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<TYPE>EX-10.14

<SEQUENCE>4

<FILENAME>dex1014.txt

<DESCRIPTION>CAJARO CONTRACT

<TEXT>

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1

EXHIBIT 10.14

EMPRESA COLOMBIANA

DE PETROLEOS

ECOPETROL



"CAJARO" ASSOCIATION CONTRACT

ASSOCIATION CONTRACT



ASSOCIATE

:

SECTOR

:

EFFECTIVE DATE :



HARKEN DE COLOMBIA LIMITED

CAJARO

February 18, 2002

-----------------



The contracting parties, as such: on one Part, the Empresa Colombiana de

Petroleos hereinafter referred to as ECOPETROL, an industrial and commercial

State-owned enterprise authorized by law 165 of 1948, actually ruled by its

by-laws, reformed by Decrees 1209 of June 15, 1994 and 2933 of December 10,

1997, with head office in Bogota, D.C., represented by ALBERTO CALDERON ZULETA,

of legal age, bearer of citizenship card No. 19'248.238 issued in Bogota, based

in Bogota, D.C., who states: 1. That in his capacity as President of ECOPETROL,

acts in representation of this Company, and 2. That for the execution of this

contract he has been authorized by the Board of Directors of ECOPETROL, as

witnessed in Minutes No. 2264 of December 14, 2001, and on the other hand HARKEN

DE COLOMBIA LIMITED, company organized pursuant to the laws of the Caiman

Islands, with a branch established in Colombia and with head offices in Bogota,

D.C., pursuant to Public Deed No. 406 of February 19, 1993, executed in Notary

Eleven (11) of Bogota, represented by GABRIEL GUSTAVO CANO VELASQUEZ, of legal

age, Colombian citizen, bearer of citizenship card number 8'265.559, who

declares: 1. That in his capacity as the Main Legal Representative he acts as

the representative HARKEN DE COLOMBIA LIMITED, 2. That to execute this contract

he is fully authorized as per the Certificate of Incorporation and Legal

Representation issued by the Chamber of commerce of Bogota, D.C., and 3. That

THE ASSOCIATE assures to have the financial capacity, technical competence and

the professional abilities necessary to execute the activities to which this

contract refers to.

Under the above conditions, ECOPETROL and THE ASSOCIATE declare that they have

entered into the contract contained in the following Clauses:

CHAPTER I - GENERAL PROVISIONS

CLAUSE 1 - OBJECT OF THIS CONTRACT

1.1



The object of this contract is the exploration of the Contract Area

and the exploitation of such nationally owned hydrocarbons that may be

found therein, described in Annex A that is part of this contract.



1.2



Pursuant to Article 1o. of Decree 2310 of 1974, the exploration and

exploitation of nationally owned hydrocarbons are entrusted to

ECOPETROL, company that may, directly or under contracts with Private

Parties, carry out such activities. Based on such provision mentioned,

ECOPETROL has agreed with THE ASSOCIATE to explore the Contract Area

and to exploit such Hydrocarbons as may be found therein, under the



terms and conditions set

<PAGE>

2

forth in herein, in Annex "A", Annex "B" (Operating Agreement) and

Annex "C" (Lineaments for the Preparation of the Development Plan)

that make part of this contract.

1.3



Without prejudice of the provisions hereunder, it is understood that

THE ASSOCIATE shall have the same rights and obligations in respect to

the Hydrocarbons produced in the contract area and to its share of the

same as are assigned under the Colombian Laws to anyone exploiting

nationally owned Hydrocarbons in this country.



1.4



ECOPETROL and THE ASSOCIATE agree to carry out the exploration and

exploitation operations within the terms of this contract in the

Contract Area, that they shall share between themselves the costs and

risks thereof in the proportion and under the terms set forth in this

contract and that the Hydrocarbons produced shall belong to each Party

pursuant to the proportions set forth in this contract.



CLAUSE 2 - APPLICATION OF THE CONTRACT

This contract applies to the Contract Area, identified, and the boundaries of

which are described in Clause 3 and Annex A of this contract, or to such portion

thereof, when areas have been restituted pursuant to this contract.

CLAUSE 3 -CONTRACT AREA

The area Contract comprises thirty four thousand one hundred and ninety five

(34.195) hectares with seven thousand fifty eight (7.058) square meters and is

located within the municipal jurisdiction of Mani in the department of Casanare.

The cartographic information was taken from the Political Map of Colombia,

digital file of the I.G.A.C., on scale 1:1'500.000.

This area is described on Annex "A" that is part of this contract.

Paragraph 1. - Whenever a person files a claim pretending to be the owner of the

property of the subsurface Hydrocarbons in the Contract Area, ECOPETROL shall

handle the case and assume the obligations required.

Paragraph 2.- In the case in which part of the Contract Area extends over the

areas that are or that have been reserved and declared to be within a system of

National Parks, THE ASSOCIATE is obliged to obey the conditions ruled by the

corresponding authorities, without it being considered that this contract has

been modified and without there being a right to make any claim against

ECOPETROL, pursuant to that agreed on in Clause 30 (numeral 30.2) of this

contract.

CLAUSE 4 - DEFINITIONS

For the purpose of this contract, the terms mentioned hereinafter, shall have

the following meaning:

4.1



Contract Area: Is the land described in Clause 3 hereinabove, and

described in Annex "A" of this contract.

<PAGE>

3

4.2



Field: Such portion of the Contract Area in which there are one or

more structures and/or stratigraphic traps totally or partially

overlaid, with one or more productive Reservoirs or that the capacity

to produce Hydrocarbons in commercial amounts has been verified. Such



reservoirs may be found vertically and/or laterally separated by

geological barriers or impervious stratums, or both.

4.3



Commercial Field: Is the field accepted by ECOPETROL able to produce

Hydrocarbons in economically exploitable quantity and quality, in one

or more of the Production Objectives defined by ECOPETROL at the time

of acceptance of the commerciality, without prejudice that during the

exploitation phase other Production Objectives may be found.



4.4



Gas Field : Is such that based on the information supplied by THE

ASSOCIATE, is classified by ECOPETROL as a Non Associated Natural Gas

Producer (or free natural gas) in the definition of its commerciality

.



4.5



Executive Committee: Is the body established within thirty (30) days

following the acceptance of the first Commercial Field, to supervise,

control and approve all the operations and actions that are carried

out during the term of the contract.



4.6



Direct Exploration Costs: Are the monetary expenses reasonably

incurred in by THE ASSOCIATE through the acquisition of seismic and

the drilling of Exploratory Wells, as well as for the locations,

termination, equipment and testing of such wells. The Direct

Exploration Costs do not include administrative or technical support

from the head office or central offices of the Company.



4.7



Joint Account: Are the records to be kept by means of books of

accounts pursuant to the Colombian laws, for crediting or debiting the

Parties for their share in the Joint Account of each Commercial Field.



4.8



Budget Execution: Are the resources actually committed and/or spent in

each of the programs and projects approved for a given calendar year.



4.9



Structure: It is the geometrical form with geological closing

(anticlinal, synclinal, etc.) that present the formations in which

fluid accumulations are found.



4.10



Effective Date: It is the day in which the sixty (60) calendar day

period expires, as from the date of this contract is signed, as of

which all the terms agreed upon therein shall be counted,

independently from the date of approval of the contract by the

Ministry of Mines and Energy.



4.11



Cash Flow: It is constituted by the movement of monies (income and

disbursements) to be made by the Joint Account in order to meet the

different obligations Contracted by the Operator for the normal

progress of the operations.



4.12



Associate Natural Gas: Mixture of light Hydrocarbons in a gaseous

state or in solution in the Reservoir and that is produced jointly

with liquid hydrocarbons.



4.13



Non Associated Natural Gas (Production of): Are those Hydrocarbons

produced in a gaseous state on surface and reported to standard

conditions, with average values

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4

(pondered by production), of initial relation Gas/Oil greater than

15.000 standard cubic feet of gas per barrel of liquid Hydrocarbon and

one molar composition of heptane plus (C7 +) less than 4.0%.

4.14



Direct Expenses: Are all expenditures payable by the Joint Account for

payments of personnel directly engaged in the Company, purchase of



materials and supplies, contracting of services with third parties and

other general expenses required by the Joint Operation in the normal

performance of its activities.

4.15



Indirect Expenses: Are those expenditures payable by the Joint Account

for technical and/or administrative support, which the operator with

his own organization, gives to the joint operation.



4.16



Commercial Interest Rate: When referring to pesos, it shall be the

current interest rate at the time of the delay; in dealing with

dollars of the United States of America, it shall be the prime rate

fixed by the LIBOR (London Interbank Borrowing Offered Rate), three

(3) months for dollar deposits, increased by four percentage points

(LIBOR +4%).



4.17



Interest in the Operation: Is the share in the obligations and rights

acquired by each party in the exploration and exploitation of the

Contract Area.



4.18



Development Investment: The sums of money invested in goods and

equipment capitalized assets for the joint operations in a Commercial

Field upon acceptance of the existence by the parties.



4.19



Hydrocarbons: All organic compounds constituted mainly by the natural

mixture of carbon and hydrogen as well those substances that accompany

them or that are derived from them with the exception of helium and

strange gases.



4.20



Gaseous Hydrocarbons: All Hydrocarbons produced in a gaseous state in

surface and reported to standard conditions (1. absolute pressure

atmosphere and a temperature of 60(0)F.)



4.21



Liquid Hydrocarbons: Crude and condensed oil and those produced in

such state as a result of the gas treatment when required, reported to

standard conditions.



4.22



Production Objectives: Are the reservoirs located in the commercial

field discovered and tested as commercial producers.



4.23



Joint Operation: The activities and work performed or in the process

of being performed, on behalf of the parties and on their own account.



4.24



Operator: The person designated by the parties to directly carry out,

on their behalf, and without representing them, the operations

necessary to explore and exploit the Hydrocarbons found in the

Contract Area.



4.25



Parties: On the Effective Date, ECOPETROL and THE ASSOCIATE.

Subsequently and at any time, ECOPETROL on the one hand, and THE

ASSOCIATE and/or its assignees on the other.

<PAGE>

5

4.26



Exploration Period: The time available to THE ASSOCIATE for complying

with the obligations set forth in Clause 5 of this contract, which

shall not exceed six (6) years as from the Effective Date, except in

the cases contemplated in Clauses 5 (numeral 5.4), 9 (numeral 9.3) and

34.



4.27



Exploitation Period: The time elapsing from the end of the exploration

period, or that of retention when necessary, to the end of this

contract.



4.28



Retention Period: The time required by THE ASSOCIATE and granted by



ECOPETROL to being the exploitation period of each gas field

discovered in the Contract Area, that due to its particular conditions

is not able to be developed in a short term, requiring an additional

term for the execution of feasibility studies, of construction of

infrastructure and/or marketing development.

4.29



Development Plan: Is the guide document to perform technical,

efficient and economical exploitation operations of each field and

shall contain, among other aspects, the development strategy, the

environmental considerations, the activities to be developed, the

Production forecasts for short and medium term, an estimate of the

investment and expenses for the following five years and specifically,

a description of the projects, the operations program and the Budget

for the remaining of the present year or of the following year, as is

the case. The lineaments for this development plan are described in

Annex "C" that is part of this contract.



4.30



Exploration Well: Any well designated as such by THE ASSOCIATE to be

drilled or deepened on its behalf, in the Contract Area in search of

new reservoirs or to verify the extension of a reservoir or to

determine the stratigraphy of an area. For the fulfillment of the

obligations contemplated in Clause 5 of this contract, the

corresponding drilling well shall be previously classified between

ECOPETROL and THE ASSOCIATE.



4.31



Discovery Well: Is that exploration well in which the existence of one

or more reservoirs is discovered or confirmed and that may require

subsequent evaluation to determine whether such reservoir or

reservoirs may be commercially exploited.



4.32



Exploitation Well (or of Development): Any well previously scheduled

as such by the Executive Committee for the production of Hydrocarbons

discovered in the objectives of production in the area of each

commercial field.



4.33



Budget: The basic planning instrument whereby the resources are

allocated for specific projects to be applied within a calendar year

or part of a year, in order to achieve the goals and objectives

proposed by THE ASSOCIATE or by the Operator.



4.34



Extensive Production Tests: The operations performed in one or more

producing Exploration Wells, to evaluate the production and behavior

conditions of the reservoir with temporary production installations.



4.35



Reimbursement: Is the payment of fifty percent (50%) of the Direct

Exploration Costs incurred in by THE ASSOCIATE.

<PAGE>

6

4.36



Exploration Operations. The operations performed by THE ASSOCIATE as

related to the search and discovery of Hydrocarbons within the

Contract Area.



4.37



Reservoir: All rocks under the surface where Hydrocarbons in their

porous space are accumulated, under production or that has the

capacity to produce Hydrocarbons and that behaves as an independent

unit as far as its petrophysical and fluid properties and that has a

common pressure system throughout its entire extension.

CHAPTER II - EXPLORATION



CLAUSE 5 - TERMS AND CONDITIONS

5.1



THE ASSOCIATE is committed to carry out the exploration operations



pursuant to the regulations and modern practices commonly accepted and

in use by the international oil industry and to fulfill the legal and

regulatory provisions in force. The exploration period shall be

divided in three (3) phases, the first with a duration of twelve (12)

months, the second phase with a duration of twelve (12) months and the

third phase with a duration of twelve (12) months. The first phase

begins on the Effective Date and the following on the calendar day

immediately following the conclusion of the previous phase.

During the exploration period, THE ASSOCIATE is obliged to carry out,

as a minimum, the following exploration operations: during the first

phase, THE ASSOCIATE must carry out the drilling of one (1)

Exploration Well until reaching the formations that can produce

Hydrocarbons in the Contract Area. With this well, the exploratory

obligation corresponding to the fifth year of the exploration period

of the Bocachico Association Contract is fulfilled.

At the end of the first phase, THE ASSOCIATE shall have the option to

resign from the Association Contract, provided having previously

complied with the exploratory commitments agreed on for the present

phase.

During the second phase, THE ASSOCIATE must carry out the drilling of

one (1) exploration well until reaching the formations that may

produce Hydrocarbons in the Contract Area.

At the end of the second phase, THE ASSOCIATE shall have the option to

resign from the Association Contract provided having previously

fulfilled the exploratory commitments agreed on for the present phase.

During the third phase, THE ASSOCIATE shall drill one (1) Exploratory

Well to depth so as to reach the formations capable of producing

Hydrocarbons in the Contract Area.

At the expiration of the exploration period, the contract shall end if

the extension thereof has not been requested and authorized pursuant

to Numeral 5.2 of this Clause, or if a field has not been discovered.

<PAGE>

7

5.2



If THE ASSOCIATE has satisfactorily complied with the obligations

stipulated in Clause 5.1, ECOPETROL, at the request of THE ASSOCIATE,

shall annually extend the exploration period, up to three (3)

additional years, for such purpose, THE ASSOCIATE must inform its

intention to continue with the exploration in the Contract block with

an anticipation not lower than ninety (90) days of the date of

termination of the Exploration Period, accompanying such request with

the proposal of the Exploration Operations Program to be performed

during each extension period. Within ninety (90) days following the

date of receipt of the request of THE ASSOCIATE in ECOPETROL, the

PARTIES shall be able to agree on the Exploration Operations Programs

to be performed during such extensions. If no agreement is reached,

THE ASSOCIATE is obliged to carry out as a minimum, Exploration

Operations in the Contract Area, consisting in the drilling of one (1)

Exploration Well per year. At the end of each of the extensions, which

duration is one year, THE ASSOCIATE, shall have the option to resign

from the Association Contract having previously fulfilled the

exploratory commitment agreed on for each of them.



5.3



At its judgment, and at its own cost and risk, THE ASSOCIATE may

perform additional Exploration Operations to those agreed on for the

Phase or Stage of the Exploration Period under development. However,

if THE ASSOCIATE wishes to have such additional Exploration Work

accredited to the fulfillment of the exploratory commitments of the



following phase or stage of the Exploration Period, it must request

ECOPETROL to issue the corresponding approval. If the request is

accepted by ECOPETROL, it shall determine the form and amount in which

the transfer of the mentioned commitments is to be made.

5.4



If at the end of the six (6) year Exploration Period, THE ASSOCIATE

has drilled one or several Discovery Wells that show the possible

existence of a Commercial Field, previous written request by THE

ASSOCIATE, ECOPETROL may authorize the extension of the Exploration

Period for the time necessary, that shall not exceed two (2) years, so

that THE ASSOCIATE may have the opportunity to prove the existence of

such Commercial Field. To bring into effect that herein set forth,

before finishing the Exploration Period and simultaneously with the

request, THE ASSOCIATE must provide ECOPETROL with the maps and other

descriptions of the area considered as capable of producing

Hydrocarbons, the Exploration Operations program and other operations

that THE ASSOCIATE plans to carry out and the budget to carry out such

work at its own cost and risk, to determine the extension of the

Reservoir or Reservoirs discovered and to show the existence of a

Commercial Field, without prejudice of that established in Clause 8.

To give application to the partial restituted of the areas during this

extension of the Exploration Period, THE ASSOCIATE shall retain the

area that is the largest between fifty percent (50%) of the Contract

Area and the area it considers capable of producing Hydrocarbons plus

its zone of reserve of two and a half (2.5) kilometers wide around the

previous one, within the limits of the Contract Area. If the

operations program proposed adjusts to the international standards and

has the object to show the commerciality of the discovered Reservoirs

within the term established, ECOPETROL shall issue its authorization

for the execution of this program.



5.5



During the life of this contract and observing that established in

Clause 7 of the same, THE ASSOCIATE may carry out the Exploration

Operations in the areas it keeps pursuant to Clause 8 and THE

ASSOCIATE shall be the only one responsible for the risks and costs of

these activities, and, therefore, it shall have the complete and

exclusive control of such activities without the maximum duration of

the contract being modified for such cause.

<PAGE>

8

CLAUSE 6 - SUPPLY OF INFORMATION DURING THE EXPLORATION

6.1



ECOPETROL shall supply THE ASSOCIATE, whenever the latter may so

request, with any information in its possession within the Contract

Area. The costs of reproduction and supply of such information shall

be charged to THE ASSOCIATE.



6.2



During the Exploration Period, THE ASSOCIATE shall give ECOPETROL, as

it is obtained and pursuant to ECOPETROL' s manual on information

supply, all the geological and geophysical information, cores,

magnetic tapes edited, processed seismic sections and all the

information on the field supporting it, magnetic and gravimetric

profiles, all in reproducible originals, copies of the geophysical

reports, reproducible originals of all well logs drilled by THE

ASOCIATE, including a final composite graph for each well and copies

of the final drilling report that includes the analyses of core

samples, the results of production tests and any other information

related to the drilling, survey or interpretation of any nature done

by THE ASSOCIATE for the Contract Area without any type of

limitations. ECOPETROL is entitled to, at any time and by the

procedures it considers appropriate, to witness all the operations and

verify all information previously mentioned.



