Sustainability report Vetra 2014 by Mr.Jack

Sustainability report

VETRA 2014

Sustainability report vetra 2014

Board of Directors President and Chairman Humberto Calderón Berti Capital Group Private Markets Martín Díaz Plata Leandro Cuccioli Atul Gupta Acon Investments José Miguel Knoell José Fernando Llano Alejandro Hanono CEO Camilo McAllister Corporate Advisor Alfredo Gruber Communications and Public Affairs Management María Angélica Castilla

Collaboration Communications and Public Affairs VETRA Exploración y Producción Colombia S.A.S. Corporación CREO Design, layout and printing Gatos Gemelos Comunicación

Sustainability report VETRA 2014

Photography Carlos Bríñez

Avenida Calle 82 No. 10 - 33, 5th floor Tel. 5934141 www.vetragroup.com

Sustainability report vetra 2014

11 PAGE 135

OUR FINANCIAL CONSOLIDATING WE WORK WITH PERFORMANCE OUR VALUE CHAIN THE BEST TALENT

PAGE 115

OPERATIONAL RESULTS

PAGE 101

A WORLD CLASS COMPANY

PAGE 87

SUSTAINABILITY AND ACCOUNTABILITY

PAGE 73

ORGANIZATIONAL PROFILE

PAGE 65

PAGE 45

PAGE 41

PAGE 35

PAGE 19

PAGE 59

Content

HEALTH AND SAFETY

WORKING WITH COMMUNITIES

PRESERVATION OF OUR ENVIRONMENT

GRI ICON

Message to stakeholders

Sustainability report vetra 2014

Message from the chairman of the board

All our efforts are oriented to obtain operational success, working closely with our stakeholders and following our Corporate Responsibility vision. We projected our economic growth and business strategy based on ethical conduct and responsible corporate citizen behavior, protecting the environment and contributing to the countryâ&#x20AC;&#x2122;s development. 2014 was a year of great sustainability challenges due to public disorder and the international oil price crisis, which undermined productive activities in Putumayo department, as well as in other Colombian regions. However, we maintained our operations focused on sustainability great achievements for the company and our stakeholders. We exceeded oil production by 2% compared to 2013, with a daily production of 15,693 bpd. We contributed to the Colombian oil industryâ&#x20AC;&#x2122;s results as well as regional development, with 454,971 barrels of crude oil in royalties paid to the State.

We consolidated results at national and international levels, based on innovation strategies and optimization processes such as materializing the bi-national agreement between the Colombian and Ecuadorian governments to promote border energy developments. We highlight the consolidation of international agreements for Colombian oil exports through Ecuador, activating a land tanker fleet destined to the Ecuadorian Heavy Oil pipeline (OCP), at Esmeraldas Terminal in the Pacific Ocean.

MESSAGE TO STAKEHOLDERS

Sustainability report vetra 2014

Likewise, the National Hydrocarbons Agency (ANH) and United Nations Development Program (UNDP) included in their best corporate social investment practices’ systematization process two of our social initiatives, "Petroleritos" and "“Strengthening society for progress”, recognizing its value for application throughout the country.

We have actively participated as a member of the Mining and Energy Committee on Security and Human Rights-CME-, consolidating our best practices on Human Right’s protection and promotion, based on the implementation of the United Nations Voluntary Principles on Security and Human Rights, the United Nations’ Guiding Principles on Business and Human Rights, as well as best practices identified with other members.

We consolidated our company as a responsible and diligent organization, committed to achieve sustainability and corporate ethics. I invite you to read our Sustainability Report and appreciate our achievements, challenges and overall progress.

Regarding our social contribution, we were acknowledged as a responsible organization –for the second consecutive year – by the Mexican Center for Philanthropy (CEMEFI), due to the practice "sociocultural transformation with childhood and adolescence", which focuses on improving the quality of life of communities in our operational areas.

Humberto Calderón Berti

MESSAGE TO STAKEHOLDERS

Sustainability report vetra 2014

Message from the CEO We proudly present VETRA’s eighth Sustainability Report, highlighting our progress in 2014 based on successful management, transparency, accountability and corporate ethics. During 2014, we focused our activities in the departments of Putumayo, Casanare and Cesar, emphasizing on our operational strategy the development of proved reserves, exploration and commercial viability of new oil assets in Colombia. We developed activities complying with ISO 14001, and OHSAS 18001, consolidating our management systems regarding the environment, health and safety, and relations with our stakeholders We incorporated in our processes the International Finance Corporation’s (IFC) initiatives through corporate, social and environmental performance standards, in order to consolidate a preventive approach in our operations’ risks and impacts. We also implemented our “ethics line” with our stakeholders, an assertive communication channel to efficiently identify and address actions that could violate our organizational culture, complying with the objectives established in our Code of Ethics and our Transparency and Integrity Policy.

Based on our commitment to contribute to the country's economic growth, we consolidated our procurement process to support local suppliers, whereby we purchased and contracted $172.72 million USD in goods and services during 2014. We also hired 1,034 local employees from our operations’ areas of influence. Focused on UN’s Millennium Development Goals (MDGs), the Colombian government’s “Red Unidos” national strategy to overcome extreme poverty, and our shared value vision, we invested $953,000 USD in local education, productive projects, infrastructure, community and institutional growth, among other programs to improve living conditions in operational areas. This report demonstrates our progress and future challenges to consolidate our goal of achieving economic growth complemented by best sustainability practices.

Camilo McAllister

MESSAGE TO STAKEHOLDERS Introduction

Sustainability report vetra 2014

Scope

G4-18

We are proud to present the VETRA’s results, goals and achievements during 2014, as well as our progress in Corporate Responsibility, and contribution to sustainable development and Colombia’s oil production goals. For the eighth consecutive year we present our report, based on our commitment to transparency and permanent communication with our stakeholders.

Introduction

We conducted our report using the Global Reporting Initiative (GRI) G4 guidelines, following the parameters of the essential option, continually seeking to incorporate the best Corporate Responsibility practices into our processes and management models. We are inspired by the principles and core subjects of ISO 26000, implementing transparency standards to our Sustainability Report, presenting our organization’s general aspects, decision-making processes and governance. This report presents the company’s overview and a detailed account of operational results in Colombia, based on economic, labor, social and environmental aspects. The report is permanently available on our website www.vetragroup.com and any additional information may be requested to comunicaciones@vetragroup.com.

We conducted our report using the Global Reporting Initiative (GRI) G4 guidelines, following the parameters of the essential option

MESSAGE TO STAKEHOLDERS Introduction

Sustainability report vetra 2014

Stakeholders

G4-24 G4-25

With all the company’s departments we conducted a process of identifying stakeholders, defined their priority levels and established specific relation strategies based on their needs and expectations regarding our corporate management.

Materiality

Shareholders

Employees

Contractors, suppliers and customers

Partners

Communities

Guilds, associations, militaries and governments

Oil sector

To reinforce our commitment to sustainable development and Corporate Responsibility, during 2014 we updated our materiality exercise developed in 2013. We included evaluation criteria identified with stakeholders, as well as relevant aspects determined by the company’s department leaders and Board members.

We included inputs identified by stakeholders, creating preliminary matrix of relevant issues to each group.

We compared the matrix’ results with topics identified in meetings with our stakeholders in Puerto Asís, our main area of operations. We normalized common topics between stakeholders and the company to generate the materiality graph.

We validated the results with the company’s managers and performed necessary adjustments, consolidating a final matrix with 19 relevant aspects classified as follows:

NGO's

Media

G4-18 G4-27

INTRODUCTION

Sustainability report vetra 2014

G4-18 G4-19 G4-27

G4-27

Material aspects Local development

High significance

Local development

Medium significance

Governance and sustainable planning

Employment conditions, development and compensation

Communities relationships

Human Rights practices

Infrastructure development

Emissions, effluents and waste

Reputation

Responsible supply

Responsible contracting

Economic performance

Biodiversity conservation

Security and public forces

Economic impacts

Water conservation

Climate change

Ethics and transparency

Eco-efficiency

Health and safety

Page 182

Employment conditions, development and compensation

Human Rights practices

Emissions, effluents and waste

127

Responsible supply

Economic performance

Security and public forces

Water conservation

124

Ethics and transparency

Health and safety

Organizational profile

Sustainability report vetra 2014

1 Organizational profile

We are a hydrocarbon sector company created in 2007. We focus our operations on oil and gas exploration and production, including well drilling, operational infrastructure development and oil transport and commercialization. During 2014 we focused activities on our Colombian exploration and production portfolio. We completed seismic projects, and well development drilling according to our contractual obligations with Ecopetrol and the National Hydrocarbon Agency (ANH).

Mission

visiOn

During 2014 we focused activities on our Colombian exploration and production portfolio.

Oil and gas exploration, production, and commercialization, generating maximum possible value for our shareholders, with special focus on social and environmental responsibility.

Become an oil and gas world class company.

ORGANIZATIONAL profile Organizational PROFILE

Sustainability report vetra 2014

Our corporate values

Shareholding structure In 2014, the company’s operation on Block XXV located at Talara, in Peru, was returned to Perupetro complying with the contract license. In the United States seismic data rights held by the company were transferred to a third party. Capital Group Private Markets

Ethics We perform our activities based on transparency and equality.

Acon Colombia Oil Partners

NEW VEG

VETRA Holding S.A.R.L

RESPECT VETRA Energía S.L.U

The essence of human relationships is to value, listen, understand and be courteous to others. VETRA Perú

VETRA E&P Colombia

VETRA U.S*

Responsibility Social Responsibility is essential for our business strategy. Complying with legal obligations and commitments to society is our priority.

