Pacific Rubiales signs deal to use Colombia's Ocensa pipeline

Canada-based oil company Pacific Rubiales Energy has announced that it has entered into an agreement with Oleoducto Central S.A. (OCENSA) to acquire preferential rights to the use of available capacity on the OCENSA pipeline system for up to 160 mm barrels of its oil for a 10 year period beginning February 1, 2010, in consideration for a one-time payment of $ 190 mm.
Under the terms of the agreement, the transport capacity of the contract is specified as follows:

1. 50,000 barrels of oil per day from the first business day of February 2010, until December 31, 2010;
2. 60,000 bpd commencing January 1, 2011, for seven years counted from the first business day of February 2010;
3. 20,000 bpd commencing on the day after the seven year period noted above has elapsed for a period of up to three additional years, or until the total volume of capacity pursuant to the agreement has reached 160 mm barrels.

In parallel to this agreement, the two companies have executed a related transportation contract to regulate the operating aspects of transporting oil through the OCENSA system.
These volumes will be delivered by the company to OCENSA at either the Cusiana station or the El Porvenir station and will be pumped through to the Covenas terminal for which the company will pay the transportation tariff as set by the Ministry of Mines and Energy of Colombia for each segment of the OCENSA pipeline.

In addition to this agreement, Pacific Rubiales has also purchased 10,000 boepd capacity in the OCENSA system to be accessed through the new truck unloading facility, currently under construction in the Cusiana station. All together, the company has secured a capacity of 60,000 boepd in the OCENSA system for most of 2010 and 70,000 boepd starting in January 2011.
Mr Ronald Pantin, Chief Executive Officer, commented: "Given the anticipated growth of production from the entire Llanos basin and other basins in Colombia, and the limitations on existing transportation infrastructure, thisagreement is a key initiative for us to secure the continuous flow of oil production from the Rubiales and Quifa blocks at a low and competitive transportation cost. In addition to this strategic advantage for us and for our customers, access to this infrastructure may also gives us the flexibility to buy diluents in Cusiana, providing substantial transportation cost leverage."

Pacific Rubiales, a Canadian-based company and producer of natural gas and heavy crude oil, owns 100 % of Meta Petroleum, a Colombian oil operator that operates the Quifa Block in the Llanos Basin in association with Ecopetrol, 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 49,500 barrels of oil equivalent per day (after royalties), with working interests in 32 blocks in Colombia and Peru.