6.3



The Parties agree that all geological, geophysical and engineering

information obtained from the Contract Area in force during the

development of this contract is confidential during the three (3)

years following the date of acquisition or up to the termination of

the contract, whatever happens first. The information made known is,

but is not limited to seismic information, of potential methods, of

remote sensors and geochemical, with its corresponding supports,

surface and subsurface cartography, well reports, electric logs,

formation tests, biostratigraphic, petrophysical and fluid analyses,

and production background. Regardless of the confidentiality herein

established, the Parties agree that in each case they may interchange

with companies that are or not associated with ECOPETROL. It is

understood that that agreed to herein shall take place without

prejudice of the obligation to supply the Ministry of Mines and Energy

with all information requested by it pursuant to the legal and

Reglementary provisions in force. Nevertheless, it is understood and

thus agreed, that the Parties may at their own discretion supply the

information required by their affiliates, consultants, contractors,

financial entities and that are required by the competent authorities

with jurisdiction on the Parties or their affiliates, or by

regulations of any stock markets in which the stocks of the Parties or

corporations related are registered.



6.4



Within the ninety (90) days following the date of termination of the

drilling operations of each Exploration Well, THE ASSOCIATE shall

inform ECOPETROL in writing of the condition of the corresponding

well, its classification as to the results obtained (dry or discovery)

and the type of fluids produced, if it is the case.



CLAUSE 7 - BUDGET AND EXPLORATION PROGRAMS

Observing that established in this contract, THE ASSOCIATE is obliged to prepare

the programs, the chronogram of activities to be developed and the Budget to be

executed in a short term (the following calendar year) and the vision for the

following two (2) years with an estimated Budget, to carry out the exploration

in the Contract Area. Such vision, programs, chronograms and Budgets

<PAGE>

9

shall be presented for the first time to ECOPETROL, within the sixty (60) days

following the date of the signing of this contract, and subsequently, December

fifteen (15) of each year, the latest.

Every semester THE ASSOCIATE shall present a technical and financial report to

ECOPETROL, including the different exploratory activities performed, and the

perspectives of the area based on the information obtained, the Budget assigned

and the exploration costs incurred in up to the time of the presentation of the

report, commenting in each case the causes that originated the main deviations

presented. Upon request by ECOPETROL, THE ASSOCIATE shall supply the necessary

explanations to the report, in meetings programmed for such purposed. The

information presented by THE ASSOCIATE in the reports and the explanations to

which the present Clause refers to, shall in any case be understood as accepted

by ECOPETROL. The financial information shall be subject to auditing by of

ECOPETROL pursuant to that established in Clause 22 of Annex "B" (Operating

Agreement) of this contract.

CLAUSE 8 - RESTITUTION OF AREAS

8.1



Upon termination of the First Phase of three years of the Exploration

Period or of such extensions thereof obtained by THE ASSOCIATE

pursuant to Clause 5 (numeral 5.2), if a Commercial Field has been

discovered and accepted by ECOPETROL in the Contract Area, said area

shall be reduced to fifty percent (50%); two (2) years later the area

shall be reduced to an extension equal to fifty percent (50%) of the



remaining Contract Area and two (2) years later such area shall be

reduced to the area of the Commercial Field or Fields under production

or development plus one reserve zone of two and a half (2.5)

kilometers wide surrounding each Commercial Field, and this shall be

the only part of the Contract Area that shall be subject to the terms

of this contract. Within the areas retained by THE ASSOCIATE pursuant

to the present numeral, the Commercial Fields discovered shall be

included.

8.2



Notwithstanding the obligation to relinquish the areas referred to in

Clause 8 (numeral 8.1), THE ASSOCIATE is not obliged to return the

Commercial Fields that are under development or production, or in a

Retention Period, including the reserve zones of two and a half (2.5)

kilometers wide that surround such areas, except in the case in which

by motives attributable to THE ASSOCIATE, the development or

production operations are suspended continuously for more than one

year without just cause, case in which such Commercial Fields shall be

restituted to ECOPETROL, terminating the contract for said areas or

part of the area. These stipulations are also applicable to the fields

exploited under the modality of Sole Risk.

Paragraph: To show just cause, THE ASSOCIATE must present to ECOPETROL

the reasons and fundaments of the same for its acceptance.



8.3



Retention Period: If THE ASSOCIATE has achieved the discovery of a Gas

Field and presents a request for commerciality for such Field pursuant

to that established in Clause 9 numeral 9.1, simultaneously with such

application it may request ECOPETROL to issue a Retention Period,

fully justifying the reasons to obtain such period.

<PAGE>

10

8.3.1



The Retention Period must be requested by THE ASSOCIATE and granted by

ECOPETROL previous to the date in which the last restitution of areas

to which numeral 8.1 of this clause refers to. In the case in which

the Retention Period is granted, it is understood that the term set

forth in Clause 9 (numeral 9.1) for ECOPETROL to speak out with

respect to the acceptance or not of the existence of the Commercial

Gas Field shall be postponed for the same term of the Retention

Period.



8.3.2



The Retention Period may not exceed four (4) years. If the term

initially granted as a Retention Period is insufficient, ECOPETROL,

previous written and duly justified request by THE ASSOCIATE, may

extend the Retention Period for an additional term, without having the

sum of the initial retention period and its extensions exceed four (4)

years. The Retention Period applies exclusively to the Gas Field area

that ECOPETROL determines as capable of producing Hydrocarbons,

including the reserve zone of two and a half (2.5) kilometers wide

surrounding such area.

CHAPTER III - EXPLOITATION



CLAUSE 9- TERMS AND CONDITIONS

9.1



To initiate the Joint Operation hereunder, it is considered that the

exploitation operations start on the date the Parties accept the

existence of the first Commercial Field or upon compliance with the

provisions of Clause 9 (numeral 9.5). The existence of a Commercial

Field shall be determined by the drilling, by THE ASSOCIATE, within

the proposed Commercial field of a number of Exploration Wells

sufficiently to reasonably define the area and commerciality of the

field capable of producing Hydrocarbons. If after evaluating the

results obtained from the Discovery Wells, THE ASSOCIATE considers



that it has discovered a possible Commercial Field, it must inform

ECOPETROL in writing, supplying all the surveys on which this

conclusion and the corresponding Development Plan are based on.

ECOPETROL within the term of ninety (90) days as of the date in which

THE ASSOCIATE turns in all the back-up information and makes a

technical presentation to ECOPETROL, must accept or object the

existence of the Commercial Field. ECOPETROL may request any

additional information considered necessary within thirty (30) days

following the date of submission of the first back-up information.

9.2



Should ECOPETROL accept the existence of the Commercial Field, it

shall, in this sense, notify THE ASSOCIATE within the term established

in Clause 9 (numeral 9.1) specifying the area and the Production

Objectives in the Commercial Field, and shall start to participate,

under the terms of this contract, in the exploitation of the

Commercial Field discovered by THE ASSOCIATE.



9.2.1



ECOPETROL shall reimburse THE ASSOCIATE for fifty percent (50%) of the

Direct Exploration Costs carried out by THE ASSOCIATE on its own

account and risk within the Contract Area previous to the date of

acceptance of the commerciality by ECOPETROL of each new Commercial

Field discovered, pursuant to numeral 9.1 of the present Clause and

that have not been previously charged to an other Field.



9.2.2



The amount of such costs shall be determined in dollars of the United

States of America, taking as a reference the date in which THE

ASSOCIATE made such disbursements;

<PAGE>

11

therefore, the costs incurred in Colombian pesos shall be liquidated

at the market exchange rate in effect on such date, certified by the

Superintendencia Bancaria or by the corresponding entity.

Paragraph: Once the amount of the Direct Exploration Costs to be

reimbursed in dollars of the United States of America is defined, this

value shall be updated on a monthly basis pursuant to the average

consumer index price of the industrialized countries, as of the date

of its disbursement, to constant dollars on the date in which

ECOPETROL begins the Reimbursement in the manner described on the

Operating Agreement (Annex B) of this contract. The balances to be

reimbursed shall be equally updated up to the date in which ECOPETROL

fully reimburses its participation in the corresponding Commercial

Field.

9.2.3



The Reimbursement of the Direct Exploration Costs, pursuant to that

established on Clause 9 (numerals 9.2.1) shall be made by ECOPETROL to

THE ASSOCIATE, as of the moment in which the Field is put in

production by the Operator, with the amount in dollars equivalent to

fifty percent (50%) of its direct participation in the total

production of the respective field, after deducting the corresponding

percentage from the royalties.

Paragraph: If concerning a Commercial Gas Field, such reimbursement

shall be made by ECOPETROL to THE ASSOCIATE, as of the moment in which

the Field is put under production by the Operator, with the amount in

dollars equivalent to one hundred percent (100%) of its direct

participation in the total production of such Field, after deducting

the corresponding percentage from the royalties.



9.3



If with the information supplied ECOPETROL cannot accept the existence

of a Commercial Field to which Clause 9 (numeral 9.1) refers to, it

may advise THE ASSOCIATE about the presentation and execution of a

program for additional operations to demonstrate the existence of a



commercial field, operations that will be carried out at the risk and

cost of THE ASSOCIATE that may not require a term longer than two (2)

years for its execution, and if it is the case, the Exploration Period

for the Contract Area shall be extended automatically for a term equal

to that already agreed on between the Parties, as necessary to execute

the additional work in this Clause, but without prejudice of that

stated with relation to the reduction of areas in Clause 8 (numeral

8.1). THE ASSOCIATE may present and execute a work program that meets

the objective required or submit for expert analysis the requirement

of additional information, pursuant to Clause 28 of this contract. In

the event that the definition of the expert analysis is favorable to

ECOPETROL, THE ASSOCIATE must fulfill the requirements and once again

submit the studies of commerciality and the revised Development Plan

to ECOPETROL for its consideration. In the event that the definition

of the expert analysis is favorable to THE ASSOCIATE, it is understood

that ECOPETROL has the necessary information and as a consequence, the

term of ninety (90) days to which clause 9.1 refers to, to accept or

to object the existence of a Commercial Field shall begin on the date

in which ECOPETROL receives the report from the experts.

9.4



If, after the completion of the additional work or the disagreement

solved by the expert analysis to which the previous numeral refers to,

ECOPETROL accepts the existence of the Commercial Field to which

Clause 9 (numeral 9.1) refers to, it will start to participate in the

development operations of the field above mentioned in the terms

established in this contract and shall reimburse THE ASSOCIATE as set

forth in Clause 9 (numerals 9.2.2 and

<PAGE>

12

9.2.3) for fifty percent (50%) of the cost of the additional work

requested and referred to in Clause 9 (numeral 9.3) and the work

executed shall become the property of the Joint Account.

9.5



Modality of Sole Risk: If ECOPETROL does not accept the existence of a

Commercial Field, after having performed the additional work referred

to in Clause 9 (numeral 9.3), THE ASSOCIATE shall be entitled to

execute such work as it may consider necessary in or to exploit such

field and to reimburse itself two hundred percent (200%) of the total

cost of the work executed at its own account and risk in the such

field and up to fifty percent (50%) of the Direct Exploration Costs

carried out by THE ASSOCIATE before the date of the presentation of

the commerciality surveys of such field. For the effects of this

Clause the reimbursement shall be done with the value of the produced

Hydrocarbons, less the royalties referred to in Clause 13, deducting

the costs of production, gathering, transportation and sale. If THE

ASSOCIATE abides to the modality of sole risk, it is understood that

the term of the exploitation begins on the date in which ECOPETROL

informs THE ASSOCIATE of the nonexistence of a Commercial Field. For

the purposes of liquidation of the value in dollars of the

disbursements done in pesos, it shall be liquidated at the

representative market rate certified by the Superintendencia Bancaria

or by the corresponding authority, on the date in which THE ASSOCIATE

has made such disbursements. For the purpose of this Clause, the value

of each barrel of Hydrocarbons produced in such Field during a

calendar month shall be the average price per barrel that THE

ASSOCIATE receives from the sales of its participation in the

Hydrocarbons produced in the Contract area during the same month. With

reference to the reimbursement of the Direct Exploration Costs, that

established in paragraph of clause 9 (numeral 9.2.3) shall be applied.

When THE ASSOCIATE has reimbursed itself of the percentage established

in the present clause, all drilled wells, installations and all types

of goods acquired by THE ASSOCIATE for the exploitation of the field



and paid for as indicated in the present clause, shall become the

property of a Joint Account without any cost, previous the acceptance

by ECOPETROL to participate in the development of such field.

9.6



ECOPETROL may, at any time, start to participate in the operation of

the field discovered and developed by THE ASSOCIATE without prejudice

to THE ASSOCIATE' s right to reimburse itself for the investments it

made at its expense, in the form and percentage stipulated in Clause 9

(numeral 9.5). Once THE ASSOCIATE is reimbursed, ECOPETROL shall enter

to participate in the economic results of the wells developed at the

exclusive expense of THE ASSOCIATE.



9.7



The demarcation of the boundaries of a Commercial Field shall take

into consideration all the geological and geophysical information and

that of the wells drilled within said field or related to the same.



9.8



If after the commerciality of one or more fields is accepted, THE

ASSOCIATE continues to fulfill the exploratory obligations established

in Clause 5, it may continue to simultaneously carry out the

exploitation of such fields before the expiration of the Exploration

Period established in Clause 4, but only as of the date of its

termination shall the Exploitation Period begin. When concerning Gas

Fields, and ECOPETROL has granted a Retention

<PAGE>

13

Period, the Exploitation Period for each Field shall begin on the date

of expiration of the respective Retention Period.

9.9



If as a result of the drilling of Exploratory Wells, after confirming

the existence of a Commercial field, THE ASSOCIATE proves the presence

of additional accumulations of Hydrocarbons associated to such Field,

it must request ECOPETROL to extend the area of the Commercial Field

and its commerciality, following the procedure set forth in Clause 9

(numeral 9.1). If ECOPETROL accepts its commerciality, it shall

reimburse THE ASSOCIATE fifty percent (50%) of the Direct Exploration

Costs exclusively related with the expansion of the area of the

Commercial Field, in the terms established in numerals 9.2.2 and

9.2.3. If ECOPETROL does not accept the commerciality, THE ASSOCIATE

is entitled to reimburse itself up to two hundred percent (200%) of

the total cost of the work executed on its own cost and risk for the

exploitation of the Exploratory Wells that have resulted productive

and up to fifty percent (50%) of the direct Exploration Costs carried

out by THE ASSOCIATE exclusively related to the expansion of the area

requested before the date in which ECOPETROL notifies on the same.

Such reimbursement shall be done with the production originated from

the Exploratory Wells that have resulted productive, after deducting

royalties, following the procedure set forth in Clause 21 (numeral

21.2) up to the percentages herein defined.



CLAUSE 10 - OPERATOR

10.1



The Parties agree that HARKEN DE COLOMBIA LIMITED is the Operator and,

as such, with the limitations set forth in this contract, shall have

the control of all the operations and activities it may consider

necessary for an efficient technical and economic development of the

exploitation of the hydrocarbons found within the area of the

Commercial Field. They also agree that, nevertheless that in this

contract - executed for the commercial purposes established in Clause

1 of the same, HARKEN DE COLOMBIA LIMITED is the Operator, it is

understood by the Parties, and thus determined, that for all labor

legal effects, HARKEN DE COLOMBIA LIMITED does not act as a

representative of the Parties, but as an only and true employer of the

workers he contracts for the operation of the Commercial Field and, as



a consequence, shall be responsible for the labor obligations that

arise from the respective relations or work contracts, such as salary

payments and social benefits, para-fiscal contributions, affiliation

and payment of bids or contributions for pensions, health and

professional risks to the Sistema de Seguridad Social Integral, to

which Law 100 of 1993 refers to and its Reglementary decrees or those

regulations that substitute or modify it.

10.2



The Operator has the obligation to carry out all of the development

and production operations pursuant to the standards and practices

generally accepted by the industry using the best technical methods

and systems required for the economic and efficient exploitation of

the Hydrocarbons and fulfilling the legal and regulatory provisions on

the issue. Also, he must present on time, to the parties, the reports

and documents mentioned in the contract, as well as any other

information required by the Executive Committee with respect to the

Joint Account and/or Operation.



10.3



Due to the afore mentioned, and in view that for the execution and

fulfillment of the operation of the Commercial Field, HARKEN DE

COLOMBIA LIMITED shall perform all the activities with its own

resources, with liberty and technical and directive autonomy, for all

the

<PAGE>

14

purposes of this contract, such Operator shall be considered an entity

different from The Parties hereto as well as for the purposes of the

implementation of civil, labor and administrative legislation and for

the Operator's relations with the personnel at his service, as set

forth in clause 32.

10.4



The Operator shall have the right to resign as such, by written

notification to the Parties six (6) months in advance of the effective

date of such resignation. The Executive Committee shall then assign a

new Operator pursuant to Clause 19 (numeral 19,3,5). In case the

Operator assigned by the Executive Committee is a third person

different from the Parties, a contract must be executed between the

Parties and the new Operator.



10.5



The Operator shall carry out the operations described in this contract

in a diligent, responsible, efficient and technically and economically

adequate manner, being understood that at no time shall he be

responsible for mistakes in criteria, or for losses or damages that

are not the result of a serious fault by the Operator.



10.6



The Operator shall have the right to execute any type of work by means

of contractors, subject to the faculty that the Executive Committee

has, pursuant to Clause 11 (numeral 11.1). To fulfill that herein

established, the Operator shall carry out the contracting operations

following the procedure described in Annex "B" and subject to the

principles of good faith, transparency, economy, equity,

responsibility, planning, quality, celerity and social and

environmental responsibility that must rule in the contracting.



CLAUSE 11 - EXPLOITATION PROGRAMS AND BUDGETS

11.1



Within the three (3) months following the acceptance of a Commercial

Field in the Contract Area, the Operator shall present to the parties,

a proposal for projects, programs and budget for the Development Plan

of the commercial field for the remaining of the corresponding

Calendar year, to be agreed on by the Executive Committee. In case

there are less than six months and a half (6 - 1/2) for the expiration

of such year, the Operator shall prepare and present a proposal for



projects, programs and Budget for the following calendar year, within

a term of three (3) months.

11.1.



The projects, programs and the Budget contained in the Development

Plan of the Commercial Field shall be checked and adjusted on a yearly

basis and presented by the Operator to the Parties during the month of

May of each calendar year, for which the Operator shall send his

proposal within the first ten (10) days of the month of May. Within

the twenty (20) days following the receipt of the proposal of the

projects, programs, and Budget of the Development Plan of the

Commercial Field, the Parties shall inform the Operator in writing on

the changes they wish to propose. When this occurs, the Operator shall

consider the observations and proposed reforms made by the Parties for

the elaboration of the revised Development Plan, that shall be

submitted for final approval of the Executive Committee, at the

ordinary meeting during the month of July of each year. In case the

total Budget of the Commercial Field has not been approved before the

month of July, those aspects of the Budget of the Commercial Field on

which an agreement has been reached, shall be approved by the

Executive Committee, and those aspects not approved shall be submitted

immediately to the Parties, for study and final decision, as set forth

in Clause 20.

<PAGE>

15

11.2.