Excellence We are committed to operate applying the oil and gas industry’s best practices to benefit our stakeholders, achieving our goals the safest way possible.

Safety We are committed to consolidate a self-care culture, promoting and implementing practices to prevent and mitigate risks.

Shareholders

shareholding

We sustained economic growth for our shareholders achieving continuous operational improvements and consolidating our activities, based on our corporate values and Social Responsibility commitments with stakeholders.

15%

During 2014, we maintained our shareholding structure, led by Capital Group Private Markets and Acon Investments. Founding shareholders maintained their minority participation in the company. The current shareholders consolidated the Board’s role, establishing bimonthly, and special meetings when required, to analyze activities and operational progress, and issue guidelines and decisions to be implemented by the company’s management.

0,19%

EQUITY INTEREST

42,5%

42,31%

ACON Colombia Oil Partners, LP (Ontario, Canada)

New VEG

Capital Group Private Markets

Atul Gupta

ORGANIZATIONAL PROFILE

Sustainability report vetra 2014

Corporate Governance Our organization’s highest governance body is the Board of Directors, responsible of developing policies and directions to guide the company, authorizing hiring processes and approving investment budgets and expenditures. The Board is led by its chairman, who is also the company's president, and the shareholders’ representative. The board leads the company and is in charge of direct decision-making. Second in hierarchy to the board are the following advising committees: Advisory Committee, Capital and Investment Committee, Compensation Committee, Auditing Committee, and Compliance Committee. Periodic meetings are held to review operational progress and budget execution, with the possibility of scheduling special meetings in order to submit and discuss business plans. Decisions and suggestions are channeled through the CEO, who is in charge of implementing the resulting plans and communicating this information to employees and other stakeholders.

Operational structure Board of Directors

Board of Directors

Humberto Calderón Berti President and Chairman

CEO

Acon Investments

Legal Corporate Governance

José Miguel Knoell Processes

José Fernando Llano Alejandro Hanono Capital Group Private Markets

New Business and Planning

Martín Díaz Plata

Finance

Technology

Leandro Cuccioli

Board responsibilities 1. Discuss and decide on action plans, (the presence and votes of the majority of its principal and alternate members is required).

Atul Gupta

Sap Procurement and Contracting

2. Keep records of meetings and decisions approved by the Chairman, the Board and the Secretary.

4. Allocate resources to execute action plans. 5. Analyze and decide on management and accountability reports, including financial statements and dividends distribution. 6. All other duties allocated in corporate by-laws.

Reservoirs

Magdalena Valley Block

Drilling

Llanos Block

Infrastructure

Communications and Public Affairs

Exploration

Marketing and logistics

Physical Security

HSE

Comptroller

Risk and Financial Services Planning and performance New Business and Planning New Business

Human Resources

Sur Oriente Block

Taxes

Treasury

3. Review plans and execute decisions according to VETRA’s corporate goals.

CRO

CFO

Social Management

ORGANIZATIONAL PROFILE

Sustainability report vetra 2014

Security and human rights MATERIAL ASPECT: HUMAN RIGHTS PRACTICES We promote and respect human rights in our activities, continuously monitoring and mitigating risks with stakeholders located at our areas of influence. We forbid child and forced labor in every activity of our supply chain. The companyâ&#x20AC;&#x2122;s departments maintain open communication channels with communities in operational areas, in order to prevent human rights violations and mitigate associated risks. We also developed an HSE and Social Management manual, to demand good practices in community employment and environmental management from our contractors, employees, and suppliers. We established assertive information channels to identify, prevent, and mitigate potential risks to our personnel (including contractors and subcontractors), communities, infrastructure and operational activities, as follows:

Potential risks identification: terrorist attacks, sabotage, community blockades, strikes.

Operational areas classification in: critical (Putumayo), normal (Llanos) and relative tranquility (VMM2).

Studies to identify security Procedures, vulnerabilities, critical preventive measures, processes, risks, and strategic potential aggressors alliances. and motivations.

Inspections and periodic audits to update and consolidate prevention systems.

MATERIAL ASPECT: SECURITY AND PUBLIC FORCES

Our Security Policy emphasizes the companyâ&#x20AC;&#x2122;s (including staff and contractors) commitment to defend, and promote respect of fundamental rights, whereby our surveillance staff is always unarmed. In 2014 we conducted more than 1,000 training activities for security personnel, as well as briefs and lectures, to promote awareness on the importance of human rights. Additionally, we consolidated our Complaints Program, a communication channel for communities in our operational areas to report violations, which we permanently monitor. During 2014 we did not receive allegations of human rights breaches. We elaborated a Human Rights diagnosis to determine strengths and improvement opportunities, consolidating our processes regarding due diligence, reputation and operational continuity. In 2014 we became a CME Security and Human Rights member, materializing high quality standards in Corporate Responsibility and Human Rights.

we conducted more than 1,000 training activities for security personnel, as well as briefs and lectures, to promote awareness on the importance of human rights.

ORGANIZATIONAL PROFILE

Sustainability report vetra 2014

1 Human Rights Risk Analysis

We mitigated security related Human Rights risks, improving our opportunities, impacts and risks (OIR) identification and assessment in operational areas. We involved security forces, authorities, communities and contractors in OIR this process, promoting continuous monitoring and update.

Voluntary Principles Performance Indicators

We continuously monitored and analyzed risks and impacts for the company and society, involving stakeholders in evaluation and prioritization processes. We have also promoted Voluntary Principles in our relationships with security forces, employees and contractors.

Extortion and Kidnapping Risk Management

We have developed and continuously updated our Security Policy and protocols to minimize extortion and kidnapping risks. We included the following CME standards in our protocol: no delegation, duty to report, no payment or direct negotiation, among others.

In 2014 we became a CME Security and Human Rights member, materializing high quality standards in Corporate Responsibility and Human Rights.

With the CME’s Technical Secretariat we organized a first training session on Voluntary Principles on Security and Human Rights, UN Guiding Principles on Business and Human Rights and the role of CME in Colombia, as well as VETRA’s obligations as a member. In addition, we organized two training sessions regarding extortion and kidnapping risks for company personnel, contractors and suppliers in the municipality of Puerto Asís. Based on our continuous improvement process as a member of the Mining and Energy Committee on Security and Human Rights - CME, we have advanced implementing its recommendations, as follows:

ORGANIZATIONAL PROFILE

Sustainability report vetra 2014

Transparency policies

MATERIAL ASPECT: ETHICS AND TRANSPARENCY

Supporting the Ministry of Defense’s Comprehensive Human Rights and International Humanitarian Law Policy

The company worked with authorities, supporting security forces training on Human Rights and International Humanitarian Law, providing continuous feedback and monitoring training processes.

During 2014, we consolidated our Transparency and Integrity Policy and Code of Ethics, demonstrating our commitment to adopt international standards and eradicate corruption. We incorporated in our processes the International Finance Corporation’s (IFC) initiatives through corporate, social and environmental sustainability performance standards. We comply with the UK Bribery Act from 2010 (UKBA) and the U.S. Foreign Corrupt Practice Act (FCPA), as well as Colombian standards in transparency and business integrity, based on a zero tolerance policy towards bribery or any type of corrupt activities.

5 Private Security and Surveillance Contract Management

6 Verification mechanism

During 2014, we consolidated our Transparency and Integrity Policy and Code of Ethics, demonstrating our commitment to adopt international standards and eradicate corruption.

We continuously monitor and evaluate private security contractors and surveillance companies, conducting continuous training activities, and demanding compliance with contractual requirements, in order to promote compliance of security related Human Rights standards.

We implemented for the first time CME’s verification mechanisms to demonstrate the company’s compliance with membership standards and its commitment to continuous improvement in security related Human Rights.

Due diligence procedures in employment, procurement, and outsourcing processes.

Control system to prevent money laundering and terrorism financing .

We require contractors to comply with anticorruption and antibribery legislation.

ORGANIZATIONAL PROFILE

Sustainability report vetra 2014

•

Contributions and sponsorships

We permanently aim to strengthen organizational capacity to detect deficiencies, correct them and prevent reoccurrence. Therefore, we developed continuous improvement initiatives based on international standards, certifications and Deming circle: Plan, Do, Check and Adjust.

•

Bribery

As a result of our compliance, we achieved the following certifications:

•

Outsourcing

•

Mergers, acquisitions and joint operations

•

Financial transactions

•

Prevention of money laundering and terrorism financing

We have achieved an improvement culture, based on contributions from all our employees to sustain our quality management system.

In 2014 we conducted training sessions with employees and contractors in Bogota and operational areas, to disclose and explain our Transparency and Integrity Policy. We also implemented conflicts of interest policies and reinforced in our employees knowledge of ethics, corruption, and transparency, among other topics.

We implemented the “ethics line”, a permanent communication channel with all stakeholders to identify risks or situations that could contravene our standards, in order to investigate and take necessary measures to correct them. Using this channel our stakeholders can report facts and actions that may affect them and/or the company.

Our Code of Ethics represents our commitment with stakeholders to maintain ethical practices in all our activities. It includes our employees’ responsibilities, explaining in detail what must and must not be done according to our corporate values.

This channel is supervised by a third party that guarantees confidentiality and anonymity. All these situations, previously assessed and classified, are informed to the Compliance Committee, to ensure decisions that safeguard the company and guarantee zero tolerance to fraud, bribery and corruption.

