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Operator: [Call Starts Abruptly] And Operational Results for the Second Quarter of 2023. There will be a question-and-answer session at the end of the presentation. Before we begin, it is important to mention that, the comments in this call by Ecopetrol’s senior management include projections of the Company’s future performance. These projections do not constitute any commitment as to future results, nor do they take into account risks or uncertainties that could materialize. As a result, Ecopetrol assumes no responsibility in the event that future results are different from the projections shared on this conference call. The call will be led by Mr. Ricardo Roa, CEO of Ecopetrol; Diana Escobar, Vice President of Sustainability Development, Yeimy Baez, Vice President of Low-emission Solutions, Alberto Consuegra, COO and Jaime Caballero, CFO. Thank you for your attention. Mr. Roa, you may begin your conference.

Ricardo Roa: Good morning, everyone, and welcome to the Ecopetrol Group’s second quarter 2023 conference call to present our operational and financial results. We appreciate your participation. First, I would like to highlight the dedication of our entire team, which has allowed us to achieve outstanding operating results in such a challenging market environment. Second quarter production average 728,000 barrels of oil equivalent per day with a yearly increase of 23,000 barrels versus the second quarter of 2022. And the highest quarterly figure in the last three years. This dynamism is a result of the strongest execution of our operation and increased production from strategic fields, including Cano Sur and Rubiales in Colombia and Permian in the United States.

These fields have played a crucial role in supporting our growth, allowing us to meet our production targets for the year today. In the second quarter of this year, we recorded revenues of COP34.3 trillion, EBITDA of COP14.6 trillion, and net incomes of COP4.1 trillion. These figures are consistent with the 2023 financial plan. These results are supported by: Firstly, an enhanced operating performance through record in production, pumping lots in zone of our transportation system and refining throughputs, and clean fuel pollution loads in our refineries. Secondly, the exceptional results in Permian, Recetor, ISA, and Ecopetrol trade in Asia. Firstly, a positive impact of the exchange rate from sales and an efficient commercial strategy. During the second quarter, we reached the following significant strategy milestones.

In May, we complete negotiations on the collective bargaining agreement for the next four years. The negotiation took place within a constructive and respectful trial with union organizations, finalizing with an agreement that will concurrently benefit our workers, the company, and the country. In June, Cartagena was notified of the international arbitral tribunal decision regarding to the claim filed on the January procurement and construction contract. For the expansion and modernization of the refinery. The arbitration process was initiated through a request filed by Reficar in March 2016, and correlating a contract breach with decision notified is subject to corrections, provisions, and clarifications of the records of the parties. This same amount were ranked in the top spot of the [indiscernible] Colombia 2023 timeframe.

The business monitor of corporate reputation Permian and Ecopetrol as the best company for attracting talent in the country. This first half of 2023, we have added more than COP23.6 trillion in transfer nation, so that is royalties and dividends maintaining our current contribution to national development. On the other hand, the account receivable to the fuel price stabilization fund had the lowest average approval since January 2022. Finally, I would like to highlight that the cumulative CapEx execution to the second quarter at least COP12.3 billion being the highest in healthy early view in the last seven years demonstrating our commitment to innovation and growth. Please continue the next slide. During the first half of the year, we faced a highly uncertain macroeconomic situation.

The possibility of conversation in the developed were high-interest rates and bank illustrate in the United States together with this lockdown in the Chinese economy. Have impacted the price up-to those and refine products introducing whether volatility to the market. Despite these challenges, we have excelled because of our companies operational resilience and adaptability. We have found opportunities within the current situation as OpEx could have focus on remediate goods and USA strategy to sale — purchase seek out great similar to those we offer. We have been able to explore the opportunities with our ongoing strategy in at the versatile markets and destinations emphasizing the strategy position of our trading subsidiary in Singapore. Ecopetrol Trading Asia which has sold over 85 million barrels of crude oil in the Asian market.

During this quarter, could oil sales to the Asian [ph] continued to represent 54% of our results. Ecopetrol Trading Asia also successfully translate carbon-neutral could cargo is in line with the company’s TESG agenda. Its EBITDA for the second quarter of 2023 reached $62.5 million an increase of 42% over the previous quarter. In addition, the CO2 through of the Carbon Trading desk has allowed us to commercialize 10 million barrels of accumulated carbon offset crude oil as of last July. Also, the commercialization of asphalt with recycled plastic with an export level of 350 tons and the distribution of five projects in Colombia has boosted the energy transition and circular economy in region. All the commercial performance has allowed as trend in the differential of the crude oil basket ensuring our positioning in the market.

The capital group continues production each all-inclusive strategy of efficiencies and competitiveness, allowing us to uphold the company’s solid operating performance despite inflationary and market challenges. We’re confident in our team’s ability to meet the facilities and remain committed to sustainable growth and success in this dynamic business climate. I now give the floor to Diana Escobar, Vice President of Sustainable Development, who will update you on our progress in the company’s total impact.

Diana Escobar: Thank you, Ricardo. Ecopetrol’s commitment to generation of social value was evidence during this quarter through advancements in the performance of our social and environmental investment plan, which in 2023 total COP766 billion a figure equal to nearly 5% of the comparable investment by the nation’s general budget. I would like to underscore the most relevant achievements during this past quarter. We highlight the start of the second phase of the Meta food supply network program in partnership with the food and agricultural organization of the United Nations. Over the next three years, this program should positively impact 3,000 farming families and 32 associations in the region, strengthening production change under commercial liability.

Moreover, a cooperation agreement was defined with the national government and companies in the industry to paid 43 kilometers of the Puerto Gaitan to Rubiales road located in the Department of Meta with an investment of more than COP214 billion. This project will sponsor, they are growing industrial productive and rural development of the European region, enabling over 1 million hectares with agricultural development potential and generating a positive annual impact of over 2.5% on the regional GDP. We also emphasize the successful national summit of the Ecopetrol’s entrepreneurship social investment program with the engagement of 1,576 entrepreneurs, micro and small enterprises from 45 municipalities that will receive benefits this year. In education, our school quality and retention programs have aided 641,000 students, which is 8% of the total enrollment in public educational institutions nationwide.

Regarding the expansion of higher education coverage through the Ecopetrol graduate program. This quarter we awarded 94 new scholarship to students in rural areas reaching a historical total of 1,761 beneficiaries to date. In healthcare, our mobile unit Magdalena Medio has assisted more than 6500 people in seven Municipalities of the Mid Magdalena region with access to low complexity health services, which is equal to 8% of the vulnerable population in this area. Regarding access to utilities, namely gas, water, and power supply, our social gas program, certified gas, service connections for more than 5,200 new households in the departments of Atlantico, Santander, and Casamari concerning water supply, we highlight the provision of COP6.5 billion for the construction of one public drinking motor well that benefits more than 13,000 people from ethnic group, as a part of our commitment to provide water supply solutions in the department of La Guajira.

In access to electricity we participated in a task force led by the Ministry of Mines and Energy seeking to define a portfolio of initiatives that can develop into self-sustaining energy communities. Our social investment portfolio has been further strengthened with the allocation to the Ecopetrol Group of 27 new projects valued at COP167 billion through the work for taxes mechanism. Our business group have the highest participation in this mechanism, 37% of the nationwide allocation. Finally, we would like to highlight the social dialogue processes carried out with the communities in our areas of influence. In the quarter, we conducted 13 dialogues processes involving more than 1000 social actors nationwide, for the participation of community action boards, academia, businesses, and local institutions.