The Parties may propose additions or revisions to the projects,

programs and the annual Budget approved for each Commercial Field,

but, except in cases of emergency, these must not be formulated with a

frequency of less than three (3) months. The Executive Committee shall

decide on the proposed additions or revisions at a meeting called

within thirty (30) days following the presentation of the same.



11.3.



The main objectives of the projects, programs and Budgets are:



11.3.1



Determine the operations to be carried out and the expenses and

investments (Budget) that the Operator is authorized to execute in

each Commercial field during the following calendar year.



11.3.2



Maintain a vision of the development of each field in a horizon of

medium and long term.



11.4



The projects, programs and annual Budget approved by the Executive

Committee and contained in the Development Plan of each Commercial

Field constitute the work plan shown and the expenses and investments

estimated to be carried out by the Operator in the different aspects

of the operation, such as:



11.4.1



Capital investments in production: drilling for the development of

Reservoirs, well workover or recovery, and specific production

constructions.



11.4.2



General construction and equipment: industrial and camp facilities,

transportation equipment, drilling and production equipment. Other

construction and equipment.



11.4.3



Maintenance and operating expenses: production expenses, geological

expenses, administration expenses for the operation.



11.4.4



Working capital requirements.



11.4.5



Funds for contingencies



11.5



The Operator shall make all expenditures and investments and shall

carry out the development and production operations set forth in the



projects, programs and annual Budgets approved in the Development Plan

for each Commercial Field referred to in Clause 11 (numeral 11.1),

pursuant to the Operating Agreement (Annex B) that is part of this

contract, without exceeding the total Budget for each year, except by

authorization of the parties in special cases.

11.6



The Operator is authorized to carry out expenditures not contemplated

expressly in the Budget of each Commercial field and chargeable to the

Joint Account, without previous authorization of the Executive

Committee, in the event of emergency measures aimed at safeguarding

personnel or the property of the Parties, emergency expenses

originating in fires, floods, storms or other disasters; emergency

expenses essential for the operation and maintenance of the production

facilities, including maintenance of the wells in a condition to

produce with a maximum efficiency; emergency expenses essential for

the protection and preservation of materials and equipment necessary

in the operations. In such cases, the Operator shall call the

Executive Committee to a special meeting as soon as possible, to

obtain their approval in order to continue with the emergency

measures.

<PAGE>

16

11.7



From the amount of the expenditures incurred in by and the contracts

executed by the Operator for amounts that exceed the annual Budget

approved by the Executive Committee for each Commercial Field, as set

forth in Clause 19 (numeral 19.3.9), without them having been

opportunely authorized by the Executive Committee, except the

assumptives set forth in Clause 11 (numeral 11.6), the Operator shall

be the only one responsible, who shall assume the totality of the

corresponding value. When the expense or contract in question is

confirmed by the Executive Committee, the corresponding value shall be

paid to the operator, pursuant to the rules defined by the Executive

Committee. In case in which the expenditure or contract is not

accepted by the Executive Committee, the Operator, if possible, may

withdraw the good in question reimbursing the Parties for any cost

that its withdrawal may cause them. When it is impossible for the

Operator to withdraw such goods, or he rejects doing so, the benefit

or patrimonial increase resulting from these expenses or contracts,

shall belong to the Parties in proportion to their Interest in the

Operation.



CLAUSE 12 - PRODUCTION

12.1



Whenever necessary, the Operator shall determine, with the approval of

the Executive Committee, the Maximum Efficiency Rate (MER) for each

commercial Field. This Maximum Efficiency Rate (MER) shall be the

maximum producing rate of Hydrocarbons that may be extracted from a

Reservoir for the purpose of obtaining a maximum economic benefit in

the final recovery of Reservoirs. In agreement with the economic and

engineering principles and the practices and procedures generally used

and in use in the international oil industry, in conditions and

circumstances similar to those experienced in the activities under

this contract. The estimated production must be adjusted as necessary

to compensate the real or anticipated conditions of the operation,

such as wells under repair that are not producing, limitations in the

capacity of the collecting lines, in the pumps, in the separators, in

the tanks, in the pipelines and in other facilities.



12.2



The Operator shall determine periodically, at least once a year, with

the approval of the Executive Committee, the area deemed capable of

producing Hydrocarbons in a commercial quantity in each Commercial

Field.



12.3



The Operator shall prepare and deliver to each Party, at regular three

(3) month intervals, a program showing each Party's share of

production, and another one showing the distribution of each Party's

production for the following six (6) months. The forecast for the

production must be based on the Maximum Efficiency Rate (MER,) as set

forth in Clause 12 (numeral 12.1) and adjusted to each party's rights

according to this contract. The Production Distribution Program shall

be determined based on each party's periodic requests, and, set forth

in Clause 14 (numeral 14.2) with the corrections deemed necessary to

ensure that none of the Parties, while being able to withdraw, will

receive less than the quantity to which it is entitled to under

provisions of Clause 14 and without prejudice to the stipulations of

Clauses 21 (numeral 21.2) and 22 (numeral 22.5).



12.4



If either of the Parties foresees a reduction in its capacity to

receive Hydrocarbons compared to the forecast given to the Operator,

the Party must inform the Operator as soon as possible, and if such

reduction is due to an emergency situation, the Party shall inform the

Operator within the twelve (12) hours following the occurrence of the

event that causes

<PAGE>

17

the reduction. As a consequence, such Party shall give the Operator a

new receipt schedule based on the appropriate reduction.

12.5



The Operator may use the Hydrocarbons that are consumed in the

development of the production operations in the Contract Area and

these consumptions shall be exempt from the royalties to which Clause

13 (numeral 13.1) refer to.



CLAUSE 13 - ROYALTIES

13.1



For the payment of the royalties for the exploitation of the

nationally owned Hydrocarbons, the Operator shall give ECOPETROL the

percentage of the production established by Law. The delivery of this

production shall be carried at the same place and time in which the

Parties distribute the production that corresponds them pursuant to

Clause 14 of this contract. In the case of Fields under exploitation

in the modality of Sole Risk, THE ASSOCIATE shall give ECOPETROL the

percentage of the production that corresponds to the royalties in the

place agreed on by the Parties.



13.2



From the percentage of the production given to ECOPETROL in the terms

of the previous numeral, ECOPETROL, in the way and terms established

by law, shall pay those entities mentioned by law the royalties that

are caused in favor of the Nation on the total of the production of

the Field and, in no case, shall THE ASSOCIATE be responsible for any

type of payment before these entities.



CLAUSE 14 - DISTRIBUTION AND AVAILABILITY OF THE HYDROCARBONS

14.1



The Hydrocarbons produced, except those that have been used in benefit

of the operations of this contract and those that are inevitably

wasted in these functions, shall be transported to the jointly owned

tanks or to other measuring facilities agreed upon by the Parties. If

there is no agreement, to the measuring site nearest to the control

site established by the Ministry of Mines and Energy. The Hydrocarbons

shall be measured pursuant to the regulations and methods accepted by

the oil industry, and based on this measurement, the volumes to which

Clause 13 refer to shall be determined. As of this moment, the

remaining Hydrocarbons shall be the property of each Party in the

proportions specified in this contract.



14.2 Distribution of Production

14.2.1



After having deducted the percentage that corresponds to the

royalties, the rest of the Hydrocarbons produced by each Commercial

Field are the property of the Parties in the proportion of fifty

percent (50%) for ECOPETROL and fifty percent (50%) for THE ASSOCIATE,

until the cumulative controlled production of the corresponding

Commercial Field reaches the amount of sixty (60) million barrels of

liquid Hydrocarbons or the amount of four hundred twenty (420) cubic

gigafeet of gaseous Hydrocarbons to standard conditions, what ever

occurs first (1 cubic gigafoot = 1 X 109 cubic feet).



14.2.2



Independently from the classification of the Commercial Field given by

ECOPETROL in the definition of commercialization, exceeding the limits

set forth in numeral 14.2.1, the distribution of the production of

each Commercial Field (previous the deduction of the

<PAGE>

18

percentage corresponding to royalties) is the property of the Parties

in the proportion that results from applying factor R as follows:

14.2.2.1



R



If the Hydrocarbon that reached first the limit established in numeral

14.2.1 of the present Clause was the liquid Hydrocarbon, the following

table shall be applied:



FACTOR



Distribution of Production After Royalties (%)

ASSOCIATE

ECOPETROL



0.0 to 1.0

1.0 to 2.0

2.0 or more



50

50/R

25



50

100 - 50 R

75



14.2.2.2. If the Hydrocarbon that reached first the limit established in numeral

14.2.1 of the present Clause was the gaseous Hydrocarbon, the

following table shall be applied:

R



FACTOR



Distribution of Production After Royalties (%)

ASSOCIATE

ECOPETROL



0.0 to 2.0

2.0 to 3.0

3.0 or more

14.2.3



50

50/(R-1)

25



50

100 - [50 /(R-1)]

75



For the effects of the previous tables, factor R shall be defined as

the relation of cumulative incomes, expressed in constant terms, over

the cumulative expenses, equally expressed in constant terms,

corresponding to THE ASSOCIATE for each Commercial Field in the

following terms:

IA

R = --------------------------ID + A - B + GO

Where:

IA (Cumulative Income of THE ASSOCIATE): Is the valuation of the

cumulative incomes corresponding to the volume of THE ASSOCIATE' s

Hydrocarbons produced, after royalties, at the reference priced agreed

on by the Parties, excluding re-injected Hydrocarbons in the Fields in

the Contract Area, those consumed in the operation and the flared gas.

The average reference price of the Hydrocarbons shall be determined by

mutual agreement between the Parties.



To determine the cumulative incomes, the Monthly Incomes shall be

taken as a base, which shall be determined as a result of multiplying

the monthly average reference price by the production of the month

pursuant to the formats established for such effect by the Ministry of

Mines and Energy.

<PAGE>

19

ID (Cumulative Development Investments): Are fifty percent (50%) of

the Cumulative Development Investments approved by the Executive

Committee of the Association for each Commercial Field. The cumulative

Development Investments done previous to the date of the initiation of

the exploitation defined by the Ministry of Mines and Energy for the

respective Field, shall be adjusted up to the present date in the same

manner in which the Direct Exploration Costs are adjusted in the

Paragraph of Clause 9 (numeral 9.2.2.).

A: Are the Direct Exploration Costs in which THE ASSOCIATE has

incurred in, pursuant to Clause 9 of this contract and adjusted

pursuant to that established in Paragraph of clause 9 (numeral 9.2.2)

B: Is the cumulative Reimbursement of the Direct Exploration Costs,

previously mentioned, pursuant to Clause 9 of this contract.

GO: (Cumulative Operation Expenses): Are the cumulative operation

expenses approved by the Executive Committee of the Association, in

the proportion that corresponds THE ASSOCIATE, plus the cumulative

transportation costs of THE ASSOCIATE. As transportation costs it is

understood, the investment and operation expenditures for the

transportation of Hydrocarbons produced in the Commercial Fields

located in the Contract Area, from it to the port of export or site

where it is agreed to take the price to be used in the calculation of

incomes IA. Such transportation costs shall be determined by the

parties in mutual agreement once the exploitation stage of the Fields

begins, which commerciality has been accepted by ECOPETROL. Within the

Operation Expenses the Special Contributions are included or those

similar that have direct application on the production of Hydrocarbons

in the Contract Area.

All values that, with posteriority to the date of initiation of the

exploitation defined by the Ministry of Mines and Energy, included in

the determination of factor R shall be taken in current dollars.

For such effect, the expenses in pesos must be converted into dollars

at the market rate certified by the Superintendencia Bancaria or by

the corresponding authority, in charge on the date in which the

corresponding disbursements have been done.

14.2.4



Calculation of factor R: The distribution of the production based on

factor R shall begin to be applied as of the first day of the third

calendar month after which the cumulative production of each

Commercial Field reaches the amount of sixty (60) million barrels of

liquid Hydrocarbons or to the amount of four hundred twenty (420)

cubic gigafeet of gaseous Hydrocarbons at standard conditions,

pursuant to numeral 14.2.1 of this clause.

The calculation of factor R for each Commercial Field shall be done

based on the accounting closing corresponding to the calendar month in

which the cumulative control production of sixty (60) million barrels

of liquid Hydrocarbons was reached or the amount of four hundred

twenty (420) cubic gigafeet of gaseous Hydrocarbons at standard

conditions, pursuant to numeral 14.2.1.

The resulting distribution of the production shall be applied until



June 30 of the following year. As of that moment, the distribution of

the production with the application of factor R shall be done in one

year terms (from July 1 to June 30), over its liquidation, based on

the

<PAGE>

20

cumulative values to December 31 of the year immediately preceding

pursuant to the corresponding accounting closing.

14.3



In addition to the tanks and other jointly owned facilities, each

Party shall have the right to build its own production facilities in

the Contract Area for its own and exclusive use in compliance with the

legal regulations. The transportation and delivery of Hydrocarbons by

each Party to the pipeline and to other storage facilities that are

not jointly owned shall be done on the sole account and risk of the

Party that receives the Hydrocarbons.



14.4



When production is obtained in places not connected by pipelines, the

Parties may agree to install pipelines up to a point in which the

Hydrocarbons may be sold, or to a place that connects with the

pipeline. If the parties agree on the construction of such pipelines,

they shall enter the contracts they consider suitable for this purpose

and appoint the Operator pursuant to the legal provisions in force.



14.5



Each Party shall be the owner of the Hydrocarbons produced and stored

as a result of the Operation hereunder and that are made available to

it pursuant to the provisions of this contract, and on its account

each Party must receive them in kind or sell them or dispose of them

separately, according to that established in Clause 14 (numeral 14.3).



14.6



Should any of the Parties be unable for any reason to dispose of or

separately withdraw from the tanks Jointly Account all or part of the

Hydrocarbons it is entitled to pursuant to this contract, the

following procedure must be followed:



14.6.1



If ECOPETROL is the Party unable to withdraw, in all or in part, its

quota of Hydrocarbons (share plus royalties), pursuant to clause 12

(numeral 12.3), the Operator may continue to produce the field and

delivering to the ASSOCIATE, in addition to the portion that the quota

of THE ASSOCIATE represents in the operation on the basis of one

hundred percent (100%) of the MER, all those Hydrocarbons that THE

ASSOCIATE decides to and in the capacity of withdrawing up to a limit

of one hundred percent (100%) of the MER, crediting ECOPETROL for

subsequent delivery, the volume of Hydrocarbons that ECOPETROL had the

right to withdraw but that did not do so. With regard to the not

withdrawn volume of Hydrocarbons to which ECOPETROL is entitled to

during the month for royalties, THE ASSOCIATE, at the request of

ECOPETROL, shall pay ECOPETROL in dollars of the United States of

America, the difference that exists between the amount of Hydrocarbons

that for the concept of royalties ECOPETROL has lifted and the amount

of Hydrocarbons that it is entitled to for the concept of the

royalties to which Clause 13 refers to, being understood that any

withdrawal of Hydrocarbons done by ECOPETROL shall be applied, in

first place to royalty payment in kind, and subsequently, any

additional withdrawals of Hydrocarbons performed shall be applied to

the share that it is entitled to pursuant to Clause 14 (numeral 14.2).



14.6.2



Should THE ASSOCIATE be the Party unable to withdraw, in all or in

part, its quota assigned under Clause 12 (numeral 12.3), the Operator

shall deliver to ECOPETROL, on the basis of one hundred percent (100%)

of MER, not only the share and the quota that corresponds to

ECOPETROL, but also the Hydrocarbons that ECOPETROL is in the capacity

of withdrawing up to a limit of one hundred percent (100%) of MER,



accrediting THE ASSOCIATE for its subsequent delivery, the part that

corresponds to its quota and that it has been unable to withdraw.

<PAGE>

21

14.7



When both parties are in the capacity to receive the Hydrocarbons

assigned under Clause 12 (numeral 12.3), the Operator shall deliver to

the Party that was previously unable to receive its quota of the

production and, upon such Party's request, besides its share in the

operation, a minimum of ten percent (10%) per month of the production

that corresponds to the other Party on a monthly basis and, by mutual

agreement, up to one hundred percent (100%) of the quota that was not

received, up to the time in which the total amounts that were credited

to the Party that was unable to received its Hydrocarbons, are

cancelled.



14.8



Without prejudice of the legal provisions that rule the mater, each

Party shall be free, at any moment, to sell or export its quota of the

Hydrocarbons obtained, as agreed to in this contract, or to dispose of

the same in any manner.



CLAUSE 15 - USE OF THE ASSOCIATED NATURAL GAS

In the case in which one or more fields of associated natural gas are

discovered, the Operator shall, within the three (3) years following to the date

of the initiation of the exploitation of the Field defined by the Ministry of

Mines and energy, submit a project on the use of the Natural Gas for benefit of

the Joint Operation. The Executive committee shall approve the project and, if

necessary, decide on the chronogram for the execution thereof. If the Operator

fails to present any project within the three (3) following years or does not

execute the project previously approved, within the time limits set by the

Executive Committee, ECOPETROL may take, free of charge, for itself, all the

associated natural gas available from the Reservoirs in exploitation, which is

not required for the efficient exploitation of the Field.

CLAUSE 16 - UNIFICATION

When an economically exploitable Reservoir extends continuously into other area

or areas outside the Contract Area, the Operator shall implement, in agreement

with the Parties and with any other interested parties, upon approval of the

Ministry of Mines and Energy, a unified exploitation program that meets the

Hydrocarbons exploitation engineering techniques.

CLAUSE 17 - SUPPLY OF INFORMATION AND INSPECTION DURING THE EXPLOITATION

17.1



The Operator shall deliver to the parties, as they are obtained,

reproducible originals (sepias), and copies of the electric,

radioactive and sonic logs of the wells drilled, historical records,

core analysis, cores, production tests, reservoir surveys and other

relevant technical information, as well as all routine reports made or

received in connection with the operations and activities carried out

in the Contract Area.



17.2



Each Party, at its own cost, expense and risk, shall have the right to

inspect, through authorized representatives, the wells and the

facilities in the Contract Area and the activities related thereto.

Such representatives shall have the right to examine cores, samples,

maps, logs for wells drilled, liftings, books and any other source of

information connected with the performance of this contract.



17.3



To enable ECOPETROL to comply with the provisions of Clause 29, the

Operator shall prepare and deliver to ECOPETROL all reports required

by the National Government.

<PAGE>



22

17.4



The information and data connected with exploitation operations shall

be treated as confidential, in the same way as set forth in Clause 6

(numeral 6.3) of this contract.

CHAPTER IV - EXECUTIVE COMMITTEE



CLAUSE 18 - CONSTITUTION

18.1



Within the thirty (30) calendar days from the acceptance of the first

commercial Field, each Party must appoint a representative and

corresponding first and second alternates, who shall form the

Executive Committee, notifying the other Party in writing of the names

and addresses of its representatives and alternates. Each Party may

replace its representative or alternates at any time, but shall give

written notice thereof to the other Party. The vote or decision of the

principal representative of each Party shall be binding upon such

Party. If the principal representative of any of the Parties is unable

to attend a Committee meeting, the alternate, in its order first or

second, shall attend, and shall have the same authority as the

principal.