Our Transparency and Integrity Policy establishes corporate and behavioral guidelines regarding the following matters:

In 2014 we conducted training sessions with employees and contractors in Bogota and operational areas, to disclose and explain our Transparency and Integrity Policy.

•

ISO 14001: Environmental management system

•

OHSAS 18001: Occupational health and security management system

In addition, this channel demonstrates a commitment to transparency and accountability with stakeholders.

We have achieved an improvement culture, based on contributions from all our employees to sustain our quality management system.

ORGANIZATIONAL PROFILE

Transparency and Integrity

We conducted eight workshops with employees and local contractors in Bogota and operational areas to disclose our Transparency and Integrity Policy. In addition, we implemented policies to handle situations that could lead to conflicts of interest.

Internal investigations We conduct investigations internally and adopt corrective and punitive measures against corruption.

Sustainability report vetra 2014

Communications

With the Communications and Public Affairs Department, we reinforced in our employees important concepts in ethics, corruption, conflict of interest and Human Rights.

Ethics Line

We implemented the â&#x20AC;&#x153;ethics lineâ&#x20AC;? for employees and third parties to report actions that transgress our Comprehensive Policy, Code of Ethics and Transparency and Integrity Policy.

ORGANIZATIONAL SUSTAINABILITY AND PROFILE ACCOUNTABILITY

Sustainability report vetra 2014

We are committed to implement good practices that prioritize our responsibility with society and the environment. We are dedicated to promote sustainable development in our operational areas and achieve our strategic goals based on transparent and responsible management.

Communications and Public Affairs The Communications and Public Affairs department constantly works to consolidate Corporate Responsibility developing assertive relationships with stakeholders. We developed communication strategies that promote trustworthy relationships and accountability, presenting our companyâ&#x20AC;&#x2122;s results in a transparent and timely fashion.

CR policy mission

Sustainability and accountability

Consolidate and continually improve harmonious relationships with stakeholders, building trust between the company and society.

CR policy vision

Promote sustainable development in regions where we operate based on our social, environmental and economic commitments.

We developed communication strategies that promote trustworthy relationships and accountability, presenting our companyâ&#x20AC;&#x2122;s results in a transparent and timely fashion

SUSTAINABILITY AND ACCOUNTABILITY

Sustainability report vetra 2014

Objectives We have developed three strategic guidelines based on corporate objectives that direct our action plans, and strategies

G4-26

We have developed three strategic guidelines based on corporate objectives that direct our action plans, and strategies, as follows:

Clients 1

Contribute to operational sustainability implementing Corporate Responsibility initiatives to benefit stakeholders.

Internal processes 2

Consolidate development opportunities for the company and stakeholders.

Mitigate risks related to environment, social conflict, public order and reputation.

Design, implement and communicate Corporate Responsibility guidelines to stakeholders.

Learning and growing 5

Generate and consolidate a Corporate Responsibility culture.

Contribute to an efficient work environment based on assertive communications.

Our objective is to consolidate strategic alliances with stakeholders based on effective communication of our actions, activities and decisions, positioning the company as a Social Responsibility leader in the oil industry. To achieve our objective, we have designed internal and external communication strategies which include traditional and relational channels, Corporate Responsibility campaigns, CME Human Rights policies appropriation programs, corporate image promotion, as seen below:

G4-26

SUSTAINABILITY AND ACCOUNTABILITY

Sustainability report vetra 2014

Communicating with stakeholders

TO UNITE Communication and trust building Contractors, suppliers, customers, associations, government, oil sector companies, communities, NGOs and public media.

External

Stakeholders

Objective

Guilds and associations

• Identify, implement and share good oil & gas sector practices.

• Report on the company’s projects and results in operational areas.

Government

• Promote joint national and local development initiatives.

G4-26

We established communication channels to maintain close, clear and continuous relationships with our stakeholders. These channels inform about the Company’s activities, strategies, achievements and management updates. During 2014, we developed the following activities:

Media plan •

GRI acknowledgement of our Sustainability Report.

•

We distributed 2,000 copies of our Putumayo newsletter to communities in our areas of influence, as well as to local authorities.

•

We continued our daily radio broadcasts in local stations. With 540 radio programs, we have constantly informed the public of the company’s activities as well as communities and employees’ achievements.

Consolidate transparent and trustworthy relationships based on effective and permanent communication.

Community

Public opinion

• Solidify The company’s reputation.

Branding

• Promote journalist professionalization project in Putumayo.

We were present in the following national and international media:

TO ALIGN

•

Interviews in Portafolio Colombian newspaper about operations in Putumayo.

•

The Oil and Gas Year.

•

Recognition as Corporate Social Responsibility Leader in the National Hydrocarbons Agency Journal.

Traditional and relational communication Internal

Employees, associates and shareholders

Media campaigns •

Stakeholders

Objectives

We sponsored the following events:

Continuous of the company’s values and politics.

•

Campetrol’s initiative to promote regional suppliers.

•

Fundación El Nogal’s Social Responsibility event.

•

National Hydrocarbons Agency’s biyearly event sponsoring Michael Levi, in order to promote dialogue on climate change.

•

We sponsored Cinmipetrol’s annual event to support industry discussions and analysis on the hydrocarbon sector’s opportunities and challenges.

Employees Achieve permanent dialogue to promote a healthy company climate.

Partners, contractors and clients

"I am VETRA” network development, where our employees can log in to view information about company’s activities, news and events. 80% of our employees actively participated.

Consolidate strategic alliances to promote joint communication projects.

G4-26

A world class company

Sustainability report vetra 2014

3 A world class company

ISO 14001: Environmental management system OHSAS 18001: Occupational health and security management system

A world class company

Sustainability report vetra 2014

2012

A world class company

Total revenues

USD 141 million

Barrels produced

3,935,233

Collaborators

245

Payments to employees

USD 5,5 million

Payment to national suppliers (includes associates costs)

USD 172 million

2013

1 Colombia

Total revenues

USD 197 million

Barrels produced

5,617,583

Collaborators

326

Payments to employees

USD 18 million

Payment to national suppliers (includes associates costs)

USD 265,3 million

2014 Total revenues

USD 158 million

Barrels produced

5,728,008

Collaborators

366

Payments to employees

USD 24 million

Payment to national suppliers (includes associates costs)

USD 173 million

SUSTAINABILITYRESULTS OPERATIONAL AND ACCOUNTABILITY

Sustainability report vetra 2014

MATERIAL ASPECT: RESPONSIBLE SUPPLY

4 Operational results

We guarantee quality and safety of our hydrocarbon exploration, production, transport, distribution and marketing activities implementing advanced technologies, as well as control and monitoring systems, supported by our teamâ&#x20AC;&#x2122;s technical expertise.

In 2014 we focused operational activities on oil exploration and production in the following Colombian departments:

Putumayo

Cesar

Arauca

Norte de Santander

Tolima

Cauca

Meta

4.37

2.53

Santander*

3.79

2.20

Huila

1.99

1.15

Casanare*

1.06

0.61

Cesar*

0.37

0.22

Antioquia

0.12

0.07

Caquetá

0.08

0.05

Tolima

0.08

0,05

Valle del Cauca

0.03

0.02

Bolívar*

0.03

0.02

Others

0.025

0.01

*Departments areas of influence.

We have implemented different strategies to prevent negative impacts associated with our suppliers and contractors’ activities:

Impact

Activities

Environmental

Compliance with norms and regulations required by environmental agencies located in our operational areas.

Labor

Personnel recruitment trough local public employment services.

Human Rights

Commitments of our suppliers and contractors to comply with our code of ethics and integrity standards.

Social

Promote employment and development opportunities in our operational areas through procurement processes with local suppliers.

“To comply with the hydrocarbon industry’s laws and regulations as well as the Consorcio Colombia Energy’s standards and refrain from activities prohibited by law". VETRA’s association contract

In 2015 we plan a pilot program with the government to support local suppliers.

WE WORK WITH THE BEST TALENT

Sustainability report vetra 2014

7 We work with the best talent

MATERIAL ASPECT: EMPLOYMENT CONDITIONS, DEVELOPMENT AND COMPENSATION In 2014, our Human Resources department designed programs to promote human and professional development and employee loyalty, incorporating benefits and competitive economic compensations based on best market practices. Our personnel selection process is based on our recruitment model, which is focused on employing the best human talent to achieve our corporate objectives We also promote permanent dialogue amongst all employees, to develop and consolidate our corporate values.

In 2014, our Human Resources department designed programs to promote human and professional development and employee loyalty, incorporating benefits and competitive economic compensations based on best market practices.

WE WORK WITH THE BEST TALENT

Sustainability report vetra 2014

Promoting diversity and equality

Employees by type of contract

Our employees

275

In 2014 our payroll increased 12.2% compared to 2013, with a total of 366 employees of which 257 were direct and 109 temporary.

256

205

Total employees

2014

366

2013

245

2013

2012

326

2012

2014

Indefinite

Definite

Apprentices

Temporary

Employees by age range

Employee classification

89 275

257 205

50 47

45 35

23 19

109 40

Direct

Men

Women 18 to 30

Men

Women 31 to 45

Men

Women 46 to 55

Temporary 2012

2013

2014

2013

2014

15 3 Men

Women 56 and above

WE WORK WITH THE BEST TALENT

SUSTAINABILITY REPORT VETRA 2014

Compensation Policy We maintained employee compensation competitiveness yearly comparing salaries with other oil sector companies. Our compensation policy is based on market salary averages depending on responsibilities by positions (support, expert, key, and critical), as shown below:

Positions

Employees by gender 2013

2014 Critical

Key

Knowledge of strategy and experience allows direct impacts on business results

Indirect impact on the companyâ&#x20AC;&#x2122;s business results.

