels per day.

Another central pillar is to Generate Value through TESG (SosTECnibilidad®). Seeking to further this objective, the plan allocates investments of close to COP 2.3 trillion thereto mainly towards: i) decarbonization-related projects, allocated COP 869 billion; ii) integrated water management investments amounting to approximately COP 900 billion; iii) projects to continue improving the quality of fuels will receive COP 288 billion; and, iv) investments in other associated fields, including research, the circular economy and occupational health and safety (OSH) have been assigned COP 207 billion. 

Additionally, the plan includes COP 472 billion for social investment that will allow the Group to reinforce its commitment to the local development of the regions, seeking in 2023 to provide interventions in 240 kilometers of tertiary roads, provide education for 90,000 students, give 16,000 inhabitants access to drinking water and deliver gas to 13,000 homes, among others. 

To continue furthering the Cutting-Edge Knowledge pillar, the plan includes investments of COP 405 billion million to pursue the Science, Technology and Innovation agenda. These investments strengthen the competitiveness of operations and contribute to the TESG strategy by providing emission-reduction solutions and technologies to achieve the goals of reducing water collection and zero water discharges.

Finally, the plan seeks to ensure competitive returns for the nation and the Company’s minority shareholders. Consequently, under an average Brent scenario of USD 80 per barrel by 2023, the plan reaches a ROACE1 of more than 10%and EBITDA of above 40% and solid financial results. These results overcome inflationary pressure and incorporate efficiency goals that aim to capture savings in the management of investment projects. Of the EBITDA, 83% will be produced in Colombia and the transfers to the nation – including dividends, royalties and taxes – would surpass COP 40 trillion. 

Finally, the 2023 investment plan foresees self-financing with its own resources, the collection of the account receivables from the Fuel Price Stabilization Fund (FEPC for its Spanish acronym), and marginal leverage in line with a lower gross debt/EBITDA ratio of 2.1 times. The plan will be subject to revisions during the first quarter of 2023 as its assumptions are tested.

“The Ecopetrol Group’s operational and commercial figures in 2022 are outstanding, a performance that endorses historical financial results. With the 2023 investment plan, we will continue to grow with the energy transition, while generating value for society and our shareholders, ratifying the Group's commitment to SosTECnibilidad® and the country's energy security”, said the President of Ecopetrol, Felipe Bayón Pardo.

Bogota D.C., December 09, 2022