18.2



The Executive Committee will hold ordinary meetings during the months

of March, July and November, during which the exploitation program

carried out by the Operator shall be reviewed as well as the

development program and the immediate plans. Every year, at the July

ordinary meeting, the Operator shall present the Executive Committee

with the annual operating program and the investment and expenses

Budget for each Commercial Field, for the next calendar year, and if

it is the case, the Revised Development Program.



18.3



The Parties and the Operator may request a special Executive Committee

Meeting to analyze specific conditions of the operation. The

representative of the interested Party shall notify the date of the

meeting and the issues to be discussed with a ten (10) calendar day's

notice. Any issue not included in the agenda of the meeting may be

discussed during the meeting, upon acceptance of the representatives

of the Parties on the Committee.



18.4



Each Party's representative shall have a vote in all matters discussed

in the Executive Committee, equivalent to the percentage of that

Party's total Interests in the Joint Operation. However, the decisions

of the Executive Committee on the issues set forth in numerals 19.3.4

through 19.3.9 of Clause 19 of this contract, shall be adopted by a

unanimous vote of the Parties.

Any decisions taken by the Executive Committee, set forth in the

procedure established in this clause, shall be binding and final upon

the Parties and the Operator.



CLAUSE 19 - FUNCTIONS

19.1



The representatives of the Parties shall form the Executive Committee

which shall have full authority and responsibility to establish and

adopt exploitation, development and operations programs and Budgets in

relation with this contract. A representative of the Operator shall

attend the meetings of the Executive Committee.

<PAGE>

23

19.2



The Executive Committee shall designate a Secretary for each session.

The Secretary shall take full, detailed records and minutes of all the



meetings, including a summary of the discussions and decisions taken

by the Committee. The Minutes shall be approved and signed by the

representatives of the Parties within the ten (10) working days

following the adjournment of the meeting and delivered to the Parties

as soon as possible.

19.3



The responsibilities of the Executive Committee are, amongst others,

as follows:



19.3.1



Adopt its own regulations.



19.3.2



Decide on those issues that the Operator submits for its

consideration.



19.3.3



Supervise the performance of the Joint Account and of the Joint

Operation



19.3.4



Create the necessary sub-committees and establish the functions they

must perform under its direction.



19.3.5



Appoint the Operator in case of resignation or discharge, and dictate

the regulations that the Operator must fulfill when he is a third

person different from the Parties, definitely stating the motives for

his discharge.



19.3.6



Appoint an External Auditor of the Joint Account.



19.3.7



Approve or reject the Development Plans and any subsequent

modification or revision.



19.3.8



Determine the rules and policies on expenditures.



19.3.9



Approve or reject the projects, programs and the annual Budget of each

Commercial Field and authorize extraordinary expenditures not included

in the approved Budgets.



19.3.10



In general, to carry out all the functions authorized in this contract

that do not correspond to the Operator, to any other entity or person

under the specific clause hereof or under a legal or regulatory

provision.



CLAUSE 20 - DECISION IN CASE OF DISAGREEMENTS

20.1



Any disagreement that cannot be solved in the Executive Committee,

shall be directly submitted to the highest ranking executive of each

of the Parties resident in Colombia, in order to reach a joint

decision. If within the sixty (60) calendar days following the

submission of the consultation, the Parties reach an agreement or a

decision on the issue under discussion, they shall so advise the

Operator, who, within the fifteen (15) calendar days following the

receipt of the communication, shall call the Executive Committee to an

extraordinary meeting, during which the agreement or decision adopted

shall be approved.



20.2



If within the sixty (60) calendar days following to the date of the

presentation of the consultation to the highest ranking executive of

each of the Parties resident in Colombia, the Parties fail to agree on

the issue, the procedures set forth in Clause 28 of this contract must

<PAGE>

24

be followed, except if concerning issues related to the operations, in

which case they may be executed pursuant to Clause 21.



CLAUSE 21 - OPERATIONS UNDER RISK OF ONE OF THE PARTIES

21.1



If at any time one of the Parties wishes to drill an Exploitation Well

not approved in the operations program, it shall notify the other

Party written notice not less than thirty (30) calendar days in

advance of the next Executive Committee meeting, of its wish to drill

such well, including information such as location, recommendation to

drill, and estimated depth and costs. The Operator shall include such

a proposal among the issues to be discussed in the next Executive

Committee Meeting. If such proposal is approved by the Executive

Committee such well shall be drilled at the expense of the Joint

Account. If such proposal is not accepted by the Executive Committee,

the Party wishing to drill such well, hereinafter called participating

Party, shall have the right to drill, complete, produce or abandon

such well at its sole cost and risk. The Party not wishing to

participate in the previous operation shall be called the

non-participating Party. The participating Party must begin the

drilling of such well within one hundred eighty (180) days following

its rejection by the Executive Committee. If the drilling is not

commenced within said period, it must again be submitted to the

Executive Committee for its consideration. Upon request of the

participating Party, the Operator shall drill the previously mentioned

well on account and risk of the participating Party, provided that by

judgment of the Operator such operation does not interfere with the

normal development of the operations of the field, upon advance

payment to the Operator by the Participant Party of such amounts as

the Operator may deem necessary in order to drill. If said well is

unable to be drilled by the Operator without interfering in the normal

development of the operations, the participating Party shall have the

right to drill such well directly or through a competent service

company and, in this case, the participating Party shall be

responsible for such operation, without interfering with the

development of the normal operations in the Field.



21.2



If the well referred to in Clause 21 (numeral 21.1) is completed as a

producing well, it shall be administered by the Operator and the

production of such well, after deducting the royalties referred to in

Clause 13, it shall become the property of the participating Party,

who shall pay for all the operation costs of such well until the net

production value, after deducting the production costs, gathering,

storage, transportation and similar costs, as well as sale costs, is

equal to two hundred percent (200%) of the drilling and completing

cost of such well, which thereupon and for the purposes of this

contract shall become the property of the holders of the Joint Account

in the proportion established, as if it had been drilled with the

approval of the Executive Committee for the account of both Parties;

for such purpose the investments done and the costs incurred, in the

exploitation of this well shall become part of Factor R of the

Commercial Field. For the purpose of the present Clause, the value of

each barrel of Hydrocarbons produced in such well, during a calendar

month, before deducting the previously mentioned costs, shall be the

reference price agreed by the Parties.



21.3



If at any time one of the Parties decides to workover, deepen up to

the Production Objectives or plug a well that is not in commercial

production or a dry well drilled by the Joint Account, and if such

operations have not been included in a schedule approved by the

Executive Committee, such Party shall notify the other Party of its

intention to workover,

<PAGE>

25

deepen or plug such well. If in the location there is no equipment,

the procedure mentioned in Clause 21 (numerals 21.1 and 21.2) shall be



enforced. If at the well site there is adequate equipment to perform

the operations proposed, the Party that receives the notification of

the operations that the other Party wishes to carry out, shall have a

term of forty eight (48) hours following the receipt of the notice, to

approve or disapprove the operation, if during such term no answer

whatsoever is received, it is understood that the operation shall be

done on account and at the risk of the Joint Account. If the work

proposed is carried out on account and sole risk of one participating

Party, the well shall be administered pursuant to Clause 21 (numeral

21.2).

21.4



If at any time one of the Parties wishes to build new facilities for

the extraction of liquids from the gaseous Hydrocarbons and for the

transportation and export of the Hydrocarbons produced, to be called

additional facilities, such Party shall so advise the other in writing

giving the following information:



21.4.1



General description, design, specifications and estimated costs of the

additional facilities.



21.4.2



Projected capacity.



21.4.3



Approximate date of the initiation of the construction and duration of

the same. Within ninety (90) calendar days from the date of

notification, the other Party, by written notice, has the right to

decide if it participates in the additional facilities projected. In

case in which such Party decides not to participate in the additional

facilities, or gives no answer to the proposal of the participating

Party, from hereinafter referred to as the constructing Party, it may

proceed with the additional installations and order the Operator to

build, operate and maintain such facilities at the exclusive cost and

risk of the constructing Party, without prejudice to the normal

development of the Joint Operations. The constructing Party may

negotiate with the other Party the use of such facilities for the

Joint Operation. During the time in which the facilities are operated

on the constructing Party sole account and risk, the Operator shall

charge this party all operation and maintenance costs of the

additional facilities pursuant to the accounting standards generally

accepted.

CHAPTER V - JOINT ACCOUNT



CLAUSE 22 - HANDLING

22.1



Without prejudice to any provisions contained herein, the expenses

covering Exploration Operations shall be on account and risk of THE

ASSOCIATE.



22.2



As from the time ECOPETROL accepts the existence of a Commercial Field

and subject to the provisions in Clause 5 (numeral 5.2) and of Clause

13 (numerals 13.1 and 13.2), the property of the rights or Interest in

the Operation of the Contract Area, shall be divided as follows:

ECOPETROL fifty percent (50%), THE ASSOCIATE fifty percent (50%). From

the moment of such acceptance, all expenses, payments, investments,

costs and obligations incurred in and contracted for the development

of the Joint Operation, in agreement with this contract, shall be

charged to the Joint Account and the Direct Exploration Costs done by

THE ASSOCIATE before a Commercial Field is accepted and its

extensions, pursuant to Clause 9 (numeral 9.9), shall be registered in

the Joint Account. Except for that established

<PAGE>

26

in Clauses 14 (numerals 14.3) and 21, all properties acquired or used



from there on for the fulfillment of the operation activities of the

Commercial Field shall be paid for and belong to the Parties, in the

same proportion established in the present clause.

22.3



Within the first five (5) days of each month, the Parties shall supply

the Operator, in the bank account of the Joint Account, the quota that

corresponds them in the Budget of each Commercial Field pursuant to

the needs and in the currency in which the expenses must be made in,

meaning, in Colombian pesos or in dollars of the United States of

America, as per request of the Operator pursuant to the programs and

Budgets approved by the Executive Committee. When THE ASSOCIATE has

insufficient Colombian pesos to cover the quota that corresponds it

from its share in this currency, ECOPETROL shall have the right to

supply such pesos and to receive a credit for the contributions it

must make in dollars, liquidated at the market rate certified by the

Superintendencia Bancaria or by the corresponding authority, of the

day in which ECOPETROL must make the corresponding contribution, when

such transaction is allowed by the legal provisions.



22.4



The Operator shall present a monthly statement to the Parties within

the ten (10) calendar days following the termination of each month,

showing the funds advanced, expenses incurred, outstanding liabilities

and a report on other debits and credits made to Joint Account; this

report that shall be done as set forth in Annex "B", and in an

independent Annex, the parameters and calculation of factor R as

mentioned in Clause 14 (numerals 14.2.3 and 14.2.4). If the payments

to which Clause 22 (numeral 22.3) refer to are not made within the

term therein set forth and the Operator decides to cover the same, the

Debtor Party shall pay the commercial interest in the same currency in

which the payment has been incurred for the period of time for which

the payment has been delayed.



22.5



Should either party, in a timely manner, fails to supply the Joint

Account with the sums due and payable, as of the due at date such

Party shall be considered as a Debtor Party, and the other Party, as

the Prompt Party. If the Prompt Party has made the corresponding share

to the Debtor Party, in addition to its own, after sixty (60) calendar

days of delay such Party shall have the right to have the Operator

issue it the total participation of the Debtor Party, in the Contract

Area (excluding the percentage that corresponds to the royalty), up to

an amount of production that shall allow the Prompt Party a net income

for the sales made equal to the sums not paid by the Debtor Party,

plus an annual interest equal to the Interest in Arrears after of

commencement of default.. By "net income" it is understood the

difference between the sales price of the Hydrocarbons taken by the

Prompt Party, less cost for transportation, storage, loading and other

reasonable expenses incurred in by the Prompt Party in the sale of the

products taken. The right of the Prompt Party may be exercised at any

time after thirty (30) calendar days from having notified the Debtor

Party in writing of its intention to take part or all of the

production shares that correspond to the Debtor Party.



22.6



Direct and Indirect Expenses.



22.6.1



All Direct Expenses of the Joint Operation shall be charged to the

Parties in the same proportion in which the production is distributed

after the royalties.



22.6.2



The indirect Expenses shall be charged to the Parties in the same

proportion established in numeral 22.6.1 of the present Clause for

Direct Expenses. The amount of these

<PAGE>

27



expenditures shall be the result of taking the total annual value of

the investments and direct expenditures (excluding the technical and

administrative supports) and apply the equation a + m (X-b). In this

equation "X" is the total value of the annual investments and

expenditures, and "a", "m" and "b" are constants which values are

shown in the following chart with relation to the amount of annual

investments and expenditures:

AMOUNT OF INVESTMENTS AND EXPENSES

"X" (US$)

1.

2.

3.

4.

5.

6.

7.



0

25.000.001

50.000.001

100.000.001

200.000.001

300.000.001

400.000.001



to

to

to

to

to

to

on



25.000.000

50.000.000

100.000.000

200.000.000

300.000.000

400.000.000



"a" (US$)

0

2.500.000

4.500.000

8.000.000

14.000.000

18.000.000

20.000.000



VALUES OF THE CONSTANT

M (frac.)

"b"(US$)

0.10

0.08

0.07

0.06

0.04

0.02

0.01



0

25.000.000

50.000.000

100.000.000

200.000.000

300.000.000

400.000.000



The equation shall be applied only one time per year, in each case

with the value of the constants that correspond to the total value of

the annual investments and expenditures.

22.7



The monthly statements of the account referred to in Clause 22

(numeral 22.4) may be revised or objected by any of the Parties from

the time they are received by the Parties up to two (2) years counted

from the end of the calendar year to which they pertain to, clearly

specifying the corrected or questioned entries and the reason thereof.

Any account that has not been corrected nor objected within this

period, shall be considered as final and correct.



22.8



The Operator shall keep the accounting records, vouchers and reports

for the Joint Account in Colombian pesos pursuant with the Colombian

laws and every debit or credit to the Joint Account shall be made

pursuant to the accounting procedure established in Annex "B", that is

part of this contract. In case of disagreement between such accounting

procedure and that established in this contract, that stipulated in

this later one shall prevail.



22.9



The Operator may sell materials or equipment during the first twenty

(20) years of the Exploitation Period or the first twenty eight (28)

years of the Exploitation Period, if it concerns a Gas Field, for the

benefit of the Joint Account, when the value of that sold does not

exceed five thousand dollars of the United States of America

(US$5.000) or its equivalent in Colombian pesos. This type of

operations, per calendar year may not exceed the amount of fifty

thousand dollars of the United States of America (US$50.000) or its

equivalent in Colombian currency. The sales in excess of these amounts

or sales of real property shall be approved by the Executive

Committee. The sale of such material or equipment shall be done at a

reasonable commercial price pursuant to the conditions wear of the

asset.

<PAGE>

28

22.10



Any machinery, equipment and other assets or personal property

acquired by the Operator for the execution of this contract, charged

to the Joint Account, shall be the property of the Parties in the same

proportion to their Interest in the Operation. However, if one of the

Parties has decided to terminate its interest in the contract prior to

the end of the first seventeen (17) years of the Exploitation Period,

with the exception of that established in Clause 25, such Party is

obliged to sell its interest in such items to the other Party, at a

price commercially reasonable or at book value, which ever is lower.



Should the other Party not wish to purchase such items within the

ninety (90) calendar days following the formal offer of sale made to

it, the Party wishing to withdraw shall have the right to yield to a

third person the Interest that corresponds it in such machinery,

equipment and items. If THE ASSOCIATE decides to withdraw after

seventeen (17) years of the Exploitation Period, its rights in the

Joint Operation shall pass to ECOPETROL free of charge, previous its

acceptance.

CHAPTER VI - DURATION OF THE CONTRACT

CLAUSE 23 - MAXIMUM DURATION

This contract shall have a maximum duration of twenty eight (28) years, counted

as from its Effective Date distributed as follows: up to six (6) years as an

Exploration Period pursuant to Clause 5 without prejudice of that set forth in

Clause 5 (numeral 5.4) and in Clause 9 (numeral 9.3); and twenty two (22) years

as an Exploitation Period as from the date of the termination of the Exploration

Period. It is understood that in the events contemplated in this contract, in

which the Period of Exploration is extended, in no case, shall the total term of

twenty eight (28) years be extended.

Paragraph 1: The Exploitation period for the Gas Fields that are discovered

within the Contract Area shall have a maximum duration of thirty (30) years as

from the date of expiration of the Exploration Period or of the Retention Period

granted. In any case, the total term of the contract for such Fields may not

exceed forty (40) years from its Effective Date.

Paragraph 2: Notwithstanding the afore mentioned, ECOPETROL and THE ASSOCIATE,

with an anticipation not less than five (5) years to the date of expiration of

the Exploitation Period of each Field, shall study the conditions to continue

with its exploitation subsequent to the term to which this Clause refers to. In

such case in which the Parties agree to continue such exploitation, they shall

define the terms and conditions within which it shall be performed.

CLAUSE 24 - TERMINATION

This contract shall be terminated in any of the cases hereinafter mentioned and

in which the rights of THE ASSOCIATE mentioned in this contract shall stop, both

as interested Party, and in its character of Operator, if at the time of the

expiration the two qualities mentioned concur in THE ASSOCIATE.

24.1



Due to the expiration of the Exploration Period without THE ASSOCIATE

having discovered a Commercial Field, except for that provided in

Clauses 5 (numeral 5.4), 9 (numerals 9.5) and 34.

<PAGE>

29

24.2



Upon expiration of the term of the duration of the contract as set

forth in Clause 23.



24.3



At any time at THE ASSOCIATE' s will, upon fulfillment of its

obligations as set forth in Clause 5 and of any others entered into

hereunder, up to the date of its expiration.



24.4



If THE ASSOCIATE assigns this contract, fully or in part, without

having fulfilled that set forth in Clause 27.



24.5



By not fulfilling the obligations acquired by THE ASSOCIATE pursuant

to this contract.



24.5.1



ECOPETROL may not end this contract until after sixty (60) calendar

days of having notified THE ASSOCIATE or its assignees in writing,

clearly specifying the causes invoked to make such a declaration and



only if the other Party has not presented the satisfactory

explanations to ECOPETROL or if THE ASSSOCIATE has not corrected the

failure in the fulfillment of the contract, without prejudice of the

right of THE ASSOCIATE to present the legal resources it considers

convenient.

24.5.2



If within the term previously mentioned THE ASSOCIATE presents the

satisfactory explanations to ECOPETROL and the remaining term to

complete the time of sixty (60) calendar days is insufficient to

fulfill the pending obligations pursuant to the good oil industry

practices, the Parties may agree on an additional term to allow such

fulfillment, without prejudice of the right of ECOPETROL to demand the

necessary guarantees to support it. If at the end of this term the

operations agreed on have not been fulfilled, ECOPETROL shall

terminate the contract.



24.6



At any time by mutual agreement of the Parties.



24.7



By the unilateral causes for termination mentioned in Clause 25.