Experts

Support

30%

33%

67%

70%

Women

Men

Knowledge acquired through specialized technical training and experience guarantees impacts on business.

Contribution to results is indirect and knowledge required is easily acquired in the market.

WE WORK WITH THE BEST TALENT

Sustainability report vetra 2014

Employees by position and gender

118

105

2013

2014

We offer our employees better employment conditions than those established in the current labor legislation. Based on our compensation policies, our minimum wage exceeds current Colombian minimum legal wage by 135% in 2014. We highlight that average monthly income for women was 10% higher than menâ&#x20AC;&#x2122;s.

55 53

Base salary by position (USD)

42 35

36 17

1 Men

Women

Support

Men

Women

Expert

Men

Women

Key

Men

Women

Critical

Position

2014

Critical

19,139

Key

8,943

Experts

4,050

Support

1,217

Based on our compensation policies, our minimum wage exceeds current Colombian minimum legal wage by 135% in 2014. We highlight that average monthly income for women was 10% higher than menâ&#x20AC;&#x2122;s.

WE WORK WITH THE BEST TALENT

Sustainability report vetra 2014

Employment stability and continuity

Average MONTHLY salary by gender (USD)

3,798.57

In order to preserve our human talent, we consolidated better working conditions, providing technical and comprehensive training programs, medical health plans, company recreational activities, and other fidelization programs.

3,398

3,152.14

2,922.87

3,079

Turnover

2,795.07

In 2014, we hired 84 employees, of which 72 were new employments, and 12 were interns. 75 employees finalized their contracts mainly due to new job opportunities and family issues.

2013

2012

2014

Men

Turnover 128

Women

108

VETRA's minimum wage (USD)

84 75

2014

606.49

257.48

376.46 2013

246.4

2013

2012

Legal M.W.

VETRA's M.W.

Entries

2014

Withdrawals

WE WORK WITH THE BEST TALENT

Sustainability report vetra 2014 Recruitment process

We promote our employees’ development

Training and education

Training and educational hours 45 19

21,490

12 18,360 15,796

0 2012

2013

2014 2012

New employees

Migration from temporary to direct contracts

2013

2014

Apprentices

Work climate We yearly implement an organizational climate survey, with a specialized consulting firm, to measure our employees’ perception of the company. Based on the results, we developed and monitored action plans to achieve our organization’s continuous improvement.

In 2014, we conducted training and education activities for all our employees, focused on technical courses, health and safety at work and quality management system. We also organized "Family Lunches" to discuss family economy, stress, family and work balance, tax reform, and personal safety in order to improve our employees’ life conditions.

Performance evaluations VETRA developed an evaluation model based on individual position’s objectives and employees’ performance. Based on its results, the company rewarded employees with a bonus, and designed action plans to improve their performance and abilities.

WE WORK WITH THE BEST TALENT

Sustainability report vetra 2014

Improving our employees’ quality of life

Social benefits

In order to protect our employees and their families, we offered extra-legal benefit packages to improve their living standards.

Complying with the Ministry of Labor’s working standards; we recognized social benefits payments according to our employees’ wages.

Social benefits (million dollars)

Benefit plan (thousand dollars) Medicine plan

794.72

2013

2014

Health

0.72

0.74

Retirement fund

1.01

1.31

Parafiscal contributions

0.7

0.94

Life insurance 50.17

49.7

716.8

46.28

432.3

Employee wellbeing We developed bonding activities with employees and their families – sports championships, and family events –, achieving trust worthy relationships amongst the company’s personnel. 2013

2012

2014

Corporate agreements

2012

2014

Other insurances 78.18

947.28

2013

845.2

71.9 50.61

We promoted work and private life balance, consolidating Fridays flexible hours work benefit, used by employees share with their families and attend to personal matters.

Labor claims We created an Employment Coexistence Committee to detect, prevent and control any type of harassment or discriminatory behavior between company employees.

2013

2014

2012

2013

2014

Decrease in the packages’ total value as seen in the graphs respond to personnel turnover. However, in 2014 we improved extra – legal benefit packages for our employees, broadening medical insurance plans to incorporate our workers’ direct family. We also complied with current Colombian labor regulations, granting 10 maternity and paternity leaves, 4 more than in 2013.

Employees can report complaints contacting personally or by email any Employment Coexistence Committee staff, or using the Ethics Line. In 2014 there were no significant complaints reported to the Employment Coexistence Committee or by the Ethics Line.

HEALTH AND SAFETY

Sustainability report vetra 2014 MATERIAL ASPECT: HEALTH AND SAFETY

HSE management system

Inspection Program Work in Altitudes Road Safety Program

Safety

Suppliers and Contractors Program Chemical Safety Program Emergency Plan

Epidemiological Surveillance Program

Occupational Health

Health Promotion and Monitoring Alcohol, Tobacco and Psychoactive Substances Prevention and Control

Health and safety

Training and education

Health Safety Environment

HEALTH AND SAFETY

Sustainability report vetra 2014

Challenges 2015

Achievements

Evaluate and optimize safety program based on organizational culture.

We reduced incidents 61% compared to last year.

Evaluate and improve epidemiological surveillance programs.

We implemented our hazardous energy control and management program.

Optimize the measurement of absenteeism rates

We promoted road safety rules compliance at access corridors to production and unloading stations.

Reduce frequency and severity rates 70% compared to the previous year, measuring the Lost Time Incident Frequency Rate (LTIFR), High Potential Incidents and Transportation Accident Index (TAV).

2012

2013

COPASST REPRESENTATION

2014

33.33%

28.57%

We conducted efficient reports to identify and take actions to prevent unsafe conditions and acts. We continuously audited work permits to promote workers’ safety.

6.66%

0% 4

Tolima

Health and safety committees

2012

2013

Suroriente

Bogotá

La Punta

Emergency brigades representation

2014

57.37%

We created teams focused on safety and health promotion through risk assessment, control and prevention programs in order to consolidate a selfcare culture in our operations. We have created the Joint Committee on Health and Safety at Work (COPASST), as well as specialized emergency focused on emergency control, risk assessment, rescue and first aid, complying with current regulations.

50.72% 45% 40%

23% 14.49%

26.22%

16.39% 0% Tolima

0% Suroriente

4 Tolima data is not presented due to the camp’s conclusion.

15%

0% La Punta

Bogotá

HEALTH AND SAFETY

Sustainability report vetra 2014

Activities Drills

Environmental Simulation

Altitude rescue simulation

First aid training

First aid, fire control and evacuation.

Oil spill recovery simulation at Guarataros creek (Casanare).

Rescue simulation of production assistant, who allegedly (faints) loading crude oil tanker.

Training and education on outbreak control and fire extinguishing.

Activities

Description

COPASST

Pre - hospital care training

Training on first aid, CPR and injections application.

Training conducted by ARL SURA professionals for personal on COPASSTâ&#x20AC;&#x2122;s scope and functions

Safety We continuously improve safety implementing activities focused on promoting a self-care culture, based on the following pillars:

Hazard and risks identification, assessment and control system

Constant monitoring of employees' behavior towards safety at work

Leader motivation, training and education

Security conditions verification and improvements

Monthly monitoring meetings.

In 2014 we developed occupational safety promotion, control, and monitoring programs, based on risk identification and prevention. We also continued our "Zero Accidents" program, an initiative that identifies and corrects unsafe work practices through education and awareness.

HEALTH AND SAFETY

Inspections

Daily inspections to identify unsafe conditions and behaviors. First aid kits, fire extinguishers, laboratories, crude oil loading stations, and vehicles auditing to consolidate efficient responses to accidents. Identification of improvement opportunities and corrective measures with the application of the AP 43 FO AC HSE AM matrix.

Sustainability report SUSTAINABILITY REPORT vetra VETRA 2014

Work in altitudes

Road safety program

Continuous training of all personnel on safe work in altitudes.

We audited personnel and cargo companies, and oil transport contractors.

Personal Protection equipment custom supply.

Road safety inspections focused on vehicle speed control and legal documents verification.

Rescue in altitudes and protection equipment (MSA Workman).

Identification of contractors’ critical activities based on our HSE manual’s requirements.

Chemical safety program

Emergency plan

Employee training in chemicals handling.

Operational blocks’ emergency plan update with ARL Sura.

Disclosure of the company’s chemical safety data sheets.

We updated environmental emergencies equipment.

Update of the company’s chemical compatibility matrix and packages and containers labeling

GPS monitoring of oil transport vehicles in transit. Daily and monthly loading exercises and inspections of all transport vehicles.

89% Implementation

Contractors

80% Implementation

Inventory and application monitoring of chemicals used by each contractor. Disclosure of oil spills containment and action plan.

80% Implementation

90% Implementation

85% Implementation

80% Implementation

HEALTH AND SAFETY

Sustainability report vetra 2014

Knowledge

Occupational health In 2014 we implemented plans to consolidate our workers’ health and quality of life, based on the following objectives:

We promoted safety awareness and improved working conditions, providing employee training on specific HSE topics according to their responsibilities:

Epidemiological surveillance program We daily monitor blood pressure, measure bodily mass index, and promote labor gymnastics to prevent cardiovascular risks.