In addition, we launched the Ethnic Inclusiveness Support Program called Forming and Diversity. Training with you and past to Siberia Ethnic communities in Nagzira and Putumayo to strengthen their individual and organizational competencies. In this way, to our business lines, we contribute to generate social value throughout the country, closing gaps, and improving the quality of life for those most affected by social inequality. I will now turn the floor over to Jaime, who will present the key financial results for the second quarter.

Jaime Caballero: Thank you, Diana. Ecopetrol recognizes that generating long-term value in a context of energy transition, requires an integrated balance between the achievement of financial profitability goals and the delivery of our strategic technology, environmental, social, and governance commitments with our stakeholders. Our performance dashboard shows significant progress in this regard. Technology is the main accelerator of this strategy generated benefits for close to up more than COP1 trillion in the first half of 2023 through increased revenue generation, cost reduction, avoided costs, and productivity increases. On environment, the Group, aware of the active role it must play in terms of climate change and energy transition, has made progress as follows.

Regarding emissions reduction, during the first half of 2023, the Group achieved an accumulated reduction of greenhouse gas emissions of 1.09 million tons of CO2 equivalents in Scopes one and Scopes two, mainly in the upstream and downstream segment through different enablers such as fugitive emissions, venting, flaring optimization, energy efficiency programs and the use of renewables. A cumulative reduction of 1.40 million tons of CO2 equivalents by 2023 with respect to the 2019 baseline is projected. On water the following has been achieved. First, an average water withdrawal of 657,000 barrels of water per day for industrial use, well below the withdrawal limit of 724,000 barrels of water per day established for the operation. Second, a 49% reuse of freshwater withdrawal achieving an over compliance of 123% compared to the target set for the first semester of 2023.

And third, a 29% reuse of production water affected by the pressure injection flow systems in [indiscernible] but compensated by the good performance of the other two indicators. As part of the ambition to incorporate non-conventional and alternative energy sources for self-consumption and promotion of cleaner energies, the company plans to incorporate 400 megawatts by 2023. Currently, 208 megawatts are in operation and another 200 megawatts are under construction to deliver the set target. Regarding social matters, in addition to the milestones previously mentioned by Diana, the following stand out, the 4,298 non-oil jobs generated that contribute to diversification of local economies and the 55,659 students benefited through quality and educational coverage projects.

In terms of governance, the company maintains a solid and transparent corporate governance with a level of independence of 78% of its Board of Directors and a 33% female representation. These guides the fulfilling of the company’s strategy and is evaluated in indexes such as the Dow Jones Sustainability Index, where Ecopetrol Group aims to maintain or improve the corporate governance rating obtained in 2022. Please move on to the next slide. During the first half of 2023, we achieve outstanding financial indicators, amides an environment of lower crude oil and refined product realization prices. Roche recorded its second-best result since 2016 and closed the semester at 14.8% above the target of 10% for the year and higher than the average of around 11% reported by peer companies to date.

The impact of higher fiscal contributions and the increase in capital employed was partially offset by higher operating income in the last 12 months. EBITDA margin was 44.3% mainly explained by the lower average rent price compared to the first semester of 2022 and the lower cracks of refined products, diesel, gasoline, and jet, which was partially offset by the net effect on revenues and purchases associated to the higher average exchange rate. Likewise, there was an increase in activity costs and operating expenses associated with the increase in activity in terms of production, refinery throughputs, and transported volumes, as well as some inflationary effects. During the semester, Ecopetrol Group recorded a higher EBITDA margin compared to its pear companies, which reported an average margin of around 34%.

Regarding EBITDA by business line, a 78% contribution of hydrocarbons stands out underpinned by the upstream and midstream segments. Transmission and toll roads contributed with 16% of the EBITDA mainly associated to the results of the energy transmission segment. Finally, low emissions contributed with 6% of the EBITDA explained by a higher gas contribution. The gross debt to EBITDA indicator remained stable at 1.6 times below the target of 2.1 times for the year. The debt-equity ratio was 1.1 times primarily due to the higher financing U.S. dollars acquired mainly by Ecopetrol S.A. in the first half of the year. During the first half of 2023, Ecopetrol Group generated an operating cash flow of COP5.2 trillion as a result of the solid operating performance and the positive effect of the average exchange rate, which offset lower organization prices and the inflationary effect on cost.

Operating cash flow accounting for the balance of FEPC, which I’ll explain in detail later, would be COP18.2 trillion at the end of the semester. Please move on to the next slide. In the first half of the year, Ecopetrol’s organic investments amounted COP12.3 trillion, the highest half-year figure in the last seven years, 41% above what was executed in the first half of 2022, and in line with the target for 2023 of between COP25.3 trillion and COP29.8 trillion. This demonstrates the company’s execution capacity in line with the target set out for the four pillars of the 2040 strategy, and contributes to our commitment to the economic growth of Colombia and the other countries where we operate. The hydrocarbons business line as a strategic priority for the company and as an enabler of investments in the energy transition, closed the semester with a solid execution for COP8.4 trillion, which represent 69% of the group’s investments.

These investments were represented in growth projects throughout the integrated chain, both in Colombia and the United States. The investments in low emission solutions and TESG closed at COP1.5 trillion of which circa COP1.3 trillion were allocated to gas projects focused on assets located in the Piedemonte and other exploratory blocks. In TESG resources were allocated to decarbonization projects, efficient water management and operations, energy efficiency, fuel quality, and hydrogen. Investments in the transmission and toll roads business line amounted to COP2.4 trillion and corresponded to projects executed by ISA in energy transmission, toll roads, and telecommunications. These investments allowed progress in the construction of the electric circuit and in improvements aimed at increasing the reliability of the existing network, as well as in Ruta del Loa, Ruta de la Araucania and Ruta de los Rios road projects in Chile.

Please move on to the next slide. At the end of the first half of 2023, Ecopetrol recorded a consolidated cash position of COP13 trillion explained by first an operating cash flow generation of COP5.2 trillion, mainly associated with higher sales volumes due to higher production, the solid performance of the midstream and downstream segments, as well as energy projects. This was partially offset by the increase in working capital, mainly due to the accumulation of the FEPC account and the payment of income tax in some subsidiaries. Secondly, the outflow of investment resources for organic activities for COP10.7 trillion, mainly made by Ecopetrol and its subsidiaries, Permian, ISA and CENIT. And thirdly, the outflow of resources for the payment of dividends for COP2.6 trillion to minority shareholders and subsidiaries.

Regarding the management of debt maturities for 2023 at Ecopetrol, we continue to advance in the refinancing strategy with which in June it carried out. A partial disbursement of close to COP693 billion from the financing line with bank Colombia, the prepayment of debt maturing in 2023 for $305 million. The issuing of bonds in the international capital markets for $1.5 billion and the launching of the repurchase offer for around $822 million plus interest for the prepayment of the remainder of the international bond issued in 2013 executed in August. As a result, the balance on maturities for 2023 at the end of August is close to $198 million, corresponding to principal installments of long-term debt. As for the average cost of debt, between the end of the first half of 2022 and the first half of 2023, the cost increased 28 basis points and close at approximately at 6.07%, which represents a highly controlled growth, despite the generalized context of higher international interest rates.