CLAUSE 25 - CAUSES FOR UNILATERAL TERMINATION

25.1



ECOPETROL may unilaterally declare this contract terminated, at any

time before the expiration of the period set forth in Clause 23, in

the following instances.



25.1.1



By death or permanent physical disability or judicial interdiction of

THE ASSOCIATE, if a natural person.



25.1.2



By initiation of a process of liquidation of THE ASSOCIATE if a

juridical person.



25.1.3



By legal injunction of THE ASSOCIATE that seriously affects the

fulfillment of the contract.



25.1.4



When THE ASSOCIATE is conformed by several legal and/or natural

persons, the causes in numerals 25.1.1 and 25.1.2 shall be applied

when they seriously affect the fulfillment of the contract.



25.2



In the case of declaration of a unilateral termination, the rights of

THE ASSOCIATE mentioned in this contract shall end, both as interested

Party to the Contract, and as

<PAGE>

30

operator, if at the time of the declaration of a unilateral

termination the two qualities mentioned concur in THE ASSOCIATE.

CLAUSE 26 - OBLIGATIONS IN CASE OF TERMINATION

26.1



Upon termination of the contract pursuant to Clause 24, either in the

Exploration, Retention or Exploitation periods, THE ASSOCIATE shall

leave in production any wells that are then producing and restitute

the facilities, transfer pipelines and other real property of the

Joint Account (located in the Contract Area), all of which, shall pass

free of charge to ECOPETROL with the any rights of ways and assets

obtained to the exclusive benefit of the contract, even though the

former or the latter be located outside of the Contract Area.



26.2



If this contract is terminated for any reason after the first

seventeen (17) years of the Exploitation Period, all Interest of THE

ASSOCIATE in the machinery, equipment or other assets or facilities

used or obtained by THE ASSOCIATE or by the Operator for the execution

of this contract, shall pass to ECOPETROL free of charge.



26.3



If this contract is terminated before the seventeen (17) years of the

Exploitation Period, that set forth in Clause 22 (numeral 22.10) shall

be applied.



26.4



In case this contract is terminated by a declaration of a unilateral

termination issued at any time, all the real and personal property

acquired for the sole benefit of the Joint Account shall pass to

ECOPETROL free of charge.



26.5



Upon termination of this contract by any cause and at any time, the

Parties are obliged to satisfactorily fulfill their legal obligations

between each other and before Third Parties and those acquired in this

contract.

CHAPTER VII - VARIOUS PROVISIONS



CLAUSE 27 - RIGHTS OF ASSIGNMENT

27.1



THE ASSOCIATE shall be entitled to assign or transfer all or part of

its interests, rights and obligations originated from this contract,

with the previous written authorization of ECOPETROL, to another

person, company or group that has the financial capacity, the

technical competence, the necessary professional abilities and legal

capacity to act in Colombia.

For such purpose, THE ASSOCIATE shall submit a written request to

ECOPETROL, indicating the essential elements of the negotiation, such

as the name of the possible assignee, information on his legal,

financial, technical and operational capacities, the cost of the

rights and obligations to be assigned, scope of the operation, etc.

Within the sixty (60) working days following the receipt of the

request, submitted in a complete form, ECOPETROL, shall exercise the

discretional faculty to study the information supplied by THE

ASSOCIATE, after which it shall adopt its determination, without being

obliged to motivate it.



27.1.1



When the assignments are in favor of companies that control or direct

THE ASSOCIATE, or of any one of the companies that integrate it or

their affiliates or subsidiaries, or between

<PAGE>

31

companies that conform the same economic group, it shall be sufficient

to previously and timely notify ECOPETROL on the essential elements of

the negotiation previously mentioned.

27.1.2



The operations performed under the development of this clause, and

that pursuant to the Colombian Legal Tax legislation, are taxable,

shall cause the payment of the corresponding taxes.

Paragraph: When THE ASSOCIATE is conformed by more than one company

and one of them wishes to totally or partially assign its interests,

rights and obligations in the contract pursuant to this clause, it

must give preference to the other companies that integrate THE

ASSOCIATE, offering them, before doing so to Private Parties, the

interests, rights and obligations it wishes to assign, unless the

companies that conform THE ASSOCIATE have agreed otherwise.

CLAUSE 28 - DISAGREEMENTS



28.1



In the event of any discrepancies or inconsistencies in the

interpretation of the Clauses of this contract with relation to those

set forth in Annex "B" called the "Operating Agreement", those



stipulations of the first shall prevail.

28.2



The disagreements that arise between the Parties on matters of rights

related with the interpretation and execution of the contract and that

cannot be solved in a friendly way, are subject to the knowledge and

decision of the legal branch of the Colombian public authorities.



28.3



Any difference as to the facto or technical matters that may arise

between the parties hereto as a result of the interpretation or

application of this contract and that cannot be solved in a friendly

manner, shall be subject to a final decision of experts appointed as

follows: one by each Party and, the third one, appointed by mutual

agreement by the principal experts appointed. Should these two fail to

reach an agreement as to the appointing of the third, the latter shall

be designated upon request of either Parties by the Board of Directors

of the Sociedad Colombiana de Ingenieros "SCI" (Colombian Society of

Engineers), with offices in Bogota, D.C.



28.4



Any differences of an accounting nature that may arise between the

Parties hereto by reason of the interpretation and implementation of

the contract, which cannot be solved in a friendly manner, shall be

referred for the decision of experts who shall be professional public

accountants designated as follows: one by each Party and, the third

appointed by the two principal experts; should these fail to reach an

agreement and by request of any of the Parties, such third expert

shall be designated by the Central Board of Accountants of Bogota

(Junta Central de Contadores de Bogota).



28.5



Both parties declare that the experts decision shall have all the full

effect of a settlement between them and in consequence, such decision

shall be final.



28.6



In case of disagreement between the Parties on the technical,

accounting or legal nature of the controversy, it shall be considered

legal and Clause 28 (numeral 28.2) shall be applied.

<PAGE>

32

CLAUSE 29 - LEGAL REPRESENTATION

Without prejudice to THE ASSOCIATE's legal rights and as a consequence of the

legal provisions or of the clauses of this contract, ECOPETROL shall represent

the Parties before the Colombian authorities on any matters concerning the

exploitation of the Contract Area whenever it is necessary, and shall supply the

officers and government entities with all the data and reports that may be

legally required. The Operator shall be obliged to prepare and supply ECOPETROL

with the corresponding reports. Any expenses incurred in by ECOPETROL to attend

any matter to which this Clause refers to, shall be charged to the Joint

Account, and when such expenses exceed five thousand dollars of the United

States of America (US$5.000) or its equivalent in Colombian currency, the

previous approval of THE ASSOCIATE is required. The Parties declare, for any

relation with Third Parties, that neither that established in this Clause nor in

any other of this contract, shall imply the granting of a general power of

attorney, moreover that the Parties have constituted a civil or commercial

association or any other relationship under which, any of the Parties may be

considered as jointly and severally liable for the acts or omissions of the

other party or as having authority or mandate that may be binding upon the other

Party in relation to any obligation. This contract is concerned to the

activities within the territory of the Republic of Colombia, and even though

ECOPETROL is a Colombian State-Owned and industrial company, the Parties agree

that THE ASSOCIATE, given the case, may choose to be excluded from the

enforcement of all the provisions of Sub-chapter K titled PARTNERS AND

PARTNERSHIPS of Internal Revenue Code of the United States of America. THE

ASSOCIATE shall make such election on its behalf and in the appropriate manner.



CLAUSE 30 - RESPONSIBILITIES

30.1



The liabilities Contracted hereunder by ECOPETROL and by THE ASSOCIATE

with relation to Third Parties shall not be joint and, in consequence,

each Party shall be separately liable for its share in the expenses,

investments and obligations that may result as a consequence of such

liabilities.



30.2



Environmental Management. During the performance of all of the

activities provided for in the contract, THE ASSOCIATE or the

Operator, shall on time comply with the provisions of the National

Code on Natural Renewal Resources and Environmental Protection, issued

by the Colombian Government, as well as with all other relevant legal

regulations. Also, motivate among their contractors, suppliers,

intermediaries, and/or workers working in benefit of this contract,

the conservation of a healthy environment, taking the necessary

precautions to protect the environment, human life and property of

others and prevent the contamination of the Contract Area. From the

beginning of this contract, THE ASSOCIATE shall elaborate a general

diagnostic on the environmental and social reality of the zones where

the Exploration Operations shall be executed and shall establish the

communication channels with the authorities and communities of the

area.

THE ASSOCIATE is obliged to execute a permanent preventive program to

guarantee the preservation and restoration of the natural resources

within the zones where the operations of Exploration, exploitation and

transportation set forth in this contract are carried out.



Such plans and programs must be made known by THE ASSOCIATE to the

national and regional communities and entities related to this issue.

Also, specific contingency programs must be established to face those

emergencies that may occur and to carry out the

<PAGE>

33

necessary remedial actions. For such effect, THE ASSOCIATE must

coordinate such plans and actions with the competent authorities.

The respective programs and Budgets must be prepared by THE ASSOCIATE

pursuant to the corresponding Clauses of this contract.

All costs caused shall be assumed by THE ASSOCIATE during the

Exploration Period and in the exploitation under the modality of sole

risk, and by both Parties with charge to the Joint Account in the

Exploitation period.

CLAUSE 31 - TAXES, CHARGES AND OTHERS

The taxes and charges accrued after the opening of the Joint Account and before

the Parties receive their production share, chargeable to the exploitation of

Hydrocarbons, shall be charged to the Joint Account. Income, patrimony and

supplementary or presumptive taxes, shall be to the sole account of each of the

Parties as applicable to each of them.

CLAUSE 32 - PERSONNEL

32.1



When THE ASSOCIATE is the Operator, the assignment of the Manager of

the Operator shall be previously consulted with ECOPETROL.



32.2



Pursuant to the terms of this contract and subject to the regulations

established, the Operator in his condition as the sole and true

employer, shall have the autonomy to assign the personnel required for



the operations hereunder, being able to set the salaries, duties,

ranks and conditions. The Operator shall adequately and diligently

train the Colombian personnel required to replace the foreign

personnel that the Operator considers necessary for the performance of

the operations of this contract. In any case, the Operator must

fulfill all the legal provisions that show the proportion of national

and foreign employees and workmen.

32.3



Technological Transfer - THE ASSOCIATE is obliged to pay for or

perform at its cost the training programs for the professionals of

ECOPETROL in areas related to the development of the contract.

For the fulfillment of this obligation in the Exploration Period, the

training may also be in the areas of geology, geophysics and related

areas, evaluation of Reservoirs and characterization of reservoirs,

drilling and production. The supervised training shall be done

throughout the entire Exploration Period of six (6) years and during

its extensions, by integrating the professionals that are assigned by

ECOPETROL, to the work group organized by THE ASSOCIATE for the

Contract Area or for other activities handled by THE ASSOCIATE.

To be able to choose to resign as set forth in Clause 5 of this

contract, THE ASSOCIATE must have previously fulfilled the training

programs herein mentioned.



During the Exploitation Period, the scope, duration, place,

participants, training conditions and other aspects, shall be

established by the Executive Committee of the Company.

<PAGE>

34

All costs for guided training, with the exception of those of work

caused in favor of the professionals that receive it, shall be assumed

by THE ASSOCIATE in the Exploration Period and by both parties with

charge to the Joint Account in the Exploitation Period.

PARAGRAPH: To fulfill all of the Technological Transference

obligations pursuant to that herein mentioned, during the first three

(3) years of the Exploration Period and for each year, THE ASSOCIATE

is committed to carry out programs of guided training and technical

exchanges for professionals of ECOPETROL in the areas of joint

interest up to a value of forty thousand dollars (US$40.000) per year.

The subject and type of program shall be previously agreed to between

ECOPETROL and THE ASSOCIATE. In the event that the Exploration Period

is extended, the guided training shall consist of similar programs to

that herein considered.

CLAUSE 33 - INSURANCES

THE ASSOCIATE or the Operator shall obtain all the insurances required by the

Colombian laws. Also, it shall require that each contractor performing any type

of work during the development of this contract obtain all the insurances

considered necessary, that must be maintained in force. Also, the Operator shall

take all other insurances that the Executive Committee considers necessary.

At the expiration of this contract, at any moment during the exploitation period

or by expiration of a term set forth in clause 23, the Operator and/or THE

ASSOCIATE shall constitute an insurance policy that guarantees the payment of

salaries, benefits and indemnifications and other working credits for eventual

legal sentences derived from claims of the workers contracted by the Operator in

his condition as a sole and true employer of the same and during the time of

operation of the Commercial Field. The life of the policy shall not be less than

three (3) years as of the date of the termination of the Association Contract

and the sum insured shall be decided by the Executive Committee, subject to that



ordered in the labor regulations that apply to the respective labor contracts.

CLAUSE 34 - FORCE MAJEURE OR ACT OF GOD

The obligations to which this contract refer to shall be suspended for the time

in which any of the Parties is unable to fulfill them in whole or in part, due

to unforeseeable events that constitute a force majeure or Act of God, such as

strikes, lockouts, wars, earth quakes, floods or other catastrophes, laws or

government regulations or decrees that hinder the provision of essential

material and, in general, any non financial motive that really impedes the work,

even when not previously mentioned, but that affects the Parties and that is out

of their control. Should either Party be unable to fulfill its obligations with

this contract due to force majeure or Act of God, it must immediately notify the

other Party, for its consideration, specifying the causes of its impediment. In

no case can the events of force majeure or Act of God extend or prolong the

total period of exploration, retention and exploitation beyond a maximum

duration of the contract pursuant to that set forth in Clause 23, but any

impediment of force majeure during the period of six (6) years of exploration

set forth in Clause 5, which duration is more than sixty (60) consecutive days,

shall extend this period of six (6) years for the same period of the duration of

the impediment.

<PAGE>

35

CLAUSE 35 - APPLICATION OF THE COLOMBIAN LAWS

The Parties set the city of Bogota, D.C., Republic of Colombia for any purposes

hereunder. This contract is governed ruled in all of its parts by the Colombian

laws and THE ASSOCIATE abides by the jurisdiction of the Colombian Courts and

waives any diplomatic claim in respect to its rights and obligations hereunder,

except in the case of denial of justice. Denial of justice shall not be deemed

to exist when THE ASSOCIATE in its condition as a Party or as Operator has had

access to all the resources and ways of action that, pursuant to the Colombian

laws, may be used before a jurisdictional branch of the public power.

CLAUSE 36 - NOTIFICATIONS

Notices or communications between the Parties hereto in relation to this

contract, shall require for their validity mentioned or the pertinent clauses

and shall be sent to the representatives or delegates assigned by the Parties to

the following addresses: ECOPETROL: Carrera 13 No. 36.24, Bogota, D.C.,

Colombia. To THE ASSOCIATE: Calle 114 No. 9-01 Bogota, D.C., Colombia. The

change of address and of representative shall be notified to the other Party in

advance.

CLAUSE 37 - VALUATION OF THE HYDROCARBONS

The payments or Reimbursements set forth in Clauses 9 (numerals 9.2 and 9.4) and

22 (numeral 22.5), shall be made in dollars of the United States of America, or

in Hydrocarbons based on the price in effect and with the limitations

established or that may be established by the Colombian legislation for the sale

of that portion of the Hydrocarbons payable in dollars, originated from the

Contract Area, and to be refined within the national territory.

CLAUSE 38 - PRICES FOR HYDROCARBONS

38.1



The Hydrocarbons to which THE ASSOCIATE is entitled to in the

development of this contract, to be refined or used in internal

supply, shall be paid when situated at the refinery where they shall

be processed or at the station where they are received as agreed to by

the Parties, pursuant to the government rules and regulations in force

or those that substitute them.



38.2



The differences that arise from the application of this Clause shall



be solved through the systems established in this contract.

CLAUSE 39 - DELEGATION AND ADMINISTRATION

The PRESIDENT of EMPRESA COLOMBIANA DE PETROLEOS - ECOPETROL appoints the

administration of this contract in the Vice-President of Exploration and

Production, pursuant to the rules and Reglementary provisions of ECOPETROL, with

faculties to execute all the matters concerning the development of this

Contract. The Vice-President of Exploration and Production is authorized to

perform this assignment through the Assistant Vice-Presidents of Exploration and

Production.

<PAGE>

36

CLAUSE 40 - LANGUAGE

For all effects and acts related to this contract, the official language is

Spanish.

CLAUSE 41 - VALIDITY

To be valid, this contract requires the approval of the Ministry of Mines and

Energy.

In witness whereof, it is signed in Bogota, D.C., before witnesses, on the

twentieth (20) day of the month of December of the year two thousand (2001).

EMPRESA COLOMBIANA DE PETROLEOS

ECOPETROL

(Signed) illegible

ALBERTO CALDERON ZULETA

President

HARKEN DE COLOMBIA LIMITED

(Signed) illegible

GABRIEL GUSTAVO CANO VELASQUEZ

Principal Legal Representative

WITNESSES

(Signed) Illegible

VICTOR EDUARDO PEREZ

<PAGE>



(Signed) Illegible

ALBERTO TOVAR

37

CAJARO SECTOR

ANNEX A



<PAGE>

38

ANNEX A

CONTRACT AREA

ANNEX TO THE ASSOCIATION CONTRACT OF THE CAJARO SECTOR

The area of the polygon formed by the vertices mentioned hereinafter is of

thirty four thousand one hundred ninety five (34.195) hectares with seven

thousand fifty eight (7.058) square meters and is located within the municipal

jurisdiction of Mani in the department of Casanare. The cartographic information

was taken from the Political Map of Colombia, digital file of the I.G.A.C., at a

scale of 1:1'500.000.



The Contract Area is described as follows and, as it appears on the map enclosed

as Annex "A", that is part of this contract, as well as the corresponding

charts: The Geodesic Vertex "RECREO- 912" of the Agustin Codazzi Geographical

Institute has been taken as the point of reference, which flat GAUSS coordinates

with origin Bogota are: N-1'051.829,47 meters, E-1'158.055,62 meters, that

correspond to the geographic coordinates Latitude 05(0) 03'58"0,207 to the North

of the Equator, Longitude 72(0) 39'20"0,698 West of Greenwich. From this vertex

it bears S 50(0) 43'3"0,552 E for a distance of 70.494,393 meters until reaching

point "A" start off point of boundaries which coordinates are N-1007.196,48

meters, E-1'212.620,77 meters. From this point it bears S 67(0) 33'25"0.116 E

for a distance of 3.709,75 meters until reaching point "B", which coordinates

are N- 1'005.780,23 meters, E-1'216.049,54 meters. The line "A-B" is contiguous

in all of its extension with line "C-B" of the Alcaravan Association Contract

operated by Harken. From this point it bears S 58(0) 57'42"0.358 E for a

distance of 18.968, 27 meters until reaching point "C" which coordinates are

N-996.000,00 meters, E 1'232.302,00 meters. From this point it bears S 54(0)

42'41"0.066 W for a distance of 22.725,46 meters until reaching point "D" which

coordinates are N-982.871,61 meters, E- 1'213.752,28 meters. The point "D" is

contiguous with point "D" of the Vuelta Laraga Association Contract operated by

the Emerald company. From this point it bears N 23(0) 38'28"0.601 W for a

distance of 9.395,40 meters until reaching point "E" which coordinates are

N-991.478,49 meters, E- 1'209.984,64 meters. From this point it bears N 51(0)

1'59"0.565 W for a distance of 9.036,48 meters until reaching point "F", which

coordinates are N- 997.161,26 meters, E- 1'202.958,68 meters. From this point it

bears N 43(0) 54'53"0.153 E for a distance of 13.930,60 meters until reaching

point "A" start off point and closure of the boundaries. Lines "D-E", "E-F" and

"F-A" are contiguous in all their extension with lines "O-N", "N-M" and "M-L" of

the Bicudo Association Contract operated by the Braspetro company.