85% Implementation

Program

Health

Prevent, detect and treat diseases.

Public health Public health risks analysis for our workers and their families.

Evaluate working capacities ACCORDING to each position's profile.

90% Implementation

Staff and neighboring communities health care provision.

Direct and indirect personnel training in epidemiological surveillance programs based on identified risks.

Implementation

80%

Occupational safety education and training for personnel:

Safety

Health care

Activities

100% Implementation

Periodic risks identification, control and monitoring.

• • • • • • • • •

Working in altitudes Personal Protection Equipment Emergency plan Hazards identification and risk assessment Condition reports Rig Pass Work Permits Working in confined spaces Monitoring of hazardous atmospheres.

80%

Environmental protection training programs: Alcohol, Tobacco and Psychoactive Substances Prevention and Control Daily alcohol tests and awareness activities.

100% Implementation

Environment

• • • • • • •

Environmental legal update Solid waste handling Efficient water use Environmental impact assessment Environmental commemorations Integrated management system Environmental incidents

80%

HEALTH AND SAFETY

Sustainability report vetra 2014

Accidents and Absenteeism In order to prevent accidents and employee absenteeism, we have implemented health and safety awareness programs, monitoring and supervising the following indicators:

Absenteeism rate

Frecuency rate

15.45

Disabling Injury index

9.22

Occupational illness

1.68

We have promoted a preventive culture implementing effective cardiovascular, visual, hearing and general health programs.

1.15 1.11

Absenteeism Indicators5

0.13

In 2014 absenteeism indicators due to illness resulted in low levels as a result of our campaigns, as shown below:

0.08 0.15

2012

2013

5 Overall absenteeism rate ( TGA ) = ( (Number of absences in a period due to illness ) * K ) / Number of employees on the payroll during that period. K = 1000. This represents the ratio between lost working days due to absenteeism and forecasted worked days.

2014

2012

2013

2014

2012

2013

0.11 2014

HEALTH AND SAFETY

Sustainability report vetra 2014

The reduction of these indicators resulted from our continuous analysis of lessons learned, and monitoring programs, which are focused on identifying trends and anticipating risks.

Accident indicators6 In 2014, 14 incidents occurred due to drilling and civil contracting activities, 61% less than the previous year. To prevent accidents we emphasized contractors control and audits, as well as personnel training programs.

FREQUENCY index 8,19

3,7 2

Disabling Injury index

2012

2013

Incident distribution

29,04

2014

Near-accidents

Severity index 3,547

0,11 2012

59 18,7 2012

2013

2014

0.069 2013

2014

6 Frequency index: a companyâ&#x20AC;&#x2122;s accidents or workerâ&#x20AC;&#x2122;s illness frequency: Number of events or accidents with disabilities / Number of man hours worked * 1,000,000.

2012

2013

2014

Damages to property

First aid

Restricted work

Transport

Others

Total

Disabling injury index: calculated based on the following formula: severity indicator * frequency indicator * 1,000. Severity index: This indicator specifies the level of disability upon incidents or accidents within the company. Formula: Number of days of leave / Number of man hours worked * 1,000,000.

101

Sustainability report vetra 2014

WORKING WITH COMMUNITIES MATERIAL ASPECT: LOCAL DEVELOPMENT

Our Social Management vision includes guidelines from to the United Nations Millennium Development Goals, and the Colombian government’s “Red Unidos” national strategy to overcome extreme poverty. Based on these guidelines, we implemented programs to generate positive transformations in communities and contribute to poverty reduction, equality promotion, local development and social inclusion in our operational areas.

VETRA’s programs

RED UNIDOS

1. Income generation projects 2. Productive projects 3. Business promotion 4. Empowerment and support to local suppliers 5. Institutional and community consolidation

1. Identification

Education, culture, recreation and sports programs

Health program

•

Eradicate extreme poverty and hunger

•

Promote gender equality and women empowerment

•

Develop a global partnership for development

•

Promote environmental sustainability

2. Income generation and employment 3. Education and training 4. Habitability

6. Infrastructure and basic services

Working with communities

MDG

Education and training

1. Health 2. Nutrition

Achieve universal primary education

Reduce child mortality Combat HIV - AIDS, malaria and other diseases

103

WORKING WITH COMMUNITIES

Sustainability report vetra 2014

We have consolidated trustworthy relationships with communities located at our operations’ direct and indirect areas of influence in the Suroriente block, in the Putumayo department, the VMM2 block in the Cesar department, and La Punta block Casanare department.

valledupar

Area of influence Valle del Magdalena Medio 2 (VMM2) y Arjona Area of indirect influence Community El Juncal - Aguachica Area of indirect influence Community Marqués - Río de Oro

MOCOA

Area of indirect influence La Puerta - Astrea municipality Area of influence Area 0f influence

Putumayo

Municipalities - Casanare departments

Area of direct influence

Puerto Asís municipality: Puerto Asís municipality: • • •

• Mundo Nuevo

Puerto Vega Teteyé La Carmelita

• Corea • Guariamena • Paso Real de Guariamena

Puerto Asís municipality: • • • • • • • • • •

Los Cristales Remolinos Ángeles Buenos Aires Campo Alegre Montañita La Cabaña La Manuela Santa María Medio Nuevo Porvenir

yopal

VETRA's operations Department capital

During 2014, we consolidated our project management model based on a Plan, Do, Check and Adjust (PDCA) cycle and the incorporation of the Project Management Institute’s (PMI) best practices. Using methodology we have efficiently monitored our projects, implementing effective engagement strategies and promoting knowledge based on best practices and lessons learned.

105

WORKING WITH COMMUNITIES

Sustainability report vetra 2014

Social investment guidelines Our social investment is based on a responsible management model "UNITED TO BUILD", focused on developing value added products with the communities in our areas of influence. Our goal is to support local and national government entities reducing gaps in living conditions, and promoting employment and entrepreneur skills to generate welfare in vulnerable regions.

High impact projects

Autonomous projects

Social Management Department In 2014 in order to promote regional development and mitigate operational impacts on communities, we focused our social management on:

Promoting quality of life in neighboring communities

Social initiatives designed and implemented jointly with urban and rural communities located at our area of influence.

Human Rights protection Human Rights education and awareness campaigns with stakeholders.

Public-private and community partnership initiatives supporting by international cooperation agencies, oriented to create jobs, promote welfare and basic needs of the population. We highlight the aqueduct designs, the Territorial Action Plan for Puerto Asis, road paving projects and electricity distribution to communities.

Social equality initiatives aimed towards education, culture, sports, recreation, social infrastructure and productive projects.

Local suppliers development Educating and training local suppliers in entrepreneurship, accounting and finance.

Working with government institutions (Puerto Asís Mayor and Ministry of Defense), we completed the Territorial Development Plan for Puerto Asís. This plan aims to promote a comprehensive economic growth for the municipality and its residents, consolidating a modern and articulate development model, uniting efforts, capabilities and resources with all territorial actors:

•

Identification of 9 programs and 14 projects aligned with community needs and the region’s competitive advantages, emphasizing the creation of a free zone as the main promoter of regional development.

•

Prioritization of initiatives based on economic and social growth potential.

107

WORKING WITH COMMUNITIES

Sustainability report vetra 2014

Community development programs In 2014 with community participation, we implemented the following initiatives in our areas of influence:

Activities and results

Rural education support program Investment USD

students were granted university scholarships. 2014 2013

Social initiatives

INVESTMENT USD

2013

2014

1,800 school kits delivered to children in urban and rural centers.

$ 1,372,848

$ 952,917 2012

798

REQUESTS, COMPLAINTS, 2013 CLAIMS AND SUGGESTIONS

Effective community relationships

724

Employment generation

2012 LOCAL EMPLOYEES HIRED:

2014

2,419 2013 2,272

1,034

2012

746

296,667

2013

2014

Activities and results

Productive development Investment USD

2014

252,000

$ 858,800

2012

Community development programs

professional skills training sessions with SENA (national education institute) for 131 young adults in our operational areas.

233,000

2012

VETRAâ&#x20AC;&#x2122;s Social Management initiatives are based on three pillars that define our relationships with stakeholders, and guide our social investment plans in operational areas.

89,583

166,331

20,000

7 productive projects (livestock, fish farms and brown sugar) to promote permanent jobs and promote food security.

109

WORKING WITH COMMUNITIES

Sustainability report vetra 2014

Activities and results

Infrastructure and basic services program Investment USD

2012

Culture, sport and recreation program

Activities and results

Community empowerment based on 25 social initiatives.

85,021

2012

361,000

Activities and results

135,417

2013

604,000

2014

8 construction projects, school updates, and housing infrastructure improvements for rural communities in operational areas.

352,083

Community empowerment program Investment USD

76,100

Institutional consolidation Investment USD

Activities and results

Investment USD

2013

197,923

2014

37,500

6 artistic, cultural and sports initiatives to promote family values and territorial identity: “Petroleritos”, Sports initiation and formation center, Youth Symphony Orchestra in Puerto Asís.

2012

131,500

Promotion of institutionalism, governance and accountability in vulnerable communities, as well as education in governance, water resource protection, and social control programs.