It is also noteworthy that, despite the higher costs, average exchange rate, and indebtedness, the increase in financial expense between these periods was only 1%, reflecting the company’s ability to manage its debt even in a challenging rate environment. The company does not expect a substantial increase in the cost of debt for the remainder of 2023. Regarding the FEPC balance, the account receivable closed at COP30.9 trillion, reflecting an accumulation of COP13 trillion during the semester. Likewise, compensation was made without transfer of resources between the balance receivable from the FEPC account and the dividends in favor of the nation for COP8.4 trillion, leaving an amount of COP13.2 trillion pending for compensation. It is important to mention that, thanks to the adjustments in the price of gasoline and the price environment, the monthly accumulation of the FEPC has been decreasing and is expected to be below COP1 trillion per month in the second half of the year.

Finally, it is important to reiterate that, the financial priorities of the Ecopetrol Group continue to be the value generation, through the delivery of the investment plan, proactive and competitive debt management, and the distribution of dividends as cash conditions allow. I will now pass the floor to Yeimy Baez, who will give us more details about the Low Emission Solutions business line.

Yeimy Baez: Thanks Jamie. In the first half of the year, the gas LPG production reached 160,000 of equivalent oil barrels per day, 22% of the Group’s production mix. This business delivered an EBITDA of COP2,142 billion with an EBITDA margin of 47%. Our continued efforts to decarbonize our operations were blostered by the implementation of a wide range of initiatives and investment projects of low-emission solutions, aiming to significantly contribute to our strategic objectives. I would like to highlight the reduction of fuel and gas from — Pizzorama and [Indiscernible] fields by the means of connecting them to the gas market to offer additional volumes of about 1400 MBTU per day. This initiative allows us to reduce emissions of more than 36,000 tons of CO2 equivalent per year.

We also were able to implement energy efficiency initiatives that led to reduce 5-gigawatt hours, 2-megawatts of consumption, equivalent to the electricity consumption of 16,000 and another 110 giga GBTU of thermal image. Energy management operational control and the use of slurry and bending of gas for cell generation of energy resulted in the loss — We continue to work on sustainable mobility during the second quarter of 2023. First, we started to deliver financial support to natural gas vehicles with the gas truck program, a fund of COP730 billion that includes an endowment by Ecopetrol. Second our subsidiary Asian pr. renew its transportation fleet with four gas-powered brand-new trucks in its operations. And finally, we deliver the first hydrogen refueling to the public transportation bus in Bogota for commissioning test.

With the support of semi and 1H22. It is estimated that all these initiatives in sustainable mobility will achieve a reduction of more than 570 terms of CO2 per year. I’ll give some further remarks on a capitals effort to improve the wellbeing of the Columbia people. To date the program to connectable communities, to the natural gas has delivered 4,843 connections positively impacting families in rural areas of [indiscernible] and Atlantico, Santander, and Casanare have been the main vehicles to meet the target. We also signed new agreements that will allows us to expand the program coverage to connect another 4,000 families in 2023. In addition, we extended the micro LNG plant operations in Buenaventura until November, providing reliability of gas supply to 37,000 families in this area.

Their company has done a significant amount of work to enrich its renewable energy portfolio. To that end new technologies have been introduced to our opportunities panel such as biomass, geothermal, and small-scale type. The operation of Brisas, Castilla, and San Fernando solar farms, as well as the Cantayus Small Hydroelectric Plant that allows us to reduce 5,883 tons of CO2 equivalent and save COP6,950 million in the second quarter of 2023. We’re also making progress in the construction of new photovoltaic capacity in Cartagena 23 megawatt, La Cira 56 megawatts, Copey, Ayacucho, and Vasconia solar farms with 15 megawatt and Caucasia with other 7 megawatt, which will contribute to the incorporation of 101 megawatt to our renewable energy metrics by the end of 2022.

Finally, last June, we held the energy transition for three days, more than 3000 people, including Ecopetrol employees, international and local leaders, and experts gathered to share knowledge of the national and global context, industry experience, technological trends, and challenges of the energy transition. We continue to leverage the consolidation of the architecture for the business line, trend in the strategic pillar of cutting-edge knowledge. At Q3 for our 2040 strategy energy that response. I’ll now the pass the floor to Alberto who will talk about the main operational license.

Alberto Consuegra: Thank you, Yeimy. Progress in the 2023 exploratory campaign reached 40% by the end of this semester. As we completed the drilling of 10 exploratory wells, seven of which have hydrocarbon potential and are located in the Llanos Orientales to having gas condensate potential in the Piedemonte Foothill, and one with natural gas potential in Northern Colombia in Cordoba. For this quarter, I would like to highlight the announcement we made about the success of the Tinamu-1 exploratory well operated by Ecopetrol located in Castilla la Nueva in the Department of Meta confirming the presence of 15 degrees API heavy crude oil. Extensive testing planned to begin in the third quarter of 2023. We made important progress in the assessment of onshore discovers.

In Northern Colombia in there receive area early production connection of the Coralino-1 [indiscernible] discoveries to existing infrastructure is underway. Extensive testing expected begin by the end of 2023 for potential commerciality in 2024. With regards to the Flamenco’s discovery located in the Mid Magdalena Valley, the Flamenco is now commercially viable and the production license is expected to be awarded during the second half of 2023 in order to proceed with extension of commerciality for Flamencos 2,1,3 wells. Finally, extensive tests are being carried out in the Upper Magdalena Valley on the El Nino-1 [indiscernible] 2 wells and in CPO9 on the Col-1 and Lorito wells. Progress in offshore exploration activity in Colombia includes assessing the results of the Gorgon-2 appraisal well and the drilling of the Glaucus-1 well in the same area, which is expected to reach total depth in the second half of this year.

In addition, we continued with pre-drilling activities of the Orca Norte-1, well as part of the appraisal process of the Orca discovery, and with the planning of the appraisal campaign of the Uchuva discovery to start in 2024. As part of the ongoing consultation with government agencies, mediation agreements were signed with the National Hydrocarbon Agency, ANH [indiscernible] National State Legal Defense Agency. Concerning controversies regarding the exploration and production agreements for the [indiscernible] Magdalena areas. Let’s go to the next slide, please. During the second quarter of this year, we achieved production of 728,000 barrels of oil equivalent per day, up 3.3% versus the same quarter of 2022, driven by a solid performance of Rubiales and positive results of the drilling campaigns at Cano Sur and Permian.

These results were obtained despite the negative production impacts of around 6,400 barrels of oil equivalent per day. During the second quarter of the year due to social unrest issues, including the [indiscernible] closures, as well as load restrictions, and the temporary shutdown of the gas planting [indiscernible] due to attacks to the Cano Limon Covenas pipeline. We continue to make progress in decarbonizing our upstream segments. During the first half of the year, we highlight the development of projects that will eliminate emissions at the [indiscernible] production facilities in line with our commitment to reduce methane emissions by 2045. During this period, the upstream segment subsided in reducing 141,000 tons of CO2 equivalent emissions, which is above expectations for the semester.