<PAGE>

39

ANNEX -A

EMPRESA COLOMBIANA DE PETROLEOS

Calculation of Area, courses and

Distances as of Gauss Coordinates. Origin Bogota

Data and Results Chart for the CAJARO Sector

Municipal Jurisdiction of Mani in the Department of Casanare

POINT Coord. N. Coord. E. Distance Dif.N. Dif. East Courses

<PAGE>

40

ANNEX B TO THE OPERATIONS AGREEMENT

ANNEX TO THE ASSOCIATION CONTRACT

FOR THE "CAJARO" SECTOR

Entered into by the Empresa Colombiana de Petroleos - ECOPETROL and HARKEN DE

COLOMBIA LIMITED, with effective date February eighteenth (18th) year two

thousand two (2002), which hereinafter shall be known as The Contract.

PART 1 - TECHNICAL ASPECTS

Section One - Exploration

The geological and geophysical information that THE ASSOCIATE is to provide to

ECOPETROL, shall be provided following the international norms accepted by the

industry, compatible with the norms used by ECOPETROL (included in ECOPETROL's

information provision manual) in order to allow for regional assessments of the



sedimentary basins. As a supplement of what is provided for in Clause 6 (number

6.2) in The Contract, THE ASSOCIATE or the Operator shall deliver to ECOPETROL,

as it becomes available, the following information with respect to the

exploratory activities that are undertaken by THE ASSOCIATE.

1.1



The geological, geophysical, magnetometric, gravimetric information

from remote sensors, electrical methods and, in general, from any

Exploration Work performed by THE ASSOCIATE in the development of The

Contract shall be submitted in magnetic media, in a reproducible

original and one copy, with its respective support information,

including the maps related with the acquisition and interpretation of

the acquisition, processing and interpretation reports for the data

acquired.



1.2



Processed seismic sections for each line, obtained in two scales,

together with an interpretation report to contain: information used,

background, seismic programs, geological information and geophysical,

geological and economic considerations that back up the conclusions

and technical recommendations.



1.3



Two (2) sets of magnetic tapes corresponding to the seismic lines, one

with the de- multiplexed information and the other with the stacked

information, with their support information and processing report. For

the case of vibrators, a copy of the field tape is to be delivered in

lieu of the de- multiplexed tape.



1.4



One seismic shot-point map, in reproducible sepia and copy, with the

information of coordinates and elevations. This information shall also

be delivered on magnetic tapes.



1.5



Magnetic, gravimetric profiles and residual maps in reproducible

originals, copies and magnetic tapes, with all of the support

information generated.



1.6



Report on the seismic, gravimetric and magnetometric interpretation,

together with all of the sections, profiles and maps interpreted,

submitted set forth in the norms that ECOPETROL has established for

this information.



1.7



Geological, structural, isopach, isolithic, facies, seismic, etc. maps

for The Contract area, in reproducible sepias and copies, with the

scales established by ECOPETROL for each basin.



1.8



Before starting to drill the well: Intention to Drill (Form 4- CR of

the Ministry of Mines and Energy), drilling program, well location

map, isochronic or structural map of the prospective

<PAGE>

41

area and the geological drilling prognosis, duly approved by the

Ministry of Mines and Energy. In the event of Exploratory Wells, the

following shall also be submitted in three scenarios: the calculation

for the Reservoirs in the prospective area to be drilled and the

forecast of investments and production. The location of the

Exploratory Wells shall be referenced to the seismic maps that served

as the basis for the definition of the prospect. For each of the

Exploratory Wells that is drilled in The Contract area, a geodesic

precision point shall be materialized, duly accepted by the Agustin

Codazzi Geographical Institute - "IGAC," obtained by satellite and

with its respective azimuth line.

1.9



Daily drilling and geology reports: These reports shall be delivered

to ECOPETROL, preferably by telefax, and shall contain the basic

information on the well, the drilling conditions, the properties of



the drilling fluid, the manifestations of Hydrocarbons that are being

obtained, the geological description of the formations penetrated, the

daily and cumulative cost and the program to be carried out. The

ASSOCIATE or the Operator shall advise ECOPETROL with sufficient

advance notice on the performance of electrical logs, cores and

testing, so that the latter can send a representative to attend and

witness all of the operations.

1.10



Copy of the reports sent to the Ministry of Mines and Energy (Form 5CR) every two weeks.



1.11



Final Geological Report: This report is compulsory for any well that

is drilled in the country, whether it be exploratory, stratigraphic,

or development, and shall be submitted in Spanish, by a registered

geologist, latest ninety (90) days after the date of termination or

abandonment of the well, and shall include the following information

by chapters:



1.11.1



Summary of all activities performed during the drilling operations



1.11.2



Location of the well and maps at a 1:250,000 scale.



1.11.3



Stratigraphy: shall include the stratigraphic column, determination of

environments and age for each of the formations drilled.



1.11.4



Biostatigraphy: The dispersion charts, analyses performed and possible

correlations are to be submitted.



1.11.5



Geochemistry: All of the analyses performed shall be included, both

for the ditch samples and for each of the cores recovered.



1.11.6



Electrical logs: All of the calculations performed for the

determination of RW, SW shall be included. The analysis of log

velocity shall be included in this chapter.



1.11.7



Formation testing: All of the results obtained for each of the tests

performed shall be included, as well as the results of the analyses

performed in the laboratories for water and Hydrocarbons.



1.11.8



The Final Geological Report shall contain the following Annexs:

Annex A: Description of the ditch samples at every ten (10) feet.

Annex B: Detailed description of the cores and side wall samples that

may have been recovered.



Annex C: All of the laboratory analyses that are performed on the

cores and side wall samples.

<PAGE>

42

Annex D: Composite graphic log, in reproducible sepia and copy at a

1:500 scale. The symbols that are used by the American Association of

Petroleum Geologists (AAPG) for these cases shall be used for the

various lithologies included in the composite graphic log.

Annex E: Final report issued by the company that performed the

"logging" for the well, including the "Grapholog" log.

1.12



Reproducible sepias and copies of each and every log run in the well,

including the velocity log, in 1:200 and 1:500 scales. In addition,

the magnetic tapes in LIS format for each of the logs shall be

delivered, together with the computer tabulations in the formats

established by ECOPETROL for these cases.



1.13



Report on the formation and/ or production tests performed, including

the analysis of bottom hole pressure (both open well and closed).



1.14



Two sets of ditch samples shall be delivered to ECOPETROL, one

unwashed every thirty (30) feet and a dry one every ten (10) feet,

with the detailed lithological description.



1.15



Coring report, whenever performed, including the detailed description

for it, as well as on all of the analyses that are carried out. With

this report, THE ASSOCIATE is to deliver photographs to ECOPETROL, as

well as 50% of the core.



1.16



A report on all of the materials used during drilling.



1.17



Biostratigraphic analyses with their dispersion chart: These analyses

shall be performed for Exploratory Wells, since the sedimentation

environments and the age of each of the formations drilled are defined

with this information. This type of analysis can also be performed on

the various recovered cores.



1.18



Geochemical analyses performed on the ditch, side wall and core

samples.



1.19



Official completion, plugging or abandonment report for the well (Form

6- CR or 10A- CR) and, in general, any other report related with the

termination of the well (further work, multiple termination).



1.20



Final Well Report. Shall include all of the engineering information

and a summary of the Final Geological Report. It shall be submitted in

the Spanish language, latest ninety (90) days after the date of

termination or abandonment of the well, with the approval of a duly

registered petroleum engineer.



1.21



Copy of the Annual Technical Report (Geology and Geophysics and of the

Engineering Report), with their respective support, submitted to the

Ministry of Mines and Energy, set forth in the existing legal

provisions.



1.22



Any other engineering or geology study that may be performed.



CLAUSE 2 - RESTITUTED OF AREAS

2.1



The areas that THE ASSOCIATE shall restitute to ECOPETROL, set forth

in Clause 8 of The Contract shall be, inasmuch as possible, regular

lots with a polygon shape, attempting to facilitate the demarcation of

borders, without prejudice of the areas in the existing Fields. For

such purpose, an imaginary grid or grille shall be superimposed upon

the initially Contract area, divided into ten rows and columns in a

north- south direction, the limits of which shall be given by the

maximum and minimum border north and east coordinates,

<PAGE>

43

which shall define the base cells for the areas to be restituted

herein. Every time an area is restituted, the imaginary grid or grille

shall be adjusted, based on the new coordinates for the Contract Area.

2.2



THE ASSOCIATE shall determine the areas that it shall restituted to

ECOPETROL, based on the imaginary grid or grille mentioned in the

above point. For such purpose, it shall carry out the restitution of

up to two lots made up by one or more cells that are contiguous and

adjacent on their sides, and trying to conserve a sole polygon, unless

THE ASSOCIATE demonstrates that this is not possible or convenient,



for which purpose it shall require ECOPETROL's approval.

CLAUSE 3 - EXTENSIVE PRODUCTION TESTS

The following is the established procedure for performing Extensive Production

Testing for Exploratory Wells and for the handling of Hydrocarbons from such

tests, prior acceptance or not of the existence of a Commercial Field by

ECOPETROL, set forth in Clause 9 of The Contract:

3.1



THE ASSOCIATE is entitled to perform Extensive Production Tests for

the Exploratory Wells that turn out to be producers, with the purpose

of assessing in the best manner, the Reservoir or Reservoirs

discovered and prepare the Development Program for the possible Field.

Before initiating the Extensive Production Tests THE ASSOCIATE shall

obtain ECOPETROL's approval and subsequently, permission from the

Ministry of Mines and Energy. Such tests shall be performed with

temporary production facilities and shall not require more than ninety

(90) calendar days, unless THE ASSOCIATE proves the contrary and

obtains timely approval from ECOPETROL and from the Ministry of Mines

and Energy, respectively.



3.2



THE ASSOCIATE, on its own account and risk, shall, set forth in

international oil industry recommended rules and practices, carry out

the Extensive Production Tests accepted by ECOPETROL and authorized by

the Ministry of Mines and Energy, set forth in the operations program.

In order to obtain such approvals, THE ASSOCIATE shall prepare and

submit to ECOPETROL the operations program for the Extensive

Production Testing, which shall contain, among others, the following

aspects:



3.2.1



Information of the completion of the Exploratory Well and of the

Reservoirs to be tested.



3.2.2



Specific objectives for the Extensive Production Tests.



3.2.3



Information to be compiled on the Reservoirs and fluids, periodicity

for sampling, analyses and data on the possible Field, such as type,

quality and properties of rocks and fluids, pressures, volumes of "in

situ" and recoverable Hydrocarbons, maximum economic Hydrocarbons

production rate, production mechanism, etc.



3.2.4



Information on the subsurface equipment and temporary surface

facilities to be used to handle and decant the volumes of fluids

obtained and other equipment required to ensure the safety of the

operations, including the location diagram for the temporary surface

facilities on site.



3.2.5



Detailed chronogram on the main activities to be performed in order to

achieve the specific objectives referred to in number 3.2.2. mentioned

above.



3.2.6



Budget for the main activities to be carried out and the estimated

disbursement schedule.

<PAGE>

44

3.2.7



Destination of the Hydrocarbons and other fluids to be recovered from

the Extensive Production Testing.



3.2.8



Evacuation and marketing scheme for the Hydrocarbons from the

Extensive Production Tests (including the volume the corresponds to

royalties) and reference price proposal subject to be agreed upon with

ECOPETROL for the valuation of such Hydrocarbons.



3.2.9



Draft contract and proposals (at least three) for the transport of the

Hydrocarbons to be produced corresponding to the royalties set forth

in Clause 13 of The Contract, from the Exploratory Well to the

delivery point of such Hydrocarbons to ECOPETROL.



3.2.10



Any other information that THE ASSOCIATE may consider necessary.



3.3



ECOPETROL may request clarification or suggest adjustments to the

operations program submitted by THE ASSOCIATE for the execution of the

Extensive Production Tests. When this occurs, THE ASSOCIATE shall

submit the explanations to ECOPETROL and, if required, shall bear in

mind the comments proposed by ECOPETROL, it being understood that, in

any case, the responsibility and the risk for any operation that is

included in the operations program for the Extensive Production Tests

shall be the responsibility of THE ASSOCIATE. Once the operations

program is accepted by ECOPETROL and the appropriate agreements have

been reached, it shall be submitted to the Ministry of Mines and

Energy by THE ASSOCIATE in order to obtain the corresponding

permission.



3.4



THE ASSOCIATE shall be responsible for one hundred percent (100%) of

the disbursements incurred during the Extensive Production Tests,

including the costs of transporting the volumes of hydrocarbons

corresponding to the royalties, if this were the case, from the

Exploratory Well to the delivery point that the Parties agree to, set

forth in the transportation proposal accepted by ECOPETROL. The costs

incurred on account of Extensive Production Testing for each

Exploratory Well shall be charged as an increased value for the

respective Exploratory Well and shall be considered as Direct

Exploration Costs (without including administrative or technical

support from Head Office, nor from the central headquarters of the

Company) for purposes of their recovery or Reimbursement, set forth in

the origin of their disbursement.



3.5



The volumes produced during the Extensive Production Tests shall be

those recovered from the respective Exploration Well during the

maximum time period for testing approved by the Ministry of Mines and

Energy in the corresponding permit, discounting any volume of the

Hydrocarbons that may be used as consumption in the testing

operations. The remaining production, once the percentage

corresponding to royalties has been discounted, which shall be paid

directly by ECOPETROL, shall be taken by THE ASSOCIATE, and the income

stemming from the valuation of such Hydrocarbons at the reference

price agreed to by the Parties, shall be deducted from the Direct

Exploration Costs for the respective Exploratory Well, up to a maximum

of fifty percent (50%) of such costs, for purposes of their recovery

or Reimbursement in the following order: i) Direct Exploration Costs

in the Extensive Production Tests; ii) Direct Exploration Costs in the

drilling and completion of the respective Exploratory Well; and iii)

Direct Exploration Costs incurred in Exploration Work undertaken

before the drilling of the respective Exploratory Well. Once fifty

percent (50%) of the Direct Exploration Costs has been recovered, the

production from the Extensive Production Tests shall be distributed

between the parties in a proportion of fifty percent (50%) for

ECOPETROL and fifty percent (50%) for THE ASSOCIATE.

<PAGE>

45

3.6



Prior consent by ECOPETROL, THE ASSOCIATE may carry out the sale of

the portion of production of Hydrocarbons from the Extensive

Production Tests corresponding to the royalties and to ECOPETROL. In

this case, the Parties shall previously enter into the corresponding

agreement.



3.7



THE ASSOCIATE shall keep at the disposal of ECOPETROL the daily logs

of the production and consumption measurements of Hydrocarbons and

fluids, the disbursements incurred and the valuation of the produced

Hydrocarbons at the agreed to reference price, with their respective

support documentation and the balance in the recovery of Direct

Exploration Costs in the development of the Extensive Production Tests

for each Exploratory Well. In addition to the periodic reports on the

progress of the Extensive production Tests for each Exploratory Well,

THE ASSOCIATE shall, within the first ten (10) days each month, submit

to ECOPETROL, a report wherein the development of the operations

program for the Extensive Production Tests, the results obtained in

the fulfillment of the specific objectives for the tests and the

status of income and disbursements are reflected, taking as the basis

the cumulative values for the accounting closure for the month prior

to that for which the report is submitted. The information that THE

ASSOCIATE submits in the periodic reports shall be subject to audit by

ECOPETROL under the terms provided for in Clause 22 of this agreement.

Section Two - Exploitation



CLAUSE 4 - COMMERCIAL FIELD

4.1



THE ASSOCIATE, once it has obtained sufficient information related to

the development of the Field, shall carry out the necessary studies to

define the criteria on the petrophysical parameters, improved

demarcation of the productive area, calculation of Reservoirs and

commercial feasibility of the Field. Such studies shall be carried out

by THE ASSOCIATE at its own expense, using the technical methods

available in country or abroad; when the circumstances require it, the

appropriate reviews shall be performed.



4.2



For new facilities, expansions or modifications, the basic production

designs and detail engineering shall be submitted to the consideration

of the Technical Subcommittee.



4.3



The engineering for the production facilities shall be Contract with

national companies, unless, in the decision of the Technical

Subcommittee, their technological complexity requires the involvement

of a foreign company, preferably in a consortium with a national

company.



4.4



The final mechanical completion of the wells passing to the Joint

Account's property must agree upon by the Technical Subcommittee. The

Reimbursement for such completion for the Exploratory Wells shall be

made as set forth in Clause 9 (numbers 9.2.1 through 9.2.3) herein.



4.5



With respect to the dry Exploratory Wells, THE ASSOCIATE shall abandon

them as set forth in the actual legal and environmental provisions.



CLAUSE 5 - SOLE RISK

<PAGE>

46

5.1



The Reimbursement corresponds to two hundred percent (200%) of the

total cost of the work executed on the account and risk of THE

ASSOCIATE in the exploitation of the corresponding Field and of up to

fifty percent (50%) of the Direct Exploration Costs made by THE

ASSOCIATE on its own account and risk within the Contract Area before

the date on which ECOPETROL makes a statement with respect to the

commerciality of the Field, which have not been previously charged to

a different Field. ECOPETROL shall carry out an audit to determine the

amount of the reimbursable investments.



5.2



In the same manner as set forth in Clause 11 numeral 11.1 of The



Contract, THE ASSOCIATE shall submit to ECOPETROL the proposal on the

projects, programs and Budget, set forth in the Field Development

Program, for the first time, within sixty (60) calendar days following

the date of the notification to ECOPETROL by THE ASSOCIATE with

respect to its intention to exploit the Field under the sole risk

method and subsequently, latest on the fifteenth (15th) of November of

each year. ECOPETROL may, with the corresponding justification,

request clarification or suggest adjustments to the programs, projects

and Budget submitted by THE ASSOCIATE. When this were to occur, THE

ASSOCIATE shall submit the explanations to ECOPETROL and, if this were

the case, shall bear in mind the comments proposed by ECOPETROL in the

preparation of the revised Development Plan, being understood that in

all cases, the responsibility and the risk for any operation shall

fall upon THE ASSOCIATE. The Development Plan for the Fields that are

exploited under the sole risk method shall be reviewed annually and

shall be consistent with international oil industry standards for the

technical, efficient and economic exploitation of each field.

