The ODL Pipeline

The key to expanding production at Rubiales is to transport the crude oil to market effectively and at low cost. In order to do that, the company, together with Ecopetrol, formed a special purpose vehicle, Oleoducto de Los Llanos ('ODL'), to build and operate an oil pipeline. We have a 35% equity interest with Ecopetrol which has a 65% equity interest in ODL, a 235 kilometre, 24-inch pipeline which connects the Rubiales field to the Monterrey station, and from there to the Coveñas export terminal on the Colombian-Caribbean coast.

We are currently in Phase I of construction, which is expected to be completed in the third quarter of 2009. Phase I was conpleted in august at acost of ODL US$370 million, while Phase II will cost US$160 million.

Phase I will see the Rubiales field connected to the main Colombian oil transportation network, significantly reducing the cost of transportation and allowing early pumping of Rubiales' production, even before the main pumping facilities of Phase II are completed. ODL has been able to create this two-phased approach to utilizing the pipeline through the use of early pumping capacity that ODL has already located and is putting in place. This early utilization of the pipeline, in conjunction with the rescaling of the trucking fleet currently used by the company to transport its crude, will set the foundation for ramping up the field to a production of up to 100,000 bbl/d in the last quarter of 2009 at a significantly lower cost. Current gross heavy oil production (as at March 2009) is approximately 58,000 bbl/d. Phase II of the construction of the ODL pipeline will see the pipeline reaching full capacity (170,000 bbl/d) by 2010.

In February 2009, ODL received credit approval for a US$200 million debt facility, in Colombian Pesos equivalent, to be provided by Grupo Aval, a Colombian banking group led by Banco de Bogota, which enables the funding for the completion of the pipeline project.

Other Pipelines

Pacific Rubiales' pipeline interests include 90.6% interest in Guaduas-La Dorada, a 1.0% share of the ODC and a 1.2% share of the OAM pipelines. These pipelines are currently transporting 5,000 barrels per day of crude oil to the Caribbean Export Port of Coveñas. Upon the completion of new unloading facilities at Guaduas PF-2 in May 2008, this throughput capacity will increase to the maximum installed capacity of 25,000 barrels per day, enabling the company to quadruple current crude oil exports.