Let’s go to the next slide, please. After three years of the start of operations in the Permian. The joint venture between Ecopetrol and Oxy reached a record production at the end of May of a 100,000 barrels of oil equivalent per day before royalties, with approximately 62,000 barrels of oil equivalent per day corresponding to Ecopetrol’s participation. In addition to the production in the Midland Basin, we highlight the start of production in the Delaware area, after drilling and completing the first 19 wells. During the second quarter of 2023, we drilled 22 new wells, totaling now 279 wells and reaching a net production for Ecopetrol before royalties of 58,700 barrels of oil equivalent per day. By the end of the year, more than 110 wells are expected to be drilled and production should reach an annual average daily production in the range of 62,000 to 64,000 barrels of oil equivalent per day, before royalties for Ecopetrol.

On the TESG front, Permian assets maintain low carbon intensity based on zero routing flaring. Methane monitoring continues at production facilities, along with other practices, such as tankless storage facilities, to reduce emissions at the source. Please continue to the next slide. For the Midstream segment, transported volumes increased year-on-year by nearly 20,000 barrels per day, primarily as a result of higher crude oil production in the Llanos region, greater availability of both refineries as well as operational optimizations in the refined product transport systems. So far this year, 10 reversal cycles have been carried out in the Centenario pipeline, ensuring the evacuation of production from the Cano Limon field. Likewise, an alternative route was implemented to evacuate condensed crude from Gibraltar and unloaded — station as a heavy crude diluent.

The bottle making production of approximately 30 million cubic feet of gas in the Gibraltar field. During the second quarter, Senate continued to perform a cabotage operation from the Buenaventura Maritime terminal to the Tumaco terminal. Supplying part of the demand of products in this region of the country affected by restrictions on the Pan American Highway in line with our TESG strategy after three years of work led by Ocensa in partnership with Oleoducto de los Llanos Orientales, ODL, Oleoducto Bicentenario Colombia, OBC, and other regional entities, we highlight the completion of the Vida Manglar project, which restored and rehabilitated 39.2 hectares of mine growth in the Cispata Bay in Cordova, contributing to the natural regeneration of the area.

Finally, the Ministry of Mines and Energy through the issuance of Resolution 279 of 2023, temporarily suspended the updating of crude oil transport tariffs that takes place in July of each year. Therefore, the current tariffs will remain enforce until the tariffs for the following period are set in accordance with the terms, established by the regular. Let’s continue with the next slide, please. In the Downstream segment, the Cartagena refinery achieved a record quarterly throughput of 209,000 barrels per day, thanks to the continuous operation of the Cartagena crude oil plant interconnection project, IPCC, by its acronym in Spanish, as well as the high operational availability of the plants. During the quarter, we reached an integrated throughput of 427,800 barrels per day, a 17% increase versus the same period in 2022.

In line with our commitment to contribute to the improvement of Air quality in Colombian and deliver cleaner fuels stand out the record production of diesel, gasoline, and jet fuel for local supply in compliance with resolution 40103 that establishes the fuel content limits for Columbia. In 2Q 2023, we reached an integrated refining gross margin of $14.4 per barrel as a result of higher refinery throughput with plant availability levels surpassing 96%. Compared to 1Q 2023, the margin was mainly affected by a contraction in global demand reflected in lower diesel and jet fuel prices and higher crude oil prices. By the end of the year, margins are expected to remain at the double-digit level. In addition, scheduled maintenance will be carried out at both refineries during the second half of the year, ensuring the reliability and integrity of our operations.

During the quarter we made progress in achieving various milestones of which I would like to emphasize, start maturation of the project to produce sustainable aviation fuels and renewable diesel in the Barrancabermeja refinery contributing to the carbonizing aviation sector. The start-up of the electrolyzer project in Esenttia that aims to generate hydrogen from water using solar panels as an energy source to partially cover the operation’s self-consumption. The execution of the 5G technology Barrancabermeja refinery with the aim of implementing industrial technology solutions in the operation which will enable efficiencies in maintenance and operation processes. We continue to advance on the zero-fuel oil path initiating production of AC-30 quality asphalt of Barrancabermeja refinery, those opening up new market opportunities.

Let’s move on the next slide please. During the first half of the year, efficiencies of COP1.6 trillion were achieved, of which COP1.1 trillion contributed to mitigate the inflationary effects that continue to impact the cost and expenses. On this front, I would like to highlight the multiple initiatives that have allowed us to optimize dilution and evacuation costs of heavy, and extra-heavy crude oil. The implementation of production strategies that have contributed to reducing lifting costs, as well as energy efficiency strategies with the use of technology solutions and self-generation listing cost as of June 2023, amounted to $9.41 per barrel, a year-on-year increase of $0.13 per barrel, mainly attributed to inflationary effects on energy targets, well services, and chemical treatment whose impact was mitigated due to achieve deficiencies of $0.24 per barrel.

Refining cash cost decreased by 14% compared to the first half of 2022, explained by increased throughput and exchange rate variance, offsetting higher costs from greater operating activity and inflationary effects. The cost per barrel transported as of June 2023 was $2.76 per barrel, which remains stable versus the same period of 2022, primarily due to the aggregate effect of higher operating costs, a greater average, the evaluation of the COP against the U.S. dollar, and additional volume transported. The total unit cost as of June, 2023 reached $45.6 per barrel a 14.7% decline compared to the same period of the previous year, mainly resulting from the effect of a higher exchange rate and an increasing traded volume. It should be noted that there was a COP700 per dollar year-on-year increase in the average exchange rate in this period, which resulted in an impact of approximately COP340 billion in operating costs and expenses.

I now give the floor back to our CEO, Ricardo Roa.

Ricardo Roa: Thanks, Alberto. The Transmission & Toll road business line generated positive operating and financial results in the first half of the year. These results were primarily sustained by the energy business in Brazil and Colombia and Toll roads in Chile. This record in a 10% contribution by the business line to the group’s revenues, 16% input to EBITDA, and 8% participation in net income for the first half of the year. They are mostly driven milestone for the quarter include. The allocation of two logs awarded in the energy transmission by the Brazilian National Electric Agency, as well as six extension in Brazil and one connection in Colombia. Startup of the UPME 07, 2017 Sabanalarga-Bolivar project, an inception of the SmartValves operation in the Santa Marta substation supporting reliability and the connection of renewable energies.

This project will represent additional revenues of $10 million. ISA continues advising in the construction of 34 energy transmission projects, which represent the addition of 4,825 kilometers of transmission lines to the network and will generate revenues of approximately $260 million when they enter in operation. Finally, progress continues in the execution of additional works Ruta de los Rios and Ruta de la Araucania concessions which we generate new revenues and extend the terms of these concessions. I would like highlight that in this first half of 2023, Ecopetrol demonstrate exceptional resilience and solid operational capabilities within a challenging landscape. This was achieved through hard work indication, as well as years of support and commitment by every member of our organization.

To the devotion of our team worldwide and productivity to recognize strategic opportunities, we continue to ensure sustainable growth with a historical execution of the investment plan. In Colombia from the production fields in the [indiscernible] palace to the offshore stations in the Caribbean, and globally from Chile through our Transmission & Toll roads business line to our trading company in Singapore. We will continue to focus on delivering operational excellence, innovation, and commitment to the energy transition. With great enthusiasm, we invite you to celebrate with us in September the 15th anniversary of our listing on the New York Stock Exchange. We will hold an event to share our achievements, financial results, and prospects, and the path to our 2040 strategy.

