Ecopetrol Capital Projects

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    March 10th, 2016

    Bogotá

    Enhancing capital project

    execution at lower-for- longer prices

    Workshop on global trends and tactical

    opportunities to improve performance

    Upstream

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    Copyright © 2016 Accenture All rights reserved.

    ASU brings experts and consultants with global experience

    Eric Janvier

    Capital Project Practice & QC

    Capital Project Forum co-leader

    Graham spent 30 years working for BP around the world. He

    retired as Chief Engineer for BP‘s global upstream business. He

    has experience in the North Sea, Alaska, Azerbaijan and many

    other countries including Colombia.

    Graham is a Chartered Engineer and a Fellow of the Institution of

    Civil Engineers.

    Raul Camba

    Head for Mexico & Andean Countries

    Raul is an Managing Director in ASU, based in Mexico. He has

    extensive experience advising oil and gas companies in Latin

     America and Europe. His main focus has been on petroleum

    upstream with areas of expertise which include strategic planning,

    operations, maintenance and capital execution

    Manas is a Managing Director at ASU. He has lead engagements

    with clients in typical areas of engagement such as market entry and/or growth strategy, risk-reward based commercial models,

    technology life-cycle management, supply chain, inventory

    management, distribution and receivables management.

    Graham McNeillie

     ASU Senior Advisor and former Chief Engineering for BP

    Upstream

    Capital Project Forum co-leader

    Manas Satapathy

    MD

    Eric started his career as a wireline engineer for Schlumberger

    He leads the Global Capital Projects Practice and the Quality &

    Risk Committee.

    Throughout his career he has advised several resource

    companies, with particular focus in oil and gas in multiple

    geographies including Europe, Africa, the former Soviet Republics

    and the Middle East.

    Jorge Falcón

    MD

    Jorge is a Managing Director in ASU, based in Mexico City. He is

    focused on three key functions in Oil and Gas projects (strategy, operational transformations, capital productivity) with experience in

    diverse geographies (Mexico, Colombia, Peru, Bolivia, Hungary

    and Slovakia).

     Andres is a Manager ASU, based in Mexico City. Prior to joining

    SBC, Andres has experience working with clients across several

    industries with particular focus in Oil and Gas, mainly in operations

    and strategy.

    Andres Castillo

    Manager

    Jorge Chaparro

    Senior Manager

    Jorge is responsible for Energy and Utilities for Colombia. He has

    more tan 25 years of experience in consulting, integration of

    solutions and project management.

    Beatriz has more than 24 years of experience and has led

    consulting projects across the world.

    She has consulted for various industries including oil and gas.

    Her work covers transformations, implementation of SAP and

    Oracle solutions as well as sector-specific solutions.

    Beatriz Carmona

    Executive Director for Accenture Colombia and Venezuela

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    Copyright © 2016 Accenture All rights reserved.

    ASU was created upon Accenture’s acquisition of Schlumberger’s

    global energy management consulting division (SBC)

     ASU helps oil and gas industry leaders solve problems regarding a wide range of practices:

    Focus on Oil & Gas 

    Our group has world-class technical expertise and knowledge, covering the entire O&G value chain:

    Deep Industry

    Knowledge 

    We serve 95 clients in 40 countries and have developed more than 1,000 projects. Our client portfolio

    includes 60% of major IOCs, 70% of major NOCs, as well as: Global Scope 

    ▬ Exploration

    ▬ Field development

    ▬ Production

    ▬ Midstream

    ▬ Refining

    ▬ Gas and power

    ▬ Marketing and retail

    ▬  Alternative energy

    ▬ Independent companies

    ▬ Other energy players

    ▬ Banks

    ▬ Investment funds

    ▬ Governmental entities

    ▬ Strategy

    ▬ Organization

    ▬ Talent management

    ▬ Operations improvement

    ▬ Mergers and acquisitions

    ▬ Post-merger integration

    ENERGY Upstream

    WHAT ASU DOES THAT MAKES IT UNIQUEWHY ASU IS UNIQUE

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    Copyright © 2016 Accenture All rights reserved.

    ASU is bringing the results and implications from the Capital

    Projects Forum to Ecopetrol

    We intend to bring the

    results of the forum and to

    engage with the audience

    on several of the most

    relevant topics in capital

    projects in the oil and gas

    industry today:

     What the current trends

    are in capital projects

    that leaders across

    industries are

    identifying  What valuable insights

    we can gain

     Discuss what trends companies are following

    to increase the efficiency in capital projects

    under the current price conditions

     Understand and discuss success cases that

    Ecopetrol can learn from

     Opens Q&A panel session for the audience

    to engage directly with the group of experts

    to address concerns or doubts about the

    trends and cases previously discussed

    SPECIFIC OBJECTIVESMAIN OBJECTIVE

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    Copyright © 2016 Accenture All rights reserved.

    Agenda

    Main Learnings from the Capital Projects Forum (2015) 8:00 - 9:00

    How impact can be achieved: Panel Discussions on Selected Topics 9:00 - 11:45

    Conclusions and Wrap up 11:45 - 12:00

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    Welcome and Introduction

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    The 2014 forum concluded – even before prices dropped - that

    operators needed to consider four actions to transform their project

    performance

    Source: SBC/ASU

    1. Create a strong central governance

    2. Focus on leaner designs

    3.  Adjust the growth strategy to match one’s true capabilities 

    4. Move to the next stage of collaboration with suppliers

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    9Sources: Upstream; Companies annual reports; SBC/ASU Capital Projects Forum Survey 2015

    % of respondents 

    Conclusions from the 2014 forum have now spread into strategic

    statements and press articles

    AREAS OF FOCUS MENTIONED BY THE PARTICIPANTS TO OUR SURVEY

     Adoption of company

    led standard solutions 30%

    20%

    Reuse of concepts

    developed for past projects

     Adoption of supplierled standard solutions

    50%

    Establishment of

    alliances with suppliers

    Increase of call for tenders 10%

    20%

    30%

    Simplication of

    company standards

    “Tearing up last year's contract and starting all over again will not be enough. This is much more about design standards, better up-

    front planning, contracting structures with the best suppliers, etc .” 

    B. van Beurden, CEO, Shell, 30/07/2015

    “Standardization,  simplification and industrialization. Not yet words that are immediately associated with our industry. But

    the potential is large, in many areas.”  

    E. Sætre,CEO, Statoil, 23/04/2015

    “[Operators need to] engage at the very early stage and do it in a way that is constructive. Every downturn there is the same

    reaction - let's cut the cost immediately... squeeze the supply

    chain. But I can tell you, this is not enough.”  

    T. Pilenko, CEO, Technip, 8/05/2015

    “Something fundamental has to change or you are not going to get a sustainable material change that

    the industry demands.”  

    J. Gremp, CEO, FMC Technologies, 8/05/2015

    E&P EXECUTIVES POINTS OF VIEW

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    However, most of the efforts last year have been on contract

    renegotiations and project revisions

     Renegotiate or retender contracts

     Stop or delay unprofitable projects, when

    possible

     Delay those that can be delayed,

    to benefit from lower prices

     Step-back and challenge concepts,

    considered for projects in design phase

    Sources: Upstream, Oil & Gas Investor, Statoil

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    11Sources: IHS Energy; EIA

    2000 = 100 (Left axis); Nominal USD/bbl, quarterly spot (Right axis)

    The impact on costs has been substantial. This deflation is however

    reaching its limits, and will not resist to a rebound of oil prices.

    BRENT OIL PRICE AND IHS UPSTREAM CAPITAL COST INDEX

    50

    100

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    0

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