5.3



During the exploitation of a Field under the sole risk method, THE

ASSOCIATE shall deliver to ECOPETROL, within the first ten (10) days

of each quarter, a report listing all of the technical, economic,

legal, administrative and accounting information for the previous

quarter, such as the entering into of contracts, well completion, flow

lines, production facilities, measuring systems, storage capacity,

wells in production, restriction orifices, production reports,

economic studies, etc. It is understood that the various Clauses in

The Contract and the clarification in this document are fully

applicable in the case of Clause 21 of The Contract, Operations for

the Risk of one of the Parties, for purposes of timely information,

the technical control of Reservoirs and other administrative aspects.



5.4



Within the first three (3) months of each year, THE ASSOCIATE shall

contract an external auditor, accepted by ECOPETROL, to review the

total costs of the work executed for the account and risk of THE

ASSOCIATE for the exploitation of the respective field and the Direct

Exploration Costs. The cost of the audit shall be part of the expenses

that THE ASSOCIATE shall recover. THE ASSOCIATE shall deliver to

ECOPETROL, immediately after having received them, the reports issued

by the external auditor and shall maintain at its disposal all of the

documentation on the costs in which THE ASSOCIATE has incurred in the

exploitation of the respective field.



CLAUSE 6 - INSPECTION OF THE OPERATIONS

For the inspection and audit of the activities that are carried out in the

Contract Area, ECOPETROL may send its representatives. During their stay in the

area, THE ASSOCIATE or the Operator shall provide lodging and other conditions

designated by ECOPETROL, equal to those provided for its engineers.

<PAGE>

47

CLAUSE 7 - PRODUCTION

7.1



The Operator shall also transmit to the Parties any information of

improvements in production techniques that it may develop during the

Exploitation Period.



7.2



For the control and prevention of Hydrocarbon losses and damage to the

environment, the Operator and the Parties shall apply the appropriate

measures, with the generally accepted methods used by the oil industry

in order to avoid Hydrocarbon losses or spills in any way during the

drilling, production, transport and storage operations.



7.3



The Operator shall maintain a daily control of consumption of



Hydrocarbons for the operation and shall submit a monthly report of

these to the Parties, attaching the forms that the Ministry of Mines

and Energy has for this purpose.

CLAUSE 8 - DISTRIBUTION AND AVAILABILITY OF HYDROCARBONS

8.1



As per Clause 14 (number 14.1) of The Contract, the Operator shall

carry out the measurement, sampling and quality control of the

Hydrocarbons produced and maintain the measuring equipment or

instruments calibrated, as set forth in the standards and methods

accepted by the oil industry (ASTM, AGA and API) and the legal and

regulatory provisions in force, performing the appropriate analyses

and performing the pertinent corrections for the settlement of the net

volumes of Hydrocarbons received and delivered under standard

conditions. In order to preserve the integrity, reliability and safety

of the facilities and the equipment or instruments for control, the

Operator shall adopt all of the necessary actions and shall maintain,

for purposes of review by the Parties, the records of periodic

calibration of such equipment or instruments and of the daily

measurements of production and consumption of Hydrocarbons and fluids.

For the case of Extensive Production Testing and for Fields exploited

under the sole risk, it shall be THE ASSOCIATE's responsibility to

abide by the obligations assigned to the Operator in this number. The

volumes of Hydrocarbons that the Operator accepts for its

transportation shall be determined with the measuring equipment that

the Operator shall have installed for this purpose at the receiving

stations or delivery points.



8.2



If at any time the Parties were to ascertain that there has been an

error in the calculation of the R Factor set forth in Clause 14

(numbers 14.2.3 and 14.2.4) herein, and that on account of this error

it turns out that a different R Factor than the one applied is to be

applied, or that it should have been applied at a different time than

the one it was applied at, the corresponding correction shall then be

made, with effect for the year in which the error was incurred in,

adjusting the percent participation that corresponds to each Party as

of that year. To perform the respective corrections with regard to the

distribution of production, a similar procedure to the one described

in Clause 14 (number 14.7) of The Contract shall be followed.



CLAUSE 9 - SUPPLY OF HYDROCARBONS FOR EXPORT

For purposes of Clause 14 of The Contract, in order to proceed with the export

of Hydrocarbons, THE ASSOCIATE's priority shall be the domestic requirements of

the country, before performing any export of Hydrocarbons, set forth in the

legal provisions that may be in force regarding this matter.

<PAGE>

48

PART II - ACCOUNTING AND FINANCIAL ASPECTS

Section One - Programs, Projects and Budgets

CLAUSE 10 - EXPLORATION BUDGET AND PROGRAMS

10.1



With respect to the Budget set forth in Clause 7 herein, THE ASSOCIATE

shall differentiate and detail it, according to the type of

Exploration Work and to the indication of the currency in which the

disbursement is forecast to be made. With respect to the reports every

six months, these shall be submitted within the first ten (10)

calendar days of the months of January and July. The January report

shall refer fully to the previous year and the July report to the

first half of the current calendar year.



CLAUSE 11 - EXPLOITATION PROGRAMS AND BUDGETS

11.1



For purposes of Clause 11 herein, the Operator shall submit the

proposal for projects, programs and annual Budget, set forth in the

Development Plan for each Commercial Field, with a detail short- term

and medium- term outlook. The short- term Budget shall be submitted

annually and by quarters, in order to facilitate its execution and for

the preparation of the corresponding treasury flows.



11.2



The Operator shall submit to ECOPETROL the organization chart for the

operation of each Commercial Field, which shall be agreed to at

Subcommittee level and approved by the Executive Committee.



CLAUSE 12 - BUDGET PREPARATION AND PRESENTATION

The following norms and procedures constitute the guidelines for the

preparation, presentation and control of the Budgets during the exploitation of

each Commercial Field that may be discovered in the development of The Contract.

The Budget shall be divided into three (3) parts, namely:

12.1



Income Budget



12.2



Expenditures Budget



12.3



Other provisions



CLAUSE 13 - INCOME BUDGET

This Budget, is in turn, broken down into two (2) sections: Current income

Budget and Capital contributions.

13.1



Current Income:

All funds which regularly accrue in the Joint Account and which the

Operator can forecast. Such income includes the following items, when

applicable:



13.1.1



Product sales:



Income from the sale of Hydrocarbons that the Operator may perform on

behalf of the Parties, to one of the Parties, or to Third Parties (it

shall be understood that these sales are different from those made by

each of the Parties of the production to which they are entitled to).

<PAGE>

49

13.1.2



Services Furnished:

All services that the Operator furnishes to one of the Parties or to a

Third Party, in accordance with the rates established by the

Sub-Committees and approved by the Executive Committee.



13.1.3



Sales of assets or materials:

Sales of equipment or materials which the Operator makes to the

Parties or to third parties as provided in Clause 20 (numeral 20.2) of

this Agreement.



13.1.4



Other income:

All funds received by the Operator on account on behalf of the Joint

Account, for items such as the yield on temporary financial

investments and other income that may be forecast by the Operator.



13.2



Capital Contributions:

All funds received by the Operator on account of advances made by each

of the Parties according to their share in The Contract. This income

is given the name of advances or advance payments (cash calls) and

shall be handled as set forth in the procedures in Clause 15 (number

15.5) in this Agreement.



CLAUSE 14 - EXPENSE BUDGET

As a prior step to its preparation, the Executive Committee, through the

respective Subcommittees, shall set the policies and general parameters to be

borne in mind when elaborating the Budget for the respective Commercial Field.

The expense or appropriations Budget is made by the Operational Expenses Budget

and by the Investment Budget, each of which shall be prepared in the currency of

origin for its disbursement in pesos and in dollars of the United States of

America, and shall be consolidated in dollars.

14.1



Operations expense Budget.

The operations expense budget shall be prepared by the Operator as set

forth in the norms and policies established by the Executive Committee

as per Clause 19 (number 19.3.8) of The Contract, and taking as the

base parameters and economic indicators, that the respective

Subcommittee has defined as being the most representative for the

budget execution term.



14.1.1.



Preparation Procedure

The Operator shall submit the Operating Expenses Budget, identifying

the requirements of the Joint Operation, and shall detail the expense

items set forth in the classification indicated in Clause 14 (number

14.1.2) of this Agreement.



The cost factors for the assessment of the various activities that it

plans to carry out during the year to which the Budget refers to,

shall correspond to the true figures known at the time of preparation

or, to the best information available. In all cases, the operating

expense Budget shall be calculated bearing in mind the costs that are

required by the entities that,

<PAGE>

50

directly, render services to the Joint Account and, as such, are to be

assumed one hundred percent (100%) by the Joint Account and charged

back to the Parties in the proportion that Clause 22 (number 22.6.1)

of The Contract refers to. The Indirect Expenses that are to be

assumed by the Joint Account shall be charged to the Parties and shall

be determined as set forth in Clause 22 (number 22.6.2) of The

Contract.

14.1.2



Classification for the operating expenditure Budget

For all presentation purposes, the operating expenditure Budget shall

be broken down into programs, groups and expenditure concept. The

expenditure programs within the Budget represent homogeneous

activities necessary for the development of the Joint Operation,

including those programs related with the investment projects. The

expenditure groupings in numerical and continuous order within each

program and project represent the object of the expense, shall be duly

supported and explained, and shall be expressed in expenditure

concepts. Following is a listing of the groups and the main

expenditure concepts to be used:



14.1.2.1



Personnel expenses - organization chart

Salaries

Social Benefits

Parafiscal contributions



14.1.2.2



Material and operation supplies

Repair and maintenance materials



14.1.2.3



Contracted Services

Technical services for the operation and Field maintenance

Services given by the Operator

Other Services



14.1.2.4



General Expenditures

Equipment and office rental

Shared expenses.

Insurances.

Public Utilities.

Community relations

Other general expenses.



14.1.2.5



Environmental Management

Materials

Contracted services

Well abandonment

Area restoration

Other expenses



14.1.2.6 Added tax value (IVA)

<PAGE>

51

14.1.2.7



Indirect expenses



14.1.3



Calculation base.

Calculation for the operating expenses Budget shall be based on the

following:

The salary and social benefits Budget shall be calculated as set forth

in the organization charts approved by the Executive Committee and

their estimate shall be made as set forth in Clause 18 (number 18.1.1)

herein. The calculation of salaries, social benefits and other special

extra-legal bonuses originated by national and foreign personnel shall

be presented separately, according to the origin of the disbursement,



to be presented to the Subcommittees and the Executive Committee.

The estimate of the cost of materials and supplies shall be made based

on actual prices or updated quotations and, in general, with the best

available information.

Importation expenses shall be based on the FOB price calculations for

the materials and/or equipment to be imported, and in their

preparation the following factors shall be considered: freight,

insurance, taxes for the use of Colombian ports, import duties and all

other import expenses.

The value of maintenance and operational services contracted shall be

estimated on contracts formalized or to be formalized that the Joint

Operation may have at the time the Budget is prepared.

Indirect expenses chargeable to he Joint Account for services that are

or may be provided by the Operator shall be calculated as set forth in

Clause 22 (number 22.6.2) of The Contract).

The purpose for the Budget for environmental expenses is to

appropriate the annual funds that are required to fulfill

environmental norms.

General expenses shall be calculated taking into account the specific

need of the Joint Operation in the normal course of its work. Shared

expenses are those expenditures that are to be assumed by the Joint

Account as a result of the use of facilities and/or services that are

shared between Fields in the same Contract or with other areas. The

Budget and the charges made to the Joint Account for general expenses

shall be recommended by the Subcommittees and approved by the

Executive Committee. Community Assistance will be budgeted on both the

request of the interested parties and according to the policies that

for such effect are established by the Executive Committee. In special

duly-justified circumstances, the Operator may deal with requests

according to its procedures, after first notifying each of the Parties

on such matters

14.1.4



Budget Execution

Execution of the operations expense Budget shall be made as follows:



14.1.4.1



All services, purchases or contracts that are charged to the Joint

Account on account of operations expenses shall be budgeted and fully

justified.



14.1.5

Budget execution control

<PAGE>

52

The Operator is responsible for controlling the expense budget

execution and must see that expenses are properly managed.

Within the first ten (10) calendar days following the end of the

respective quarter, the Operator shall prepare and submit to the

Parties a report explaining the results obtained in the Budget

execution, which shall contain:

14.1.5.1



Expenses accrued to date, itemized as per expense categories set forth

Clause 14 (number 14.1.2) in this Agreement.



14.1.5.2



Special comments on items which deviate significantly from budget

average or quarterly estimate.



14.1.5.3



Estimated expenses forecast for disbursements per quarter or for the

rest of the year.



14.1.5.4



Justification for possible budget additions, adjustments or transfers

that the Operator may deem necessary or that are proposed by one of

the Parties.



14.2



Investment Budget

Constitutes the basic planning, execution and control tool for each of

the investment programs and projects that the Joint Operation foresees

it shall carry out, and acts as means to estimate the required funds

in the execution of the various programs that are approved by the

Executive Committee.



14.2.1



The investment Budget is composed of items allotted for the following

items:



14.2.1.1



Purchase of durable goods, materials and services required for the

execution of the different projects approved by the Executive

Committee.



14.2.1.2



Purchase of major maintenance equipment and tools destined for the

Joint Operation shops, in order to ensure the normal development of

the operations.



14.2.1.3



Construction and/ or expansion of buildings that the operation may

require, including the facilities destined for workers in the

Commercial Field's organization chart.



14.2.2



Classification of the Investment Budget

For all presentation purposes, the Investment Budget shall be grouped

into programs and projects. Programs, in numerical order within each

Budget, represent a set of projects to be undertaken which, on account

of their technical, operational and administrative characteristics,

merit being controlled in a connected manner and which the Joint

Operation shall execute through the Operator. Projects, in a numerical

and continuous order within each program, constitute the set of

activities that are common to a specific work or job and shall be duly

supported and explained. Following are the main programs and projects

to be used:



14.2.2.1



Development Wells

Locations

Drilling

Completion

Surface equipment, artificial lifting, recompletion and services that

are capitalizable to the wells.



14.2.2.2 Surface facilities

<PAGE>

53

Collection system and transfer lines

Separation and treatment system

Storage system



DISPOSAL OF WATER AND CONTAMINANTS

Pressure maintenance and/ or improved recovery system

Pump Stations

Hydrocarbon transport and transfer system

Other support systems

14.2.2.3



Civil Work

Roads

Bridges

Constructions (camp, workshops, warehouses and offices)



14.2.2.4



Other assets

Automotive equipment

Firefighting equipment

Communications equipment

Office equipment

Electromechanical maintenance equipment

Major tools

Cleaning or workover equipment



14.2.2.5



Special programs

Environmental management

Reservoir studies

Simulation studies

Pressure, interference, etc. tests

Others



14.2.2.6



Warehouses

For projects.



For maintenance materials.

<PAGE>

54

14.2.2.7



Each one of the above projects can be broken down into sub-projects as

needed, using a uniform identification. Final presentation thereof

shall be made on a project by project basis, according to the

classification given above and using forms two (2) and four (4)

established by ECOPETROL for such purpose which may be adapted by

previous agreement between the Parties, through the corresponding

Subcommittee. In order to achieve increased clarity in the preparation

and structuring of the investment Budget, the following considerations

are to taken into account:



14.2.2.7.1 Maintenance investments

All investments made in equipment, materials and construction for the

purpose of keeping facilities in good operating condition as well as

their original capacity and performance limits.

14.2.2.7.2 Enlargement Investment

The investments are to be classified as such if their objective is to

increase the facility capacity, increase the authorized provision of

automotive equipment, office equipment, etc.

14.2.2.7.3 Special investments

These include all of those investments which, on account of their

amount, their importance for the industrial activities or their impact

on a social or ecological level, merit being classified as special.

14.2.3



Preparation and presentation of the Budget

Each and every one of the projects within the various programs that

make up the Investment Budget shall be fully justified and analyzed

before being included in the general Budget. In this sense, the

Operator shall prepare an investment draft which shall contain the

following general information:

a)



Analysis of needs



b)



Project justification



c)



General project description



d)



Estimated amount of the investment



e)



Execution chronogram



f)



Critical path for the project



g)



Economic evaluation



The draft with the aforementioned information, plus any other

information that may be considered necessary for its assessment that

the Operator may submit, shall be studied jointly by the respective

Subcommittees, which shall recommend or object to the viability of the

project, as set forth in the policies drawn up by the Executive

Committee.

Once such Subcommittees recommend that a specific project be

undertaken, the project shall then be included in the Budget to be

approved by the Executive Committee for the respective Commercial

Field.

<PAGE>

55

All of the general information that is submitted to justify each

project will be compiled in a Technical-Financial Annex, which shall

serve as support when presenting the Budget for each Commercial Field

for the approval of the Executive Committee.

14.3



Budget Consolidation.

Once the Joint Operation's requirements have been defined, the

Operator will consolidate the Operations Expense and Investment Budget

for each of the Commercial fields, as set forth in classification in



Clause 14 of this Agreement (numerals 14.1.2 and 14.2.2 respectively)

and shall present it to the Executive Committee for final approval.

The Operation Expense Budget and the investment Budget, will be

submitted in four columns that will contain the accrual origin in

United States of America dollars, accrual origin in pesos, a

consolidated statement in dollars and one in pesos, using the forecast

of the exchange rate for the respective year for this purpose. In

addition, the Operator shall prepare, for information purposes, a

disbursement chronogram that indicates the cash requirements in the

short term, itemized by quarter and by currency origin, at the level

of expense group, program and investment project.

14.4



Budget Execution

In all cases, the Operator is authorized to make all of the operations

and investment expenses that the Joint Operation requires, set forth

in the approved Budget and subject to the procedures in this

Agreement, and those that the Executive Committee may establish. The

execution of the budget shall be performed by the Operator through its

various departments and set forth in the previously established

execution schedules.

The appropriations assigned to each project shall be identified with a

previously defined code, which shall be used on all documents that

originate in carrying out its budgetary execution.



14.5



Budget Control.

The Operator shall be responsible for carrying out each of the

investment programs and projects and shall be accountable for the

execution of these within the conditions under which they were

approved.

Similarly, it shall be responsible for the verification that the

corresponding steps for the performance of the projects are taken

adequately and on a timely basis. In the event that any problem is

encountered that prevents the normal development of the projects, it

shall immediately report it in writing to each of the Parties, in

order to seek the solution to the difficulty that has been

encountered. The Operator, as the responsible party for the

Development Plan, the programs, projects and Budget, shall prepare the

quarterly reports regarding the budget and technical advance of these,

which it shall send to each of the Parties for their study and

subsequent approval by the Executive Committee.

The quarterly report that is to be prepared and presented by the

Operator within the ten (10) days following the end of each quarter,

shall contain the following information:

a)



Period covered by the report.



b)



Project code and description.



c)



Total project budget.



d)



Financial advances from its start to final date. Investments per

current-year, accumulated to date.



<PAGE>

56

e)



Technical progress of the work.



f)



Quarterly projection of work to be carried up to year-end, for

information purposes.