Finally, I wish to attend all our employees and investor partners for their continued support, and to all of you who participated in this call conference today. Thank you for your time. I now open the floor for the questions.

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Operator: [Operator Instructions]. Our first question comes from Andres Cardona from TD Bank. He is in line with a question. Mr. Cardona, the floor is yours.

Andres Cardona: Good morning. Thank you for this opportunity. I have two questions. The first one is with respect to the EBITDA margin in the downstream segment. I understand there is an impairment because of the — we sold. And the reduced margins of petrochemicals. But I would like to understand if there are nonrecurring events, perhaps losses for reevaluation of inventories that would explain this impairment of the segment. And second of my question is if you have estimated the present value of the indemnity for the refi card. And if you could give us the perspective of the company regarding the possibility to recover these resources because it has been published in the media and also in — of the Minister of Mines, is there any of possibility of waiting for new auctions up for oil fields in Colombia? Thank you.

Diana Escobar: Andres, good morning. Thank you for your question. With respect to the first one, about the effect on the EBITDA in the downstream effect, and inventories, I would say that, in this year, we had an inventory effect an accumulation in the first month of the year with a drop in the second few. And at large, the fact, on inventories — amounted to $5 million. Talking about the refineries, the inventory effect we have had cumulative in the first half of the year has been positive. In the case of Barranca, we had an accumulation of a volume metric inventory because of a drop-in demand. But in general, both Cartagena and Barranca have had positive inventories. In the whole Downstream segment to give you an idea of the cumulative inventory between Cartagena and Barranca was $27 million positive these have — and EBITDA $1,020 million so the inventory effect that was semester or text perceptive and our glad less than 2% as compared with EBITDA.

We haven’t had any adjustments or one-time adjustments, you may complement this.

Jaime Caballero: Thank you. Yes. With respect to the downstream, I don’t have much to add to what Walter said. We don’t have any exceptional material issues in the second quarter. And what you have seen in terms of margin is just a reflection of the change in the environmental conditions, but still, the down margins are still very appealing and competitive also. So, I would say that… and with respect to your question about replicant as it following knowledge in early June we received of a new favorable ruling for the refinery in the dispute with CBI today. The owner is McDermott and this gives rise to a potential expectation of recovery in the future. The steps to follow are first that their ruling is made firm. This is something we’ll be expecting by the end of the year.

And once we have a firm ruling, we’ll be able to formalize a number of procedures for the recovery of those trends with the counterparty. To the extent that the strategy for recovery and the dialogue with the counterparty shed light on their amount of matters of this recovery. We will be adjusting the financial statements to reflect that expectation in an educated manner. That’s what I can say now.

Andres Cardona: And the last question, with respect to the living of the Ministry of Minds Energy, is there a possibility for new routes for awarding areas for exploration and search for gas and oil? And I should mention that this continues to be a public policy of the government or will it depend on the Ministry of Mines and Energy and whoever is the head or leader of the ministry? And also, the analysis and exercises to the implications of this in their macroeconomic aspect and also with the participation of the Ministry of Finance and Public Credit.

Jaime Caballero : What we have been doing very rigorously is to participate in technical groups with representatives of these entities in order to show them what we have in respect of contracts that are enforced to undertake the search. And we have been making some announcements that are small but important. And in that line, we’ll continue working with a contract that are enforced and obviously favoring the institutionality as to the macroeconomic relevance of the availability or not of those new contracts.

Operator: Thank you to you all for your answers. Catherina does some [indiscernible].

Unidentified Analyst: Good morning. I have two questions. The first one is related to your opinion with respect to the mentions of the President of Colombia in respect of Ecopetrol. Yes. I am in Spanish.

Unidentified Company Representative: Okay. You can ask.

Unidentified Analyst: Thank you. Well, good morning to you all. I have two questions. The first one is related to the announcement made by the President of the Colombia with respect to the strategy and the role of Ecopetrol in terms of the development of unconventional projects. He mentioned it in [indiscernible] and in this regard, I would like to understand if, for example, Ecopetrol will try to absorb projects in this regard that had been abundant by other companies because of the difficulties of making them viable due to their challenge with the communities. Or what is the plan of that role that the government has mentioned Ecopetrol in the development of this project in these areas or other areas of course? And my second question is related to the fact that recently we became aware of a document that shows the guideline of the roadmap for energy transition.

And in that document, there is even a possibility that very soon we will be having to import gas Ecopetrol with the current ones. And when you think of the estimated reserves, they’re quite different. If you compare them with Ecopetrol had showed in the 2020 plan. So, I would like to know what your opinion with respect to those figures is and what is the alignment if they have with the expectations of Ecopetrol, and if you could tell us if there have been any changes in these expectations with respect to the plan that we knew with respect to Ecopetrol strategy? Thank you.

Diana Escobar: Thank you, Catherine, and welcome to this conference. In the context of the possibility of Ecopetrol becoming an important factor in the development of power generation from unconventional sources of non-renewable energy. We cannot ignore in particular the great potential in this region of energy with and so radiation. Those potentialities are determined and they also constitute one of the plans of a corporate role in its 2020, 2040 road map. And so far, as, based on these energy resources, it is possible to think about the development of energy in the transition that we have already mentioned, such as green hydrogen, and methanol. So, in this road map, we are foreseeing investment and potential for development.

And we cannot ignore them, and they will be part of that cross-cutting access for economic decisions at Ecopetrol, which is called a capital discipline. Each of these opportunities will be developed as they are defined and studied thoroughly in a rigorous manner, as part of the premises and tenets that have been planned and disseminated about this discipline. The timing and the opportunities for decision on such investments would be part, obviously, of that roadmap and that portfolio that we are supposed to assist. Also, considering that, not only as to the expectations of the government but also with respect to the existence of new conditions in the legal platform, derived from the derogation of some articles that prohibited the vertical integration of energy business in a company such as ISA.

And second, in the issuance of emergency decrease where the regulatory and legal spaces being open for Ecopetrol to be able to make investments in the generation of renewable and conventional energy sources. With respect to your second question, I would like to pass the floor to Jamie by mentioning, of course, that this is a draft document. For comments and observations of the stakeholders, we have been participating in it and conducting our analysis. So, I pass the floor now to Jamie.

Jaime Caballero: Thank you, Mr. President, and thank you, Catherine, for your question. The Ministry of Mines and Energy published recently this draft of the roadmap for energy transition that gathers a very interesting diagnosis of the government since 2022 and part of 2023, with dialogue that have been conducted throughout the Colombian territory with benchmarks, thanks to the multilateral support we have received from different governments worldwide. And, this concludes the analysis of scenarios that President Well said, we will have comments until August 16th. Before going specifically into natural gas. I would like to share that the diagnosis highlights several points where we have full alignment between the government’s vision and the strategy of a corporate role in three areas.

The first one is the relevant thing, the renewable and conventional energy sources, and the importance for the country that we continue on the road of developing this type of energy. Second, of course, we’re aligned. The document says is to the relevance of natural gas in its fundamental role in the energy transition. And I’ll talk further about that. And finally, the document recognizes something that is very important and that is the importance of this transition being a gradual process. Having said that, with respect to gas, I’ll go back to something we mentioned in previous call about simplifying through three types of resources that we have in our portfolio reserves that have a very high probability of being developed and produced, the contingent resources that have more uncertainty and then the perspective resources that have even more uncertainty.

