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Services for the Oil & Gas Industry


Bogota has

everything you need for a successful oil and gas services operation Bogota, the capital of Colombia, is a dynamic and cosmopolitan city of more than seven million inhabitants. Thanks to its economic performance, pro-investment environment and excellent quality of life, it is one of the best destinations to do business in Latin America.

Bogota is becoming a new hub for services to the oil and gas industry in northern South America thanks to: Growing industry. Exploration and production activities; the arrival of new production and exploration companies have stimulated demand for services in the oil and gas industry. Attractive business environment. Stable economic performance, consistent policies and strong institutional support for the oil and gas sector have generated a favorable environment for new investors. Qualified and available human capital. Bogota has skilled personnel with experience in this industry. Competitive costs. The cost benefit ratio in wages and infrastructure is one of the most competitive in the region. Large base of E&P companies. In Colombia there are around 120 E&P companies of all sizes.

A Dynamic Oil and Gas Services Industry Services for the oil and gas industry have grown by an annual average rate of 31% in the past five years. Total sales in 2010 were approximately US$3.7 billion. Oil and Gas Services Revenues in Colombia (2006-2010) 4

From all oil and gas services companies, 89 % are located in Bogota and its region.

3.7

3.5

2.9

3

2.6

2.5 US$ Billions

There are around 126 representative oil and gas services companies in Colombia, according to la Superintendencia de Sociedades.

2 1.5

1.7 1.2

1

The top 10 oil and gas services companies concentrate 60% of the market, and are mainly foreign.

0.5 0

2006

2007

2008

2009

2010

Note: Based in classification CIIU 1120. Current exchange rate. Source: Superintendencia de Sociedades (2006-2010). Invest in Bogota calculations.


Growing Demand for Oil and Gas Services Colombia has a large oil potential… Wildcats (2004-2014e) 205

2,400 mboe proved reserves and potential 54,600 mboe in unexplored territories. Current production of approximately 930 thousand barrels a day and a goal of 1.7 million barrels of oil equivalents per day for 2020 in an optimistic scenario.

200

150

135

130

Dynamic exploratory activities: In the next 4 years 205 new E&P contracts would be signed, among those 15 would be in non conventional hydrocarbons.

112

99

100

100

75

70 56

50

35 21

0

2004

Also 570 new wildcats would be drilled.

2005 2006

2007

2008 2009

2010 2011e 2012e 2013e 2014e

Source: Agencia Nacional de Hidrocarburos. e: Estimated.

…and a flexible and competitive regime for exploration, production and service companies. Competitive, flexible government take (45 to 75%) Tiered royalties for operating companies (8 to 25%) 33% income tax Deductible local taxes No remittance tax

Escalation in payment of the obligations for new micro and small companies. Obligations: Registration of companies, income tax, payroll contributions. Tax incentives for employment generation: Payroll contributions can be deducted from income tax, according to specific requirements on employment generation.

In recent years a growing number of local and international E&P companies have established business in Bogota. E&P Contracts (2004-2014e)

80

Nearly 40 new E&P companies have established in Colombia since 2007. These companies have acquired important exploration and production commitments.

70

70

64 59

60

59 54

50

44

40

From 2009 to 2010 E&P companies’ revenues have increased 2%.

30

45 5

40

40

40

70

8

10 0

45 5

28

20

In the last 7 years E&P companies have signed more than 300 contracts and it is expected that 205 will be signed by 2014.

45 5

2004 2005 2006 2007 2008 2009 2010 2011e 2012e 2013e 2014e E&P contracs

Unconventional

Conventional

Source: Camara de Comercio de Bogota, Registro de compañías. Invest in Bogota calculations. e: Estimated.


Skilled and Available Human Resources Bogota concentrates 40% of the total graduates in fields related to the Oil & Gas industry. Graduates in Fields Related to the Oil & Gas Industry (2001–2010) Computer Science

108,789 62,269

Industrial

44,623

Electronics and Telecommunications

34,689

Civil

23,076

Mechanical

19,845

Environmental Electrical

9,650

Chemical Engineering

9,186 5,073

Mining and Metallurgy Geology

1,457 0

20,000

40,000

60,000

Bogota

Other cities

80,000

100,000

120,000

Colombia

Source: Ministerio de Educación Nacional, Observatorio Laboral.

Competitive Costs The cost structure in Bogota for oil and gas services is the most competitive in the region. Ease of Doing Business (2011) Years of experience

Monthly average wage (2011) US$

Hydrocarbon Project Manager

7-9

$8,000 - $9,000

Field Engineer

7-9

$7,000

Oil or Production Engineer

7-9

$5,000

Hydrocarbons Business Developer

5

$3,500

Geological Engineer

2-5

$2,500

Certified Machine Operator

0.5

$2,400

No contributions. Source: SGF Global and el Empleo, TRM: COP$ 1 = US$ 1,900.

54,5 50

40 US$ / m²

Position

60

30

20

25,2 17,7

18,0

Lima

San Jose

27,0

29,0

29,8

Bogota

Buenos Aires

10 0

Santiago

Mexico City

Sao Paulo

Source: Colliers International, Real Estate Review Latin America Region 2011.


Bogota has important multinational sector companies... Service Companies The main multinational oil and gas services companies are located in Bogota; there is also a critical mass of experienced local companies.

E&P Companies In addition to Ecopetrol, which produces 60% of the country’s oil, there is a large number of multinational operating companies that require services.

...and strong institutional support for the industry. Main Sector Entities

www.acipet.com

www.campetrol.org

www.anh.gov.co

www.minminas.gov.co


Invest in Bogota Investment promotion agency for Bogota and Cundinamarca. A public-private partnership between the Bogota Chamber of Commerce and the Bogota Mayor’s Office. Ranked by the World Bank in 2009 as the top non-OECD investment promotion agency in the World. Offers, free of charge, and in absolute confidentiality, services for investors during each stage of their investment process: exploratory phase, start-up phase, operational phase and reinvestment. It has supported 51 investment decisions exceeding US$250 million and generating approximately 6,000 jobs. The agency runs Talk to the World, the English program whose objective is to offer a bilingual labor force to companies with English operations in the city, and improve job opportunities for people living in Bogota. It heads up Bogota’s marketing strategy through diverse projects which aim at promoting the main values of Bogota, creativity and innovation.

Contact us Bogota, Colombia PBX: +57 (1) 742-3030 Email: info@investinbogota.org www.investinbogota.org twitter.com/investinbogota facebook.com/investinbogota


Services for oil gas industry Bogota Invest in Bogota 2011