Pacific Rubiales and Ecopetrol Award Construction Contract for Rubiales Oil Pipeline

Pacific Rubiales and Ecopetrol Award Construction Contract for Rubiales Oil Pipeline

Pacific Rubiales Energy Corp. announced that it has awarded, in conjunction with Ecopetrol S.A. (Ecopetrol), the construction of the Oleoducto de los Llanos Orientales Pipeline to the Consorcio Rubiales-Monterrey, a joint venture between Spiecapag and Ismocol (collectively, the Contractor).

This project will provide the company with a substantial reduction of transportation costs for Rubiales Crude to the export port of Covenas while ensuring that there will be adequate throughput capacity to bring the Rubiales Oil Field to its full production potential.

Under the terms of the Engineering, Procurement and Construction (EPC) contract, the Contractor will complete the construction of the 235 kilometre 24 inch pipeline between the Rubiales Oil Field, located in the Meta Province of Colombia, and the Monterrey Station, located in the Casanare Province, by September 30, 2009. The lump sum fixed price contract has a value of US$190 million and does not include construction of the pumping station at Rubiales Field, which will be awarded separately. Total capital commitments for the project so far exceed US$320 million, including the EPC contract, the pipe and procurement of long lead-time items.

Spiecapag, which leads the 60/40% consortium, is a highly regarded French international contractor, specialized in pipeline construction, as well as oil and gas production facilities and terminals. Spiecapag has executed significant worldwide projects for major oil and gas companies, as well as projects in Colombia. The local partner in the consortium is Ismocol de Colombia, a leading Colombian contractor, with approximately 20 years of experience in the Colombian oil and gas industry.

The pipeline company “Oleoducto de los Llanos Orientales S.A.”, a special purpose vehicle organized for the pipeline project, is owned 35% by Pacific Rubiales and 65% by Ecopetrol. German bank WestLB will provide financing for up to 75% of total capital costs under a project financing structure.

This project is the key element of the Rubiales Oil Field master plan, which will allow field development to its maximum potential by 2010. Additionally, this pipeline will leverage the future development of the very prospective Los Llanos Heavy Oil Basin.

Pacific Rubiales, a Canadian-based company and producer of natural gas and heavy crude oil, owns 100 percent of Meta Petroleum Limited, a Colombian oil operator which operates the Rubiales and Piriri oil fields in the Llanos Basin in association with Ecopetrol S.A. the Colombian, national oil company. The Company is focused on identifying opportunities primarily within the eastern Llanos Basin of Colombia as well as in other areas in Colombia and northern Peru. Pacific Rubiales has a current net production of approximately 22,500 barrels of oil equivalent per day, with working interests in the Rubiales, Piriri and Quifa concessions and the Caguan, Dindal, Rio Seco, Puli B, La Creciente, Moriche, Guama, Arauca, Tacacho and Jagueyes blocks in Colombia and blocks 135, 137 and 138 in Peru.

Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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