When you detail the scenarios that you mentioned in your question, with respect to projections of gas in this roadmap of energy transition, well effectively only considering the reserve, it’s evident that the reserve today are insufficient to meet all the demand for gas in the medium and long term. That is something that is in line with our figures and that’s the conclusion of this roadmap and the Ecopetrol strategic plan. And it’s essential to have development of the discovery that we have announced recently in the offshore basin because that will enable us to develop the contingent resources, the resources that be discovered, and the prospective resources. In this regard the roadmap shows that to be able to reverse that situation, we must continue investing in gas offshore.

And as you’ll see in the document, the contingent resources that the government mentioned are around 4.2% as costing the most likely scenario, which is recognized as to see resources. In the control numbers, we are close to 3.94 CTFs, so there’s full alignment. The government includes some volumes that are from third-party producers that are not part of the Ecopetrol Group. In addition to these contingent resources, we have the perspective resources that we had in the Ecopetrol Group a month to participate in a topless subject in which we all recognized we need to invest more in gas than the potential access primarily in the Caribbean offshore base. And then that’s why we are conducting such an important activity in this basin. With this, the country needs to manage this uncertainty, and the way to do that is through options because all these volumes have certain challenges for development and that’s why the government and us are working on options to cover this possible gap that we could have in the short-term true options of imported gas as technologies of micro LNG or using the capacity of reification that are already existing Columbia.

Other additional sources. The name of the game is having optionality to make sure that Colombia will have gas and for Ecopetrol to do it in a profitable manner. Thank you, Catherine and I hope this will help you understand. The way we see it right now, the document that have been promised recently.

Unidentified Analyst: Thank you.

Operator: The next question comes from Daniel Guardiola from BTG. The floor is yours.

Daniel Guardiola: Thank you. Good morning Ricardo. May I have a couple of questions? The first one is about the production of unconventional oil. Considering that without any doubt that type of reservoir or production has been one of that has yield had good yields for Ecopetrol, and I would like to know if you could share with what is the expectation of production for the closeout year and what is the CapEx that you plan to allocate for the next two years? That’s my first question. But also, I would like to know if you see any risk of interference by the Colombian government to change this development that’s already planned for the production basically the Permian basin. And my second question has to do with ISA. Recently there was a shareholder’s assembly where some modifications in the Board of Directors were made and I would like to know if you are considering any changes in the management of ISA. Those are my two questions.

Alberto Consuegra: Daniel good morning this is Alberto Consuegra. With respect to unconventional production, I can say that Permian continues to be a very profitable asset where we have all of our focus and expectations. Production for the first half of the year has been very good and the perspective for the rest of the year is between 62,000 and 65,000 barrels of oil equivalent. The good news is that we continue with significant activity and we hope we will end up with 110 drilled wells, where we already have wealth in Delaware. We already have additional activity in Delaware in addition to Midland. So, this will be about $1,200 million this year with the perspective of investment similar for next year. So, Permian is a source of, for focus for all of our focus and as we have stated, it’s a highly profitable asset with EBITDA margins that exceed 70%.

Daniel with respect to your second question about the risk or interference on the businesses that are part of the Ecopetrol’s portfolio at present. I have just come back from Permian. I attended the Board of Directors meeting. Where we met with the partner and as I said, it’s one of the more profitable businesses of Ecopetrol has in its portfolio, and the expectation about the continuity of the development of this business with the partner stable very good feedback on the outcome so far achieved. And obviously, the decisions that are to be made at the time will be in line with what is legally and contractually established in that partnership for this project. And regarding your question about movements in ISA or any of the fields of the Ecopetrol Group or as the decision of the President of Ecopetrol and the Board of Directors.

And if any decisions are made about changes, it will always be within the rigor and the corporate governance principles that are clearly established for such purpose, both in ISA and at the Ecopetrol Group.

Operator: Thank you. The next question is from Andrés Duarte from Corficolombiana. Mr. Duarte?

Andres Duarte: Okay. I have two questions. The first one has to do with gas offshore and what has been said regarding the importance and the roadmap, or the part that has been polished so far. In the last conference call, I understood that what you were registering of offshore gas was viable at the current prices in the country, not only at import price but domestic prices. I would like to know what’s still missing for you to build the infrastructure that is necessary to bring it and to register those reserves. I would like to understand, what is the delay at this time for those additional configurations. And my second question is to ask, also, if you could update — give us an update of the goals and objectives relative to the self-supply of electricity and hydrogen or hydrogen replacement, that’s called dirty hydrogen for green hydrogen in the industrial processes that you have.

And that question is related to, as far as I know so far, your objective of having self-supply as a power and high opportunity is to replace what you already are using. And what I understand now from the President is that you would like to stand these lines beyond the fact that being self-sufficient or having self-supply. Sorry for the length of my questions.

Yeimy Baez: Thank you for your question. This is Yeimy Baez. First, the offshore gas, and then we can review the renewable that you asking about, we respect the offshore yes in a suit that the potential that we have in the Caribbean offshore is very important. I already mentioned the volumes. And as you mentioned, we have found that according to the estimate, this gas can be competitive at the domestic market prices. The combination of these two factors is what enables that all projects related to this basin with respect to gas, are very well ranked for capital allocation. To be able to move those three, which are either contingent or discovered to be limited to reserves, there are two aspects. First, we need to carry out all the limitation work.

This is the process that allows us to understand what is exactly or to know with more certainty the volume that we have initially opportunities, all the limitation works imply drilling of wells and building facilities. We have told you before that in the 2023 plan to 2025 plan, we have planned the drilling of seven offshore wells. This will be essential for this limitation work, and at this time, we are completing one of the two wells that we have planned for 2023. That means that in, some weeks we will be completing it and before the end of the year, we will start the drilling of the second well. That is an activity that will continue until we complete the seven wells in this three-year plan. And in the second activity, infrastructure, understanding volumes, how are we going to take that gas to the coast?

How are we going to treat it and process it, what is the transport system it’ll be connected to? And we have found fantastic synergies with the infrastructure that we already have, and the facilities Uchuva that somehow are available. So, that will allow us to expedite the work that we’re foreseeing. Infrastructure and limitations are crucial. And when we complete those two aspects, we were able to pass this to the reserve. All this activity of the wealth and the infrastructure, of course, requires environmental licensing processes, and consultation with the communities, and as a corporate trial, we’re always committed to doing things well upfront. So, we will do this calmly following processes, but with a clear approach, understanding what this means for patrol and for the country.

And hopefully, we are able to pass this volume to reserve between 2025 and 2027 and to get them in the early stage so that by the end of the decade we will have full development of these volumes. With respect to renewables, I will go very rapidly on the way we steered with respect to hydrogen. In 2022, we close a year with an installed capacity of 208 megawatts of renewable energy, primarily solar, 99% with this technology and 1% in small, high-quality plants. Our next goal is that by the end of the year, we will have 400 megawatts that we had announced. And in 2025, we will have around 900 megawatts that will start operating in 2026. Of course, this is the management of the portfolio that is continuous, as I told you before, this is one of our own projects.