41,667

63,325

196,000

111

WORKING WITH COMMUNITIES

Sustainability report vetra 2014

Effective community relationships We consolidated relations with stakeholders, developed communication strategies, and efficiently responded requests and requirements using the following communication channels:

Available professional social workers in all operational areas

Continuous dialogue with stakeholders and constant information exchange

3 Companyâ&#x20AC;&#x2122;s projects Information workshops

Requests, complaints, suggestions, information, and response system

Daily radio broadcasts

Quarterly Putumayo Magazine

In 2014 we efficiently responded 724 communications received through these channels, and distributed as follows:

2013

2014

Complaints

Thank you notes

Requests

397

322

Invitations

Information

214

276

Total

746

724

Total communications received declined 2.94% compared to the previous year, mainly due to the significant decrease of (58%) complaints, as a result of the implementation of improvement plans for social and environmentally responsible operations.

113

WORKING WITH COMMUNITIES

Sustainability report vetra 2014

Income and employment generation

Achievements and acknowledgements in 2014:

We contribute to income generation and employee training, hiring skilled and unskilled personnel for our operations. Our employment policy focuses on hiring residents from our direct and indirect areas of influence. These initiatives have contributed to local communities’ economic development, promoting labor skills consolidation and productive networks. Recruitment procedures are disclosed and socialized with all stakeholders through company channels.

Unskilled labor:

Skilled labor:

Total personnel employed:

829

184

205

Best Corporate Social Responsibility practices in Latin America- 2014

Territorial Development Plan for Puerto Asís

For the second consecutive year, the Mexican Center for Philanthropy (CEMEFI) granted VETRA the best Social Responsibility practice award due to the initiative "sociocultural transformation with childhood and adolescence". This program resulted from the company's goal to improve the quality of life of communities in our areas of influence, including Petroleritos, Sports Initiation and Formation Center and Puerto Asis Youth Symphony Orchestra.

We elaborated a territorial development model for the municipality of Puerto Asis, focused on promoting social and productive progress in our operational areas. We identified services and economic activities that could stimulate Puerto Asís’ growth and consolidation as a modern development center in Southern Colombia.

2014

Regional

Local

"Seven lessons learned for successful social investment in the hydrocarbon sector” by the National Hydrocarbon Agency

National

Employment per field Block

Local

Regional

National

La Punta

112

Suroriente

565

Tolima

Arjona

VMM2

131

Total

829

184

The National Hydrocarbon Agency (NHA) and UNDP selected two of VETRA’s social initiatives, “Petroleritos” and “Strengthening society for progress”, for their best practices data bank, promoting its implementation in other regions of the country. “Strengthening society for progress” is a leadership training program focused on rural populations. This program is based on consolidating the community as empowered social actors. In 2014, 28 participants were certified by the ESAP in project formulation and management.

“Strengthening society for progress” is a leadership training program focused on rural populations. This program is based on consolidating the community as empowered social actors. In 2014, 28 participants were certified by the ESAP in project formulation and management.

115

ENVIRONMENT PRESERVATION

10 Environment preservation

Sustainability report vetra 2014

Respect for our surroundings We are committed to consolidate our operations mitigating environmental risks and impacts, as well as minimizing waste and atmospheric emissions. We achieved ISO 14001 recertification, consolidating the following objectives:

Optimize energy consumption.

Optimize handling of solid and liquid waste (industrial and domestic).

Minimize consumption of domestic, industrial and purchased water.

Based on our commitment to achieve sustainable operations, we have developed initiatives, complying with Colombian environmental regulations to protect the environment and natural resources, identifying, preventing and mitigating risks. Our environmental programs are focused on promoting efficient use of natural resources, proper waste management and biodiversity preservation. In order to achieve these objectives, we continuously monitor greenhouse gas emissions, and other substances that may be hazardous to the environment.

Achieve operational efficiency to avoid spills.

117

ENVIRONMENT PRESERVATION

Sustainability report vetra 2014

Environmental protection

51.5%, 3.52 million dollars were invested in prevention, control and compensation measures identified by our environmental impact plan. These include: particulate material and noise control systems, environmental quality monitoring, waste treatment and disposal, and environmental liabilities recovery and decontamination.

Investment (USD)

$ 6,831,212 $ 5,670,682 $ 3,934,000

2014

2013

Environmental control investments (USD)

2012

257,750 Valdivia Almagro

8,825

2013

61,780 305,817 452,774

Tolima B

During 2014, we increased our environmental investment 20% compared to the previous year, with a total of 6.83 million dollars.

We invested 3.19 million dollars, 46.7%, in environmental impact studies, mitigation plans and environmental control audits in exploration and drilling projects.

116,268

Chenche

49,746 181,479 30,724

260,000

Suroriente

Tolima

Arjona

1,039,035

15,067

VMM2

107,000 208,017

Alea 1947 C

Putumayo 8

Llanos 64

1.7% was invested to protect areas in our operational blocks to be returned to Ecopetrol according to our contractual obligations. In 2014 we continued these environmental activities; however during 2013 we had executed most of the investments required to comply these obligations.

784,563

386,000 356,034

49,746

67,000 33,167 5,176 96,522 21,194

35,514 375,000 40,350

100,676

San Luis

20,275 602,933

131,524

100,342

Pauta

191,838

Llanos 78

La Punta

54,427

Environmental protection in contractual return PROCESSES (USD)

171,952 37,766

2,049,210

Suroriente

3,265,721

342,000

Alea 1848 A

931,203 1,963,090

243,000 105,335 57,256

VMM2

Environmental impacts study and mitigation investments (USD)

2014

2012 2013 2014

2012 2013

55,587 Menegua y Tamanaco

154,703 35,514

2014

119

ENVIRONMENT PRESERVATION

SUSTAINABILITY REPORT VETRA 2014

Operation and exploration blocks

tolima b Block

Llanos 5 Exploratory Block

Arjona Field

Llanos 64 Exploratory Block

Location

Altitude

Chaparral (Tolima)

Tame, Arauca

Astrea (Cesar)

Maní (Casanare) y Orocué (Casanare)

Fields Classification Basin

Average temperature Rainfall

Tropical dry forest

Tropical rain forest

Tropical dry forest

Tropical rain forest

Upper Magdalena Valley Basin

Llanos Basin

Lower Magdalena Valley Basin

Llanos Basin

Alea 1848A exploratory Block

300-800 m above sea level

180 m above sea level.

1.000 m above sea level

200 m above sea level.

24°C

25°C – 30°C

24°C

20°C – 32°C

1.000-2.000 mm per year

2.000 – 4.000 mm per year

1.000-2.000 mm per year

2.000 – 4.000 mm per year

Alea 1846D exploratory Block La Punta Block

VMM2 Exploratory Block

Puerto Asís, Puerto Caicedo (Putumayo)

Piamonte (Cauca)

Tropical rain forest

Putumayo Basin

Caguán Basin

Maní (Casanare)

Aguachica, Río de oro, Gamarra (Cesar)

50-400 m above sea level

280-350 m above sea level

Tropical rain forest

Tropical rain forest, Tropical dry forest

20°C

25.3°C

Llanos Basin

Middle Magdalena Valley Basin

4,000-4,500 mm per year

180 m above sea level

50-400 m above sea level

25°C - 30°C

28°C - 30°C

16,300 mm per year

1,250-2,000 mm per year

3,000-4,000 mm per year

Suroriente Block

Puerto Asís (Putumayo)

PUT-8 Exploratory Block

Alea 1947C Exploratory Block

Llanos 78 Exploratory Block

Campos Quillacinga, Cohembí, Quinde Tropical rain forest

Puerto Asís (Putumayo)

Puerto Caicedo, Puerto Guzmán (Putumayo)

Orocué (Casanare)

Putumayo Basin

Tropical rain forest

Putumayo and San Miguel River Basins

Putumayo Basin

Llanos Basin

440 m above sea level

1.000 m above sea level

187 m above sea level.

250 m above sea level 25.5°C 3,500 mm per year

24°C 4,371 mm per year

20. 5°C 3,550 mm per year

20°C – 32°C 2,000 – 4,000 mm per year

121

ENVIRONMENT PRESERVATION

Sustainability report vetra 2014

Preserving Resources

Efficient energy use

Materials We produce light and heavy grades of crude oil, which we dehydrate in our installations to be commercialized, complying with labeling and information requirements (HMIS III and MSDS), as well as our HSE safety procedures and contingency plans.

We produce energy in our operational blocks with electric generators. A total of 1,617,517 gallons of diesel fuel were used for power generation in Suroriente block, 348,116 in La Punta and 163,643 in VMM2.

Recyclable materials produced in our operations are delivered to government authorized recycling plants to be treated and disposed.

Produced energy (GJ)

109,251

Materials used (gallons) 2013

2014

Emulsion breakers

15,649

17,648

Flocculants

205

554

Reverse emulsion breakers

5,005

2,137

Corrosion inhibitors

3,684

5,984

Anti-foams

11,038

17,106

Paraffin and asphaltene inhibitors and dispersants

3,419

8,162

Clarifiers

4,699

1,287

Incrustation inhibitors

15,316

22,264

Oxygen sequestrates

7,479

10,031

Hardness dispersants

7,591

294

Dual (corrosion inhibitor and incrustation inhibitor)

1,973

7,225

Biocides

165

1,100

Viscosity reducers

15,649

17,648

2014

Bogotรก: 950.42 GJ

Energy consumption (GJ)

Suroriente (operational areas and offices): 93.464 GJ La Punta: 17.797 GJ VMM2: consumed energy originated from diesel fuel power generation

123

ENVIRONMENT PRESERVATION

Sustainability report vetra 2014

Water conservation

MATERIAL ASPECT: WATER CONSERVATION We use, and dispose water required by our production processes complying with our authorized operationâ&#x20AC;&#x2122;s environmental license and Colombian environmental regulations. We collect water from authorized sources, controlling volumes and flow rates, and continuously monitoring its quality.

