Announcement of IFC Assists Twenty-Five Thousand US Dollars Colombian Oil Project on March 12, 1981

International Finance Corporation • 1818 H Street. NW. Washington. O.C. 20433, U.S.A. 202-4 77-1234 IFC Press Release No. 81/35 Thursday, March 12, 1981 IFC Assists $25.9 Million Colombian Oil Project The legal documents for a $25.9 million oil exploration and development project in Colombia were signed in Washington, D.C. today (March 12) by Jorge Mejia Salazar, Chairman of Petroleos Colombianos, Ltd. (Petrocol) and President of Banco de Bogota; Luis G. Morales, President of Petrocol: Pedro Camargo, Man._1~er of Petroleos Nacionales S .A. (Petronal); and Hans A. Wuttke, Executive Vice President of the International Finance Corporation (IFC). The project is being implemented by Petrocol, a private, independent oil • company majority owned by Colombians, to develop its Andalucia Sur oil field in the Huila area and to explore other promising sites in Buila and in the Sinu area. It is the first such project by a private, Colombian owned company and it is being undertaken in association with Ecopetrol, the Colombian Government oil corporation. Financing for the project is being provided by domestic and foreign share- holders and by IFC, together with a group of foreign and local banks. IFC, an international institution that assists the private enterprise sectors of developing countries, is lending Petrocol Sl2.15 million, of which $9 million is being taken up by a group of participating banks: Arab Latin American ~ank (ARLA.BANK), Peru; Banco de Bogota S.A., Pan~ma~ and Den norske Creditbank (Luxembourg) S.A. Senior representatives of these three banks attended the ceremonies. Although IFC has assisted other oil projects, this is the first in which it is helping to finance exploration for oil. Petronal, a wholly owned Colombian company that has a major interest in Petrocol, is investing $4.2 million in equity; IFC, S1 million: and other Petrocol shareholders, $475,000. Approximately Sl.25 million of Company funds, Sl.35 mil- lion in short-term financing from local financial institutions and $3.5 million in • complementary associated financing from Ecopetrol complete the financial plan . Project sponsors also have agreed to provide up to $3.9 million in contin- gency financing should it be needed.  - 2 - The project includes· the development of the newly discovered Andalucia Sur oil field in the Huila area, about 125 miles southwest of Bogota, through • the drilling of additional production wells and the installation of ancillary production facilities. In line with its efforts to help finance the commer- cialization of proven fields, Ecopetrol will cover 50 percent of the develop- ment costs. A second project component is the drilling of exploratory wells at other prospective oil sites in Huila plus seismic and gravimetric surveys. Finally, Petrocol will undertake an oil exploration program in the Sinu area, located in northwestern Colombia, near the gulf of Uraba. The program includes drilling several exploratory wells and geophysical surveys. The venture is in line with Government policies to expand oil explora- tion and production and restore Colombia to oil self-sufficiency. It is also the first joint Government/private Colombian industry effort to increase oil output. The Company ~}tpects to have an initial production of some 3,000 barrels • of oil per day from the Andalucia Sur field and save the country an estimated $16 million a year in foreign exchange. Additional discoveries are expected from its exploratory wells. Besides its own investments and helping introduce Petrocol to the inter- national banking community through the sale of participations, IFC assisted the Company in defining and structuring the project and in developing the financial plan. [Any inquiries strictly relating to IFC's participation in this project should be directed to the IFC Information Office, 1818 H Street, N.W., Washington, D.C. 20433, Telephone (202) 676-0394.] 4II