We already have 101 megawatts being built, different assets, but we’re also working with partners to analyze to bring 99 megawatts in the Rubiales field, 25 megawatts from biomass Villanueva (Casanare), and several projects from small hydraulic plants. So, I think we’re in the right path to the 400 megawatts. In the medium-term to the extent that we have been walking and understanding the opportunity of hydrogen for Ecopetrol and the country, it is evident that renewable and conventional energy will play a fundamental role. And that’s why we have said that there is 900 megawatts are just the beginning of the story. For a hydrogen project that the refiners will work like the one we are very close to sanctioning, it will require 250 megawatts green hydrogen project will require at least 1 gigawatt.

And for this line of hydrogen business that needs will be between 3 gigawatt and 5 gigawatts by 2030. And in 2040, it will be above 9 megawatts or 10 megawatts. This, as you can see, has a magnitude and figures that is demanding the development of a capacity and an architecture in Ecopetrol that is positioning us for this type of project. Sorry, I interrupt to have clarity in those 900 megawatts by 2026 and what you’re saying in the magnitude of giga for purposes of hydrogen, please clarify at what point in both cases you are exceeding the requirement of cell supply, because I think you consume those 900 electricity. Where does it start going beyond the requirements of Ecopetrol for hydrogen and to go to a phase of being able to export or to sell?

And with respect to hydrogen, also, I would like to understand if that installed capacity, which is beyond what is required for cell supply as to power generation, if 100% of that additional installed capacity would be intended for the production of hydrogen or is the sale contemplated for the national system. Well, to the point at Ecopetrol, we have an install capacity for self-generation or 1,300 megawatts primarily thermal. All the figures I’m giving you correspond to self-generating projects of nonconventional energy sources that will complement the portfolio that we have for cell generation. When we talk about cell generation is for the hydrocarbon business in the upstream, middle, or down, but also for the future production of hydrogen and derivatives like green ammonia or green hydrogen.

All is focused on self-generation for low-emission supply and for the hydrocarbon business. And our main objective in the medium term, of course, we evaluate permanently the profitability and competitively of this opportunity, and as the president mentioned, being out of that framework or things that will have to be reviewed, we are focused. But as it is sufficiently material to build the facilities that are required to focus on this. We have tested different business cases, which are quite profitable options, and the replacement that we have of sources that are CO2 emission intensive with sources that will improve to reduce that emission with more resources is our main focus.

Operator: The next question has from Bruno Montanari from Morgan Stanley.

Bruno Montanari: Good afternoon. Good morning. Thanks for taking my questions. I have two questions here. Can you talk a little bit about trends in oil production for the second half of the year? Maybe address where you see upside risks and downside risks. What the main challenges are for you to finish the year according to the guidance, to the most recent guidance provided, please? And then the second question, it’s very interesting to see you making a lot of advances on hydrogen, with the actual operations. But can you give us, some clarity or color on the level of returns you currently see on hydrogen operations or the expected returns? And how do they compare with the returns you are able to do on the hydrocarbon business? Thank you very much.

Alberto Consuegra: Bruno, good morning. Thank you for your first question. I will answer the one related to production. My name is Alberto Consuegra, and I would like to tell you that we maintain our production forecast to the range that we have been giving you. And by the end of the year, it will be between 720,000, and 725,000 barrels hopefully clearly to the upper range. We in the first half have had a materialization of bridge related to the environment. This trend could continue in the second half, but we will have scheduled maintenance in some of the production fields. This will not be substantial, but we must consider the impact in the plan. This is to tell you that, we continue with the perspective of finishing in accordance with what we have planned.

The third quarter looks quite robust with respect to production. And as I said, there are factors that perhaps will not help us, such as the planned or the scheduled shutdowns for maintenance, and the environmental issues that continue to materialize. Thank you. Bruno, thank you for your question. With respect to opportunities that we are managing in the hydrogen portfolio, I would like to share that, we are focusing on those that enable us to have some links that are more sophisticated in the supply chain. And that have synergy with the hydrocarbon business, which is what is allowing us to reach profitability rates that are appealing. And that means could exceed two-digit dollars. The most evident example that we have is the two projects that we have at the refineries of Cartagena Refinery, as I have shared before.

In this case, to give you the example of what we do is to build a facility to produce green hydrogen based on a nonconventional renewable source. Hydrogen is used primarily for processes that have more hybrid treatment at the refineries, thus producing fuel such as diesel and gasoline that are clean and have no sulfur, but also producing more sophisticated products, concretely, green methanol. In Colombia, we are net importers of methanol and it’s used in industry processes and we think that this could be replaced with a local product, but also with a product that is less to intensive. When we combine all these pieces in the business case we, was in fact a tier that is competitive. The middle and long-term challenges for Ecopetrol and for all the companies that are working with it.

Why green and blue hydrogen worldwide to be able to have those profitability rates being the characteristic of the project? And then probably we’ll be focusing on hydrogen for hydrocarbons and not for new markets. We’re working on this every day, but we know this is a technological project for in which we’re committed to and it’s facing challenges that are not minor, but of course, we are working hardly on them because the capital discipline and their profitability parameters are very important for us and we will continue doing so. And as far as the opportunity start to make sure. I hope this has clarified your concern. Jamie, I would like to add, to give you a group perspective. I think Jamie’s answer is absolutely clear. We’re looking for competitive returns, two digit returns, and we’re following all the criteria of capital discipline that for which we’re known.

This should be also seen within a broader context. If you look at the allocation of capital 70% of the company’s capital is directed to the hydrocarbon business line. 20% to transmission and roads, so we’re talking about 10% allocation first. Second as part of that 10% in our business line of low emissions, the predominant component is gas as to capital allocation. It will continue to be gas in the short and medium term. So, what we’re talking about is plans that in the context of the total allocation of capital are measured, calculated, and calibrated, where we want to understand and make these business models viable and understand its long-term profitability. And second, I would like to mention that comparison with the hydrocarbon business because as you very well know the hydrocarbon business and its profitability is highly linked to the price cycle.

One thing is when we are in the good times of prosperity and it is different when we have all the opposite, and as history has shown, nobody can anticipate that entirely and what we have noted historically is that there is great volatility. So, for us, in the context of hydrocarbon having returns and you know that we always look for sustainable returns over time of about 10%, that’s what we’re looking for. And in that line, we see that the low emission businesses can be competitive with those returns. This could be favorable and with less volatility, we’ll have to see how this evolves and if we have the regulatory conditions, market conditions, execution, and environment that will enable those returns to become real. That’s the way we see this topic.

And third, the structure of the capital that accompanies the project. While in the hydrocarbon business, given its long story and that the value chains are quite mature and well established. The general pattern of the capital structure is that the company contributes cash flow 100% in many of the projects. And in these low-emissions businesses, we see other schemes where partnerships are protagonists. The project finance is also the protagonist as part of the structure of the project for several reasons. First, because given the maturity conditions of those value chains, we need those alliances for the market to materialize. And second, also because of the risk capital ratio, we’re inviting that risk capital and financial institutions that are willing to offer financial conditions that are more competitive than in the competitive area.

To give you an example, while the capital cost of a hydrocarbon business, depending on the company, of course, could be close to 8% and 12%, depending on who’s the player in this business, it could be as low as 4% or 7% or 8%. So, really the issue here is to understand if we’re able to generate profitability for the shareholders, that differential of their profitability and the capital cost is something that we have seen so far. To the extent that those projects are sanctioned, we will be able to confirm that value proposal. That’s the way we’re approaching it. Thank you.