ENERGY INTENSITY SURORIENTE: 0.041 GJ/BARREL

Energy reduction strategies were focused on raising awareness among employees on efficient resource use through communication campaigns. Likewise, we programmed computers in power saving mode consolidating our message of resource optimization on a daily basis.

ENERGY INTENSITY LA PUNTA: 0.03 GJ/BARREL

Total water consumption

Blocks

Source

Suroriente

Volume (m3) 2013

2014

El Diamante and Agua Blanca creeks

2,964

3,310

La Punta

Aguas Brisas del Llano, Yopal

633

341

VMM2

Peralonso creek

7,974

3,597

11,625

TOTAL

Water use increased 11% in Suroriente compared to 2013 due to increased operational activities and our new residential camp.

In La Punta, we optimized water consumption, which decreased 53.8% due to our efficient use of the resource, complemented by rainwater collected in sand traps for infrastructural projects.

In VMM2 stored rainwater was reused for industrial purposes in drilling mud preparation.

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ENVIRONMENT PRESERVATION

Sustainability report vetra 2014

Biodiversity protection To minimize potential impacts to ecosystems, we have developed and executed comprehensive environmental management plans (PMA) for each operation block, including the following actions:

To minimize potential impacts to ecosystems, we have developed and executed comprehensive environmental management plans (PMA) for each operation block, including the following actions:

Reforestation projects for environmental compensation.

Soundproofing equipment installations to prevent noise impacts to wildlife.

Training of community leaders as environmental promoters in order to generate an environmental protection culture in operational areas. The training included regional resources protection, watershed management, and operational controls.

Training on flora and fauna conservation for personnel and contractors.

Forest compensation We reforested and maintained protective forest plantations that we have promoted during the last two years, as follows: Reforested or maintained area (hectares)

Blocks

2013

2014

Suroriente

Tolima

Valdivia

La Punta

Total

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ENVIRONMENT PRESERVATION

Sustainability report vetra 2014

Emissions, effluents and waste

Effluents

MATERIAL ASPECT: EMISSIONS, EFFLUENTS AND WASTE

Wastewater generated in operational areas was treated according to its origin, in order to reduce pollutants, especially those deriving from the oil extraction process. Discharges were conducted based on our environmental licenses, with the objective of avoiding environmental impacts. In Suroriente block all formation water produced is processed and reinjected in the reservoirs, in either a water disposal well or in an oil secondary recovery project at Cohembi field. Similarly, in La Punta block industrial wastewater previously treated for disposal is injected in the reservoir and used for dust control with road irrigation activities. The following table shows the volumes of water treated and disposed:

Hazardous emissions to the ozone layer In order to reduce greenhouse gas emissions we conducted drilling equipment, boilers, generators, pumps, and vehicles preventive maintenance programs. Likewise, we continuously measured air quality to monitor and guarantee compliance with environmental regulations, as shown below.

Particulate material (µg/m3)

VOC (µg/m3)

Wastewater disposal

Block

2012

2013

2014

2012

2013

2014

Suroriente

32.15

62.45

<8.3

<o.2

VMM2

32.6

<8.3

0.026

NOx (µg/m3) Block

2012

Suroriente

SOx (µg/m3)

2013

2014

Suroriente

85.11

30.74

Not detectable with measuring method

VMM2

4.49

2012

Block

2013

2014

17.10

18.57

Not detectable with measuring method

Compared to 2013, NOx (nitrogen oxides) and SOx (sulfur oxides) emissions in Suroriente were significantly reduced, as studies demonstrates concentrations were below the detection limits of the employed methods. In VMM2 registered concentrations were below the regulatory limit.

La Punta

VMM2

Oil barrels

Treatment

2014

Formation water - injection system

3,297,196

3,321,689

API separator - Skimmer - 3 treatment pools - Internal road irrigation

172,331

487,469

Injection system: Separator - PIA - Tank 750 - Tank 500 - Head tank - reinjection with HPS pumps.

6,429,042

5,178,635

Red Fox and PTARI and road irrigation

For each disposal activity, in situ water processing and injection systems are continuously evaluated to guarantee its quality. Therefore, during 2014 we evaluated and guaranteed the quality of water disposal processes, complying with the approved flow, as well as the physicochemical, bacteriological and hydrobiological parameters allowed by our environmental permits.

6,313

129

ENVIRONMENT PRESERVATION

Solid Waste Disposal

Sustainability report vetra 2014

Non-recyclable waste (Kg)

Total waste (kg)

In 2014 we installed ecological sites at our operational areas for initial separation to guarantee proper waste disposal. We held training activities on generated waste adequate separation and processing programs in order to create awareness among our workers and contractors and promote its proper handling in our operations. We worked with specialized recycling, collection and processing companies, which we supervise and control to guarantee appropriate treatment and disposal activities.

26,860 142,186

125,290 15,978 10,578

61,460

2012

2013

2014

2012

2013

2014

The volume of waste generated in 2014 increased compared to 2014 due to additional areas in operations and the new residential camp at Suroriente Block Recyclable waste (Kg)

Hazardous waste (Kg)

124,123 22,987 75,443

37,462 7,485

8,020

2012

2013

2014

2012

2013

2014

In 2014 we installed ecological sites at our operational areas for initial separation to guarantee proper waste disposal.

131

ENVIRONMENT PRESERVATION

Sustainability report vetra 2014

Waste treatment

Bogotรก: We performed source separation for recyclable and non-recyclable wastes in each ecological site at our offices.

Oil spills Suroriente: Non-recyclable and hazardous wastes were collected by our contractor Servipetrol to be transported to incineration plants for treatment and final disposal (security cells were used for ash disposal). Recyclables were collected by the company Biofuturo to be processed.

La Punta: the contractor Ecoplanta PRI carried out waste separation, collection, temporary storage and final treatment. Hazardous wastes were treated at the API skimmer and prepared for final disposal.

VMM2: The contractor Urban Sanitation performed recyclable and non-recyclable waste treatment, while Descont handled hazardous waste disposal.

In 2014 three terrorist attacks occurred in operational areas in Suroriente block, in Putumayo, contaminating streams, rivers and low lands with oil. We immediately activated our contingency plans and contained the situation within possibilities based on public order situation in the affected areas. We also provided humanitarian support to communities affected by the attacks. Cleaning activities began with the removal of contaminated material and its delivery to processing plants for treatment and final disposal. Remaining hydrocarbons were treated on site by pressure washing techniques, achieving maximum oil recovery at affected areas.

Spilled barrels 2014

6,840

2013

3,830 2012

113

133

ENVIRONMENT PRESERVATION

Sustainability report vetra 2014

To monitor these impacts, contractors must strictly comply with our HSE manual, environmental management plans and environmental licenses. They are required to provide evidence of their activities with an environmental compliance report that includes measures and records the following topics:

Waste management (classification and delivery to licensed companies for treatment and disposal).

Water use

Environmental supply chain management In order to guarantee our supply chainâ&#x20AC;&#x2122;s compliance of environmental commitments, we established monitoring standards to prevent control, mitigate, and environmental impacts caused by contractors and suppliers.

Environmental impacts identification.

Personnel training on environmental issues.

We mapped suppliers and contractorsâ&#x20AC;&#x2122; environmental impacts: Environmental controls.

Ground impact due to environmental incidents during drilling activities.

Solid and liquid waste generation, which we transformed into a positive impact supporting a community recycling program.

Employment generation for contingency plans.

Once contracted activities are finalized, environmental assessment mechanisms are implemented with HSE-FO-58 document, in order to verify compliance with defined contractual obligations regarding environmental management. During 2014, six contractors were evaluated.

135

GRI icon

Sustainability report vetra 2014

11 GRI icon

General Standard Disclosures Indicator

Description

Location / Direct response

External assurance

Strategy and analysis

G4-1

Provide a statement from the most senior decision-maker of the organization (such as CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and the organization’s strategy for addressing sustainability.

p. 8, 9, 10, 11, 12

Organizational profile G4-3

Report the name of the organization.

p. 4

G4-4

Report the primary brands, products, and services.

p. 20, 47, 48, 49, 50, 51, 52, 53, 54

G4-5

Report the location of the organization’s headquarters.

p. 4

G4-6

Report the number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the report.

p. 43, 44, 46

G4-7

Report the nature of ownership and legal form.

p. 20

G4-8

Report the markets served (including geographic breakdown, sectors served, and types of customers and beneficiaries).

p. 46 - 58

G4-9

Report the scale of the organization.

p. 43, 44, 46

G4-10

Total number of employees by employment contract, region, employment type and gender.

p. 75, 76

G4-11

Report the percentage of total employees covered by collective bargaining agreements.

The Company recognizes right of association and therefore is willing to promote its knowledge and application. We have not established trade unions or collective agreements to date.

G4-12

Describe the organization’s supply chain.

p. 66, 67, 68

G4-13

Report any significant changes during the reporting period regarding the organization’s size, structure, ownership, or its supply chain.

p. 23, 24

G4-14

Report whether and how the precautionary approach or principle is addressed by the organization.

There is no unified procedure for risk identification and management. Each area of the company is responsible for managing its own risks, as well as their communication to other managers during regular meetings.

