Challenges for offshore development in Colombia Challenges for offshore development in Colombia V Colombia Investment Conference October 2012 Álvaro Racero.

Challenges for offshore development in Colombia

V Colombia Investment ConferenceOctober 2012

Álvaro Racero Baena

Caribbean Regional Executive Director

Agenda

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1. Worldwide Offshore activity

2. Repsol offshore activity

3. Offshore Colombia Challenges

4. Summary

Growth in offshore projects:

Source: IHS CERA, Capital Costs Analysis Forum–Upstream Houston, May 2012

Onshore and Offshore Projects Production Start Dates

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Source: IHS CERA* Deepwater >1000 <5000 feet; Ultradeep Water: >5000 feet.

Worldwide offshore production

Deepwater continues to be an important oil supply in the world (not only in US) and will continue to increase in the future.

The contribution from deepwater fields rises from around 5.4 Mbd in 2011 to 11.2 Mbd in 2035.

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Rigs Availability

Source: ODS-Petrodata, Morgan Stanley Research, October 2012 5

Major offshore drilling basins (rig supply/utilization)

Repsol: Offshore presence around the world

Morocco

USA

Canada

Spain

Norway

Colombia

Cuba

Sierra Leone

Liberia

Venezuela

Trinidad and Tobago

Guyana

Indonesia

Offshore activity in 20 countries (operator in 14)

Brazil

* Pending of official ratification

Portugal

Ireland

Tunusia

Australia

* Bulgaria

Angola

* Namibia

OPERATOR and joint venture

NON OPERATOR

Exploration

Productión

Services Contract in production operations

Acreage @ September, 30th 2012

DeepwaterOperated andjoint venture

Non OperatedOperated andjoint venture

Non Operated

93 73 162 103

40.837 91.450 40.555 17.842

25.590 26.697 21.204 5.848

431

190.683

79.339

Gross Acreage

(km2)

Net Acreage

(km2)

Nº of Blocks166 265

132.286 58.397

52.286 27.052

RESUMEN

DeepwaterTOTAL@ 30 Sept 2012

Shallowater

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Repsol:Offshore Exploratory and Appraisal Wells

Deepwater non operated (dw)

2008-2012: 52 Offshore exploratory (Operator & joint venture in 22) 32 deepwater (Operator & joint venture in 10)

2008-2012: 52 Offshore exploratory (Operator & joint venture in 22) 32 deepwater (Operator & joint venture in 10)

Deepwater operated & joint venture & (dw)

YEAR COUNTRY WELL

GuaráItatiaia 1Saleta (Obelix)

US AtlasSuriname West Tapir-1

Abaré WestBogoria Iguazú Lençois PanoramixPialamba ( Piracuca)Piracuca AppraisalTurkanaAngosturaBuckskinLubina 1Montanazo D 5

Libya A1 NC 202 (Barracuda)Morocco AnchoisSierra Leone Venus B-1Venezuela Perla 1X

Asterix Creal-BMalbecPanoramix-2 AppraisalPepePiracuca 2 (bl.East) Seat

Sierra Leone MercuryVenezuela Perla 2 Appraisal

Carioca NE (3 SPS-74)GaveaGuará Norte (3-SPS-69)MalombeBuckskin appr (KC785#1)Garden Island Bay

Liberia Montserrado-1Deep ThonMerou

Noruega Heilo (7124/4-1S)Abaré (4-SPS-81)ItaboraiMagadi (1-ESS-210)Pao de AçucarSagitario (1-SPS-98)Tingua (1-RJS-685)Vampira (1-REPF - 4 - SPS)

Cuba Jagüey-1Guyana Jaguar-1xNoruega Ulvetanna (3/4 2S)

Jupiter 1Mercury 2

Brazil

2008

2010

Brazil

2009

Brazil

US

Spain

US

Marruecos

2011

2012

Brazil

Sierra Leona

Brazil1

86

3 44

8

37

8

2008 2009 2010 2011 12@sept

Operated & Joint Venture Non Operated

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Repsol: Deepwater Operated Exploratory Wells

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Repsol: acreage in Colombia

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Repsol has 10 blocks in Colombia, 3 in the offshore (Tayrona, RC-11 and RC-12)

Proyecto Cardón IVUbicación y Concepto de Desarrollo – Fase 300

Cardon IV East Block

Perla 2ST1

Perla 5

Cardon IV West Block

Perla 3x

Perla 1X

Perla 4x

Refineria Amuay

Refineria Cardon

Perla-2ST1

Perla-1X

Perla-4X

Perla-5

Perla-5

Perla-3X

El Campo Perla está localizado aproximadamente 50Km al oeste de la Península de Paraguana (Golfo de Venezuela) en lo que se denomina el Bloque Cardón IV West.