Bruno Montanari: Okay, thank you.

Operator: The next question comes from Luis Carvalho from UBS. You can ask now.

Luis Carvalho: Hi, Ron thank you for taking my question. My first question historically the company has been a solid event player, but in 2023 on the lower brand environment, higher CapEx, and also income tax from the country. We drop in the capital location, flexibility for the company. It would be great for the company. It would be great to hear the company’s view in terms of capital allocation ahead. If you see the payments to be closer to the bottom or the high range, between the 5% to 6% percent policy and maybe breaking between your expectations for this year, 2023, but also looking, they need to in long-term considering, investments in the strategic plan and also oil and fuel prices environment. My second question is, in the past months, we have seen some discussions in the country potentially to change fuel prices calculation, and fuel prices have actually been increasing gradually in the past months, right?

So, it would be great to hear, how discussions with the government have been going on this front and your thoughts on fuel prices ahead. How much gap do you still see to international prices and how much and on what timing this gap could eventually be adjusted? Those are my questions. Thank you.

Jaime Caballero: I will take both questions. First of all, in relation with the CapEx. As you have observed the CapEx is being well executed. We are fully in line with the expectations so far. And to that extent, we hope to finish the year within the ranges that we have mentioned to the market before, which is a rate that is in the order of $5.8 million to $6.5 million. And the distribution or allocation of that CapEx, as I mentioned before, is in line with the 2040 strategy, which is an important focus in the hydrocarbon business of about 70% transmission and 20% low emissions for the rest. So, we are not expecting surprises and it shows the commitment of the company to its growth practices. And with respect to the second question that has to do with FEPC.

If I understood correctly about prices, the government has opted for a commitment, making an adjustment on the fuel prices of domestic your prices, and it has been executing it consistently in a committed manner. And thanks to that, you have been able to see the change in the trend of accumulation of FEPC. We, as the government has announced, we hope those internal price adjustments will continue. And this is not only for the end of the year but also for 2024. The goal of the national government is to have domestic prices aligned with international prices by the end of 2024. That is a plan that has been announced and the route that we are using as a planning trend. Thank you.

Operator: The next question is from the chat, from Goldman Sachs.

Unidentified Analyst: About the accounts payable of a bank where the pay solution refers only to the balance OPEC for the second quarter of 2022? And what is the expectation of the company to receive the remaining balance of OPEC?

Diana Escobar: Thank you for your question. With respect to OPEC, as you saw in the financial disclosures, the balance of OPEC as of this semester was COP31 million. In the second quarter, there was enough in corresponding to last year. And what we see from now on is that those compensations will continue to be core to the, at least that’s what we have seen so far. The idea is to have conversations so that the balances will not accumulate above 12 months, but at the same time that the conversations will not be premature. So, to have a margin for maneuvering and also for the government to see how the prices evolve as well as the adjustment. We think that is a viable mechanism. The fiscal framework in the middle, and medium term is giving us visibility and how the government is considering to offset balances from now on, we have a public document that shows what is the balance that the government expects for the end of the year, and also how we plan to offset that next year.

And that’s a premise of the planning. So, if you look at it from a historical perspective, the level of uncertainty with respect to the recognition of the OPEC account and the evolution of the balance has decreased dramatically this year and with OPEC. So, by the end of next year, the disbalance in the OPEC account should be minimal. That’s what we are seeing. And I hope that has answered your question.

Unidentified Analyst : The next question is also from Hernan Goicochea from LatinFinance. It has redeemed $832,000 in bonds. How did the company finance redemption of those bonds and what all their finance plans does the capital have for the rest of the year?

Jaime Caballero: Thank you for your question and the operation that we announced yesterday, it’s an appendix of the operation that we carried out a month ago associated to the bond that was issued. The idea was to issue that bond, which was $1.5 billion in order to the refine the existing debt. So, the resources used for this redemption were partially what we collected a month ago with the $1.5 billion. so, the situation, as I said in my presentation at least with the challenge of refinancing for the year to all of the short-term deadlines or expiration have already been resolved. We refinanced medium and long-term, some to five years, always to 10, and another to seven years. So, that gives us a debt profile that makes us feel more comfortable and gives us more financial flexibility from now on.

So, the focus then for the rest of the year is transit to next year. We will have a couple of maturities next year, about $1.5 million. We will be monitoring market conditions, so us to understand if it makes sense to activate some of the refinancing. That’s when all the themes and also the ordinary course of the business always consider operations to maintain our working capital. That’s what we’re anticipating. Thank you.

Operator: The next question comes from the chat [indiscernible].

Unidentified Analyst: What is the self-efficiency strategy for gasoline, diesel, and natural gas according to the demand behavior in Colombia?

Diana Escobar: Thank you for your question. There are no from the refining and industry processes vice presidency. I would say that it should be mentioned that Ecopetrol has an extremely relevant role for the supply of clean fuels to the country. It is worth mentioning that in diesel, the countries are self-sufficient and we even have balances that are exported from Cartagena Refinery and we have international quality. In jet fuel, we’re also self-sufficient and have balances for export. And this is done from Cartagena Refinery and talking about a normal operation with all our plants in operation. Sometimes periodically we have to have shutdowns in our assets and production units and the production can go down. But at large we have a surplus in diesel and jet.

When talking about gasoline should be mentioned and remember that by 2013 the demand was 60,000 barrels or 65,000 barrels per day and it was supplied by national production. However, since 2014, we have seen a sustained growth of demand for gasoline within the country and reaching values of 140,000 barrels or 150,000 barrels per day. So, gasoline demand has doubled volumetrically in the past 10 years. Although in Ecopetrol we have could be increasing our products. The Cartagena Refinery started operations in 2016 or ’17 increasing the production of fuels, including gasoline. Our current production is between 80,000 barrels and 90,000 barrels per day from both refiners. So, for these demand levels to supply the market, we do need imports of gasoline of about 60,000 barrels per day, which are also managed by Ecopetrol to ensure meeting the market demand.

To the extent that the demand is maintained at this level, our production will be sustained at about 90,000 barrels per day. So, we’ll have to meet that demand through imports. We have relevant projects in both refineries at Barrancabermeja and Cartagena, in order to ensure that we will continue improving the quality of that gasoline and lowering the sulfur levels. We want to get to be less of 10 parts per million, and also to improve the octane. And this is being executed from now to 2030 to meet the domestic regulations that is already issued and effective as to the enhancement of fuel quality. In general, in 2023, we have had a reduction in the level of imports of both diesel and gasoline. And I would like to mention that, last year in September, we started the expansion of the Cartagena refinery.

And we were able to add 6000 barrels of additional gasoline production, reducing the import level. And to the extent that the demand is maintained at this level of 140,000 barrels or — barrels per day, the inputs of gasoline will continue to be necessary to meet the demand in the country. As part of our strategy for 2040, we are not foreseeing so far increases in the refining capacity in Columbia.

Operator: Thank you. We have a finished our time. Mr. President. You can convey your final message now.

Diana Escobar: Well, thank you to all the participants, executives, and directors of Ecopetrol, the team. I would like to reiterate our willingness to continue with our roadmap and our investment portfolio for the medium and long-term strategy. Have a very good day. Thank you.

Operator: This is the end of our results conference for the second quarter of 2023. Thank you for your participation. You can disconnect now.