137

GRI icon

Sustainability report vetra 2014

Indicator

Description

Location / Direct response

External assurance

G4-15

List externally developed economic, environmental and social charters, principles, or other initiatives to which the organization subscribes or which it endorses.

p. 27, 28, 29, 30

G4-16

List memberships of associations (such as industry associations) and national or international advocacy organizations.

p. 27, 28, 29, 30

VETRA Exploración y Producción Colombia S.A.S.

Indicator

Description

List all entities included in the organization’s consolidated financial statements or equivalent documents.

Within each GRI material aspect, topics and indicators were linked. Disclosures on Management Approach are presented for each material aspect, regardless of having more than one GRI aspect related."

Explain the process for defining the report content and the Aspect Boundaries.

G4-19

List all the material Aspects identified in the process for defining report content.

p. 17

For each material Aspect, report the Aspect Boundary within the organization.

Areas of the Company responsible for managing each material aspect: 1. Local development: Social Department, Operations Department 2. Conditions on employment, development and compensation: Human Resources Department 3. Human Rights Practices: Legal Management, Process Department, Communications and Public Affairs Department, Physical Security Department 4. Emissions, effluents and waste: HSE Department 5. Product Liability: Operations Department 6. Economic Performance: Finance and Planning, Procurement and Contracts Department 7. Safety and security forces: Physical Security Department 8. Water conservation: HSE Department 9. Ethics and Transparency: Legal Department, Process Department, Communications and Public Affairs Department 10. Occupational safety and health: HSE Department

G4-20

G4-21

For each material Aspect, report the Aspect Boundary outside the organization.

G4-22

Report the effect of any restatements of information provided in previous reports, and the reasons for such restatements.

No restatements of information provided in earlier reports were required.

G4-23

Report significant changes from previous reporting periods in the Scope and Aspect Boundaries.

This is the first year the report follows GRI methodology guide G4.

"p. 14, 16, 17 G4-18

External assurance

"Stakeholders that are affected or affect the management of each material aspect: 1. Local Development: Communities in the area of influence of our operations, local mayors, grassroots social organizations, contractors and suppliers 2. Conditions on employment, development and compensation: Ministry of Labor 3. Human Rights Practices: unions, associations, government, police, Contractors and Suppliers 4. Emissions, effluents and waste: Government, Autonomous Regional Corporations, environmental NGOs, contractors and suppliers 5. Product Liability: Customers, Partners, Shareholders 6. Economic Performance: Partners, Shareholders 7. Safety and security forces: private security providers, government forces, local governments, communities in the area of influence of operations. 8. Water conservation: Government, Autonomous Regional Corporations, environmental NGOs, contractors and suppliers 9. Ethics and transparency: Guilds, associations and government, Contractors and Suppliers 10. Occupational safety and health: Partners, Suppliers, Contractors, Ministry of Labor"

Identified material aspects and boundaries

G4-17

Location / Direct response

Stakeholders engagement G4-24

Provide a list of stakeholder groups engaged by the organization.

p. 15

G4-25

Report the basis for identification and selection of stakeholders with whom to engage.

p. 15

G4-26

Report the organization’s approach to stakeholder engagement, including frequency of engagement by type and by stakeholder group, and an indication of whether any of the engagement was undertaken specifically as part of the report preparation process.

p. 37, 38, 39, 40

139

GRI icon

Sustainability report vetra 2014 Specific Standard Disclosures

Indicator

Description

G4-27

Report key topics and concerns that have been raised through stakeholder engagement, and how the organization has responded to those key topics and concerns, including through its reporting. Report the stakeholder groups that raised each of the key topics and concerns.

Location / Direct response

External assurance

Material Aspect: Local Development Indicator

p. 16, 17, 18

DMA

Description

Disclosures on Management Approach

Location / Direct response

External assurance

p. 102, 105, 106, 107

p. 109, 11o

p. 103, 104, 107 - 113

p. 111, 112

GRI Aspects and indicators related

Report profile

Indirect economic impacts

G4-28

Reporting period (such as fiscal or calendar year) for information provided.

2014

G4-29

Date of most recent previous report (if any).

2013

G4-30

Reporting cycle (such as annual, biennial).

Annual

G4-31

Provide the contact point for questions regarding the report or its contents.

p. 14

G4-32

Report the ‘in accordance’ option the organization has chosen.

p. 14

G4-33

Report the organization’s policy and current practice with regard to seeking external assurance for the report.

The report is not verified by a third party external to the organization. The contents are insured by each area responsible for its management within the organization.

G4-EC7

Development and impact of infrastructure investments and services supported.

Local communities

G4-SO1

Percentage of operations with implemented local community engagement, impact assessments, and development programs.

Grievance mechanisms for impacts on society

G4-SO11

Number of grievances about impacts on society filed, addressed, and resolved through formal grievance mechanisms.

Material Aspect: Conditions on employment, development and compensation Indicator DMA

Governance

Description Disclosures on Management Approach

Location / Direct response

External assurance

p. 102, 105, 106, 107

p. 81 The monthly minimum wage is set by the Colombian government and it does not differ by region or by gender."

p. 82, 83 Turnover rates (retirements and income) are presented generally.

GRI Aspects and indicators related G4-34

Report the governance structure of the organization, including committees of the highest governance body. Identify any committees responsible for decision-making on economic, environmental and social impacts.

Market presence p. 22, 23, 24

No G4-EC5

Ethics and integrity

Ratios of standard entry level wage by gender compared to local minimum wage at significant locations of operation.

Employment G4-56

Describe the organization’s values, principles, standards and norms of behavior such as codes of conduct and codes of ethics.

p. 21, 30, 31, 32, 33, 34

No G4-LA1

Total number and rates of new employee hires and employee turnover by age group, gender, and region.

141

GRI icon

Indicator

G4-LA2

G4-LA3

Sustainability report vetra 2014

Description

Location / Direct response

External assurance

Indicator

Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation.

p. 85

Return to work and retention rates after parental leave, by gender.

p. 85 All employees on maternity and paternity leave returned to work after their license period.

G4-LA9

G4-LA11

Percentage of employees receiving regular performance and career development reviews, by gender and by employee category.

Description

Location / Direct response

External assurance

No DMA

p. 84 Total hours of training in the year are presented. We do not have the systematization of these data by gender and professional category.

Disclosures on Management Approach

p. 127 - 132

GRI Aspects and indicators related No

Training and education

Average hours of training per year per employee by gender, and by employee category.

Material Aspect: Emissions, effluents and waste

Emissions

G4-EN17

Other indirect greenhouse gas (GHG) emissions (Scope 3).

p. 127

G4-EN21

NOX, SOX, and other significant air emissions.

p. 127

Effluents and waste p. 84

No G4-EN22

Total water discharge by quality and destination.

p. 128

G4-EN23

Total weight of waste by type and disposal method.

p. 129, 130, 131

G4-EN24

Total number and volume of significant spills.

p. 132

Diversity and equal opportunity

G4-LA12

Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity.

p. 75, 76, 77, 79

p. 78, 80, 81

Equal remuneration for women and men

G4-LA13

Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation.

Material Aspect: Product Liability

Material Aspect: Human Rights practices Indicator

Indicator

Description

Location / Direct response

DMA DMA

Disclosures on Management Approach

p. 25

External assurance

Disclosures on Management Approach

p. 46 - 58

p. 55, 56

GRI Aspects and indicators related Customer health and safety

Assessment

G4-HR9

Location / Direct response

GRI Aspects and indicators related

Total number and percentage of operations that have been subject to human rights reviews or impact assessments.

Description

External assurance

p. 27, 28, 29

G4-PR1

Percentage of significant product and service categories for which health and safety impacts are assessed for improvement.

143

GRI icon

Sustainability report vetra 2014

Material Aspect: Economic performance Indicator

DMA

Material Aspect: Ethics and transparency

Description

Disclosures on Management Approach

Location / Direct response

p. 60 - 63

External assurance

Indicator

DMA

Description

Disclosures on Management Approach

GRI Aspects and indicators related

Economic performance

Anti-corruption

G4-EC1

Direct economic value generated and distributed.

p. 62, 63, 64

G4-SO4

Communication and training on anti-corruption policies and procedures.

Location / Direct response

External assurance

p. 30 - 34

p. 32, 33, 34

Material Aspect: Security and public forces Indicator

Description

Location / Direct response

External assurance

Material Aspect: Occupational health and safety Indicator

DMA

Disclosures on Management Approach

p. 26, 27

Description

Location / Direct response

External assurance

No DMA

Disclosures on Management Approach

p. 88 - 96

G4-LA5

Percentage of total workforce represented in formal joint managementâ&#x20AC;&#x201C;worker health and safety committees that help monitor and advise on occupational health and safety programs.

p. 89, 90

G4-LA6

Type of injury and rates of injury, occupational diseases, lost days, and absenteeism, and total number of work related fatalities, by region and by gender

p. 97, 98, 99, 100 Indicators of accidents and absenteeism are presented generally. There is no systematic gender calculation of this indicators.

GRI Aspects and indicators related Security practices

GRI Aspects and indicators related Occupational health and safety

G4-HR7

Percentage of security personnel trained in the organizationâ&#x20AC;&#x2122;s human rights policies or procedures that are relevant to operations.

p. 28, 29

Material Aspect: Water conservation Indicator

DMA

Description

Disclosures on Management Approach

Location / Direct response

External assurance

p. 116, 124

GRI Aspects and indicators related Water

G4-EN8

Total water withdrawal by source.

p. 124

G4-EN9

Water sources significantly affected by withdrawal of water.

p. 124