Validez de la licencia es de 30 años desde el 2 de Febrero de 2006

PDVSA tiene el derecho de entrar en la asociación hasta con el 35%, hasta 120 días después de declaración de comercialidad

Gas Original en Sitio = 17 TCF/ Reservas = 8.1 TCF GSA firmado el 23-12-2011 Declaración de comercialidad publicada el 15-08-2012 Plan de desarrollo aprobado el 20-08-2012

5 Pozos Perforados : 4 verticales y 1 sub-horizontal.

14” Tubería del Pozo 14 Tubería del Pozo

30” Tubería de Exportación Multifasica

Plataforma de Interconexión

Perla 1x

Estructura livianaPerla 2ST1

Estructura livianaPerla 3

PROJECT COSTS &

COST CONTROLS INFRASTRUCTURE

& MARKETS INTEGRATION

QUALIFIED STAFF

EQUIPMENT, AVAILAVILITY

AND LEAD TIME

EFFICIENT APPLICATION

OF TECHNOLOGY

LEGAL FRAMEWORK

(STABLE, ADECUATE)

CONTRACTS & CONTRACTING

STRATEGY

GAS PRICES

Challenges for offshore Colombia

INTEGRATED DYNAMIC

TEAMS

HSE AND ENVIRONMENTAL

IMPACT

REMOTENNES AND LOGISTICS

IHS CERA Upstream Capital Cost Index

•Steel•Land Rigs•Offshore Rigs•Engineering and Prof. Management•Equipment •Construction labour•Yards Fabrication•Sub-sea•Bulk materials•Offshore installation vessels

Index includes:

$12,000 =

$40,000 =

$48,000 =

2002 Fiat Punto

2007 BMW 320

2012 AUDI A6

Valve (super duplex SS)

2003

2007

2012

Cost inflation

•Assuring the appropriate human and technical resources

•Developing time and cost effective projects that consistently provide added value to the business

•Predicting project costs and schedule in a reliable way

•Manage opportunities and project risks during all phases of the project lifecycle.

•Improve communications establishing a common language

Mitigating the Risk of project executionthough a consistent and proved methodology

-

5,00

10,00

15,00

20,00

25,00

Dic-99 Abr-01 Sep-02 Ene-04 May-05 Oct-06 Feb-08 Jul-09 Nov-10 Abr-12 Ago-13

Norte de Europa

Henry-Hub

Mercado Asiatico

Comparación del precio del Gas en diferentes mercados (USD/MMBTU)

Offshore Guajira wellsStatistics by spud year, WD, TD

Araza-1

~ 20 years no wells

Spud year

Water Depth

~ all the well in shallow water

Variable TD

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An integrated project to improve the subsurface imaging through seismic processing

Leaded by the Repsol subsurface team in Houston

Kaleidoscope

Kaleidoscope

• Applying state-of-the-art algorithms to resolve complex geological geometries

• Either in sub-salt environment or in complex thrust belts

Input: Delivered study (ies).Output: Updated Geopressure model, shallow hazards and geomechanic results, gathered and completed in the PDDP.Participants: Project manager, manager of Operaciones Geológicas, Drilling Manager, Geopressure Team.

Description: The Team coordinator and the Drilling Manager validate and approve the study and its conclusions with the support of the recommendations of the Team specialists. The Project manager enters the conclusions and recommendations of the study in the PDDP.

Geopressure analysis process

Technical maturityDesignation

Call for the Geopressure team

Data preparation

Team meeting

Budget approval

Study completion

Study approval

PDDP

• 7 areas of coral-reefs

• 9 bird sanctuaries including the protected Nariva Swamp

• Several turtle nesting beaches

• Cost line geomorphologically complex with 8 zones particularly sensible to oil spills

• 6 zones of artisan fishing

• 9 types of sediments, with 4 types of benthonic communities

Biodiversity, a must to preserve

Summary

Improve quality of subsurface image and capabilities in Seismic Processing. Improves well prediction. (Kaleidoscope/Phoenix Project)

Multidisciplinary geopressure group to improve on the well prognosis for areas with limited well data available

Operational Deep-Water capabilities with an offshore drilling group in Houston which give support, supervise and design all offshore drilling operations.

IPM and adequate contracting strategies to minimize risks of cost overruns

Repsol’s regulatory and drilling groups have been actively engaged with all of the industry initiatives related to the new and evolving regulations in the GOM.

Along with 23 other operators in the GOM, Repsol has elected to join the Helix Well Containment Group (HWCG), one of the two groups approved by BOEMRE, to find solutions for spill containment.

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Thanks