CLAUSE 15 - OTHER PROVISIONS

15.1



Budget Additions

If, during the execution of the Budget, it were necessary to add

supplementary items above and beyond the appropriations approved by

the Executive Committee, the Operator shall request the corresponding

modifications from the Parties in an extraordinary manner and their

ratification shall be made in the next ordinary meeting of the

Executive Committee.

On a periodic basis, requests for budget transfers or additions for

expenses and investments may be submitted, studied and approved, every

time the Executive Committee meets on an ordinary basis. However, the

Executive Committee may meet in an extraordinary manner to deal with

budgetary issues any time a special situation may so merit.

Every time that a budget addition is requested, the Operator shall

initiate, with due lead time, the corresponding procedures, submitting

the requests to the respective Subcommittee for its study and

subsequent recommendation to the Executive Committee. In any event,

the requests for budget additions shall be fully justified, explaining

the reasons that gave rise to the variation in the appropriated items,

with their respective technical and financial Annex, as specified in

Clause 14 (number 14.2.3) in this Agreement.



15.2



Budget transfers

Those appropriations that are carried over from one year to another as

a result of those projects that could not be concluded during the term

for which they were budgeted for reasons such as the lack of

availability of equipment, importation procedures, bad weather, among

others, shall be considered to be budget transfers.

When a project is not totally completed, the value of the budget shall

become part of the Budget for the immediately following year and shall

be subjected to approval by the Executive Committee. The presentation

of these projects within the Budget shall be singled out and

specifically identified and shall be considered in the preparation of

the disbursement schedule that Clause 15 (number 15.4) in this

Agreement refers to. In addition, budget transfers shall give rise to

an Annex wherein the cause for the budget transfer shall be explained,

as well as the way in which it is to be executed during the following

term.



15.3



Approvals

The Executive Committee shall be entity entrusted with approving the

programs, projects and the Budget recommended by the Subcommittees,

and with authorizing the Operator to purchase or contract, for the

account of the Joint Account, all of those goods and services that are

required by Joint Operation.



15.4



Disbursement Schedule



Together with the overall Budget, the Executive Committee shall

approve the Budget by quarters submitted by the Operator and

recommended by the Subcommittees for the immediately following year,

and which shall constitute the basis on which the monthly cash calls

shall be calculated.

<PAGE>

57



15.5



Cash Calls

The requests for advances of funds or cash calls shall be made by the

Operator to each of the Parties, based on the obligations entered into

by the Joint Operation for the month immediately following the one of

the request, referring to the quarterly Budget approved by the latest

Executive Committee and the forecast cash flows. The management of the

advances or cash calls that this Clause refers to shall be made

through a bank account that the Operator shall establish for such

purpose, for the exclusive use by the Joint Operation. In the

preparation of the requests for advances or cash calls, the following

requirements are to be followed:



15.5.1



Preparation

Based on the approved Budget and the obligations entered into on

behalf of the Joint Operation for the following month, the Operator

shall prepare the requests for advances, bearing in mind the following

conditions:



15.5.1.1



The request shall be made by the Operator separately for each of the

Commercial Fields being exploited in the Contract Area, identifying

operations and investment expenses, in pesos and in United States of

America dollars, depending on the origin in which the disbursement is

forecast to be made.



15.5.1.2



The request shall be by programs and projects, in the case of

investments, and by group and expense item in the case of expenses, in

the same manner in which they are listed in the Budget approved by the

Executive Committee.



15.5.1.3



For each of the projects and expense items listed in the request for

advance funds to be considered, they must be included in the Budget;

otherwise, they shall be deducted from the total amount requested.



15.5.1.4



The projects and expense groups shall necessarily have a sufficient

Budget.



15.5.2



Presentation

The request for funds (cash call) shall be made by the Operator within

the first twenty (20) days of the immediately preceding month to the

month in which the contributions are to be made. If the Operator were

to have to make extraordinary disbursements, that are not provided for

at the time that the monthly advance cash call is made, it shall

request special advances in writing from the Parties, covering their

respective share in such disbursements.

Every request for an advance or cash calls shall be submitted for

processing in the form previously agreed to by the Parties in the

respective Subcommittee and shall show the actual and estimated

charges for investments and expenses and shall comprise the following

documents:



15.5.2.1



Letter of Request



15.5.2.2. Request format, wherein the financial status for each of the programs,

projects and expense items is shown on the date on which the request

is made.

15.5.2.3. General comments of a technical nature in which the destination of the

requested funds is identified, within the main projects or expense

items.

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58

Section Two - Accounting Procedure

CLAUSE 16 - ACCOUNTING PROCEDURE

In each half- yearly report that Clause 10 (number 10.1) in this Agreement

refers to, THE ASSOCIATE shall submit to ECOPETROL the direct Explorations Costs

for the period of the report that could be subject to reimbursement in agreement

with Clause 9 of The Contract, with the indication of the currency in which the

disbursement was made and a consolidated statement in United States of America

dollars. In addition, in this same report, THE ASSOCIATE shall submit the

preliminary cumulative value that is to be included as variable "A" for the

calculation of the R Factor that Clause 14 (numbers 14.2.3 and 14.2.4) in The

Contract refers to, clearly showing the parameters used for the calculation, It

is understood that the Direct Exploration Costs shall only be definitive once

they have been audited and accepted by ECOPETROL.

During exploitation of each Commercial Field, the credits and charges incurred

in by the Operator in development of the Joint Operation, shall be charged to

the Joint Account set forth in the provisions of Clause 22 of The Contract. The

Joint Account shall be divided into three main items, as stated below, for each

Commercial Field discovered in performance of The Contract, and the consolidated

statement, when there is more than one Commercial Field in the Contract Area:

16.1



General Joint Account (clarification, charges and entries).

This account shall reflect all of the movements, as is expressed later

on, and shall be fully distributed on a monthly basis between the

Parties, in a share of fifty percent (50%) for ECOPETROL and fifty

percent (50%) for THE ASSOCIATE with respect to the investments, and

in the proportion that is set out in Clause 22 (numbers 22.6.1 and

22.6.2) in The Contract for Direct Expenses and Indirect Expenses.

That is to say, it shall serve as the basis for monthly billing, set

forth in the provisions of this procedure, ending every month with a

balance of zero (0).

All of the accounting operations related with this account shall be

booked by the Operator in Colombian pesos, set forth in the laws of

the Republic of Colombia, but the Operator may, in turn, keep ledgers

wherein it shows the disbursements it may incur in any currency other

than Colombian pesos.



16.2



Joint operations current account.

This account shall record the cash calls received from the Parties and

the charges or credits corresponding to the invoicing of these and, at

all times, shall show a balance in favor or against each of the

Parties, as appropriate. This account shall be divided into two subaccounts, set forth in the monetary origin of the transaction, namely:

Colombian pesos and United States of America dollars.



16.3



Joint property records.

Through the Joint Account, the Operator shall keep a record of all of

the assets acquired that are subject to inventory, indicating in

detail the kind of asset, the date of purchase and its original cost.



The accounts mentioned in Clause 16 (numbers 16.1, 16.2 and 16.3) of

this Agreement shall constitute part of the Operator's official

accounting records, but without mixing them with accounting records

other than those of the Joint Account. The three aforementioned

records shall be subject to Clause 22 of this Agreement.

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59

16.4



The Operator shall send to ECOPETROL on a monthly basis, together with

the information cited in Clause 17 (number 17.2.2) of this Agreement,

in an independent Annex, the parameters and the calculation of the R

Factor, set forth in the provisions of Clause 14 (number 14.2.3 and

14.2.4) of the Contract. The Operator shall keep in its files and at

the disposal of the Parties, all of the support documentation for the

charges made to the variables that are included in the calculation of

the R Factor for each Commercial Field.



CLAUSE 17 - ADVANCES, INVOICES AND ADJUSTMENTS

17.1



Advances.

Despite the fact that the Operator shall pay and clear, initially, all

of the costs and expenses incurred set forth in The Contract, charging

each Party with its percentage share, it is agreed that, to finance

such share, each Party, at the Operator's request, shall advance to

the latter, from the moment of acceptance by the Parties of the

existence of a Commercial Field and, latest within the first five (5)

days of every month, the proportion of the disbursements for the

account of each and that were estimated for the operations of the

given month. These advances shall be made in United States of America

dollars and in Colombian pesos, set forth in the requirements

established in the approved Budget by quarter and in the forecast cash

flow for each Commercial Field and in the requests for advances (cash

calls) prepared by the Operator, set forth in Clause 15.5 in this

Agreement.



17.2



Invoices.



17.2.1



The Operator shall prepare an initial invoice for ECOPETROL after the

acceptance of the existence of each Commercial Field, in the amount of

fifty percent (50%) of the Direct Exploration Costs incurred in before

the date of ECOPETROL's statement regarding the commerciality of each

new Commercial Field discovered, that is audited and accepted by

ECOPETROL set forth in Clause 22 of this Annex and that has not

previously been charged to another Field. In the Direct Exploration

Costs for the Exploratory Wells, all of the direct costs incurred in

drilling, termination and testing shall be included for the case of

Exploratory Wells that are producers, and the cost of drilling and

abandonment of the Exploratory Wells that are dry. Such invoice shall

also include fifty percent (50%) of the costs of additional work that

Clause 9 (number 9.3) in The Contract refers to, if applicable. For

the monthly update of the values that the paragraph in Clause 9

(number 9.2.2) in The Contract refers to, one twelfth (1/12th) of the

value resulting from averaging the percent annual variation available

for the last two (2) years in the consumer price index for

industrialized countries shall be used, taken from the "International

Financial Statistics" of the International Monetary Fund (page S63 or

its replacement) or, if not available, the publication that may be

agreed to by the Parties. This invoice shall include a summary of the

costs, expressing separately the currency in which the investments and

the expenses were made, that is to say, in Colombian pesos or in

United States of America dollars.



17.2.2



Set forth in Clause 22 (number 22.2) of The Contract, the Operator

shall charge the Parties, within the ten (10) days following the last

day of each month, their proportional share of the investments and

operational expenses during that month. In the invoices, the details

that may be available in the Operator's accounting procedures shall be

noted, including a detailed summary of accounts, expressing separately

the investments and operational expenses originating in pesos and

those originating in United States of America dollars.



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60

17.2.3



Investments and expenses during the Retention Period.

The costs and expenses made by THE ASSOCIATE during the Retention

Period to establish the commercial viability of a Gas Field shall be

assumed by THE ASSOCIATE in their entirety.



17.3



Adjustments

The invoices shall be adjusted between the Operator and the Parties

after deducting the advances in United States of America dollars and

in Colombian pesos.

When the advances made by either of the Parties differ from their

share in the actual costs determined for each period, the difference

in pesos and/ or in dollars shall be adjusted in the invoices for the

following month.



17.4



Acceptance of the invoices.

The payment of the invoices shall not affect the right of the Parties

to protest or inquire about the accuracy of these, set forth in the

terms of Clause 22 (number 22.7) of The Contract.



CLAUSE 18 - CHARGES

Subject to the limitations that are set forth below, the Operator shall charge

the Joint Account and invoice each Party, set forth in the percentages

established in Clause 16 (number 16.1) of this Agreement, for the following

expenses:

18.1



Labor.



18.1.1



National and foreign employees



18.1.1.1



The salaries of the Operator's employees or workers that are working

directly for the benefit of the Joint Operation, including the payment

for overtime, nighttime surcharge, payment of Sundays and holidays and

their respective compensatory rest periods and, in general, all

payments that constitute salary.



18.1.1.2



Social benefits, compensation, insurance, subsidies, bonuses and, in

general, any benefit that is not salary and that is awarded to the

workers and/ or their relatives or dependents, whether it is granted

individually or collectively, or whether it is granted to them by

virtue of the labor contract, the law, arbitration conventions or

sentences, with the exception of housing plans, with respect to which

a special agreement shall be required. Among the aforementioned, one

can cite, among others, the following: severance pay, vacation,

retirement and disability pensions, benefits to retirees and their

relatives, benefits and aid caused on account of professional or nonprofessional illnesses and accidents, service bonuses, life insurance,

compensation or indemnity on account of contract cancellation, labor

union benefits, all types of bonuses, subsidies and aid, for savings,

health, education and, in general, for social security. In addition,

the contributions to the Colombian Family Welfare Institute (ICBF),

National Vocational Training Service (SENA), Social Security Institute

(ISS) and other similar ones that may be established.



18.1.1.3



All expenses incurred for the benefit of the Joint Operation with

respect to the maintenance and operation of the camp, its offices and

service facilities at the site. Among these, the following expenses



are also included, not in a restrictive manner but rather as a

listing, as indicated below, whether the services are rendered for

free or for payment, or

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61

whether they be for the workers, their dependents or relatives, of

that these be provided in a voluntary or compulsory manner.

Such services include the following:

18.1.1.3.1



Medical, pharmaceutical, surgical and hospital services.



18.1.1.3.2



Camp and full services thereof, including its repairs

and sanitation.



18.1.1.3.3.



Training and educational expenses.



18.1.1.3.4



Workers recreation.



18.1.1.3.5



Maintenance of schools for the workers, their children

and dependent relatives.



18.1.1.3.6



Safety, social work and camp surveillance.



18.1.1.4



It is understood that the expenses and services outlined in the

aforementioned Clause 18 (numbers 18.1.1.1, 18.1.1.2 and 18.1.1.3)

shall be for the account of the Joint Account when, by provisions of

law, labor agreements and/ or arbitration sentences or voluntarily,

they are applicable in a direct or by extension to contractors,

subcontractors, intermediaries and/ or their workers who are working

for the benefit of the operation.



18.1.1.5



With respect to retirement pensions and disability compensation, the

Executive Committee shall proceed set forth in the provisions of the

Social Security and Pension System established by Law 100 issued in

1993 and other norms that regulate it or substitute it.



18.2



Materials, equipment and supplies

The materials and supplies that are necessary to undertake the

operations shall be charged to the Joint Account. The materials and

supplies shall be purchased for warehouse inventories for the projects

or for the maintenance materials warehouse when it is convenient for

the operation and shall be credited to it, at cost in the books, as

they are withdrawn from the warehouse to be used. The capital

equipment units shall be charged directly to the Joint Account. The

book cost is determined as follows:



18.2.1



Book cost

It is understood that book cost means the last average price of the

inventory in the warehouse, based on the cost obtained in the import

liquidation sheets, or the local cost, as follows:



18.2.1.1



For imported materials, equipment and supplies, the book cost shall

include the net price on the manufacturer or vendor's invoices, the

cost of purchases, freight and delivery charges between the supply

point and the loading point, freight to the entry port, insurance,

import duties or any other tax, handling from the vessel to the

customs warehouse and transport to the site of operations.



18.2.1.2



For materials, equipment and supplies purchased locally, the book cost

shall include the seller's net invoice, plus sales taxes, procurement



expenses, transport, insurance and other similar costs paid to Private

Parties, from the purchase location to the site of operations.

18.2.1.3



the materials shall be charged to the Joint Account set forth in the

monetary purchase origin, so that it can similarly be charged to each

Party.

<PAGE>

62

18.2.2



Return of materials to Joint Operation's warehouses, as the case may

be.

The materials, equipment and supplies that are returned to the

warehouses of the Joint Operation shall be valued as follows:



18.2.2.1



New materials, at book cost.



18.2.2.2



Second- hand materials, in good condition and that can render service,

as well as equipment that can subsequently be used without repairs,

can be reincorporated by the Operator to the corresponding warehouse

at one hundred percent (100%) of their cost on the books, crediting

the respective project in the Joint Account.



18.2.2.3



Second- hand equipment and materials which, when repaired, can be

used, can be reincorporated by the Operator to the corresponding

warehouse at one hundred percent (100%) of their cost on the books.

These materials, upon being used again, shall be charged at the new

book value.



18.2.3



Sales by the Parties. The materials, equipment and supplies sold by

the Parties to the Joint Operations shall be valued at the replacement

price agreed to by the Parties. The corresponding transport costs

shall be for the account of the Joint Operation. In the cases of sales

by the Joint Operation to one of the Parties, these shall be valued at

the replacement price agreed to by the Parties, and the transport

costs shall be for the account of the purchasing Party.



18.2.4



Local transport of materials



18.2.4.1



For materials shipped through an external transporter, at cost, set

forth in the invoice issued by the transportation company.



18.2.4.2



For materials sent in transportation units owned by the Parties, at

the fees calculated to cover the actual costs, pursuant to the

procedure established in Clauses 18 (number 18.4) and 23 (number

23.1.1) in this Agreement.



18.2.5



Materials for projects that have been cancelled, postponed or changed.

When there is an accumulation of inventory in the warehouse on account

of the change, deferral or cancellation of projects approved by the

Parties, the cost of such materials shall be charged to the warehouse

account. These materials may be sold to Private Parties set forth in

the provisions of Clause 20 (number 20.2.1) in this Agreement and what

is obtained shall be credited to the Joint Account. Surplus materials

from projects, purchased with direct charge. Once the project has been

finalized, these should be reincorporated to the warehouse and

credited to the corresponding projects. The Operator shall advise the

Parties of this operation at the ordinary meetings of the Financial

Subcommittee when this were to occur.



18.3



Travel expenses

All travel expenses incurred on behalf of the Joint Operation for



Colombian or foreign personnel, such as transport, hotels, food, etc.

18.4



Service units and facilities



The value of the service rendered for equipment and facilities that

are owned by any of the Parties shall be charged to the Joint Account

at reasonable rates, as provided for in Clause 23 of this Agreement.

The rates that are established shall be applied until such time as

they are modified by mutual agreement.

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63

18.5



Service

Services rendered by Private Parties, including contractors, to the

Joint Operation, at their actual cost. Similarly, technical services,

such as laboratory analyses and special studies, require the

recommendation of the Technical Subcommittee and approval by the

Executive Committee.



18.6



Repairs

Expenses for repairs made to the equipment or elements of either of

the Parties, destined for use by the Joint Operation, unless these

costs have already been charged through leasing or in another manner.



18.7



Litigation

Expenses to the Joint Operation regarding the threat of effective

lawsuits (including the investigation and collection of evidence),

lifting encumbrances, sentences, legal claims and procedures for

claims, compensation for accidents, settlement for death and funeral

expenses, provided that these charges have not been recognized by an

insurance company or covered by the proportional surcharges mentioned

in Clause 18 (number 18.1.1) in this Agreement. When legal services

are provided in these matters by permanent or external counsel, whose

total or partial compensation is included in indirect costs, no

additional charges shall be made for their services, but rather, these

shall be charged to Direct Expenses incurred in such procedures.



18.8



Damages and losses of Joint Operation property and equipment.

All costs and expenses necessary to replaced or repair damage or

losses caused by fire, flood, storm, theft, accident or any other

similar event. The Operator shall notify the Parties in writing

regarding the damages or losses occurred, as soon as possible.



18.9



Taxes and rentals

The value of all taxes paid or accrued in carrying out the Joint

Operation shall be charged to the Joint Account, in keeping with the

existing legal provisions.

The value of leases, right of way and indemnity for improvements, the

occupation of land, etc. shall also be charged to the Joint Account.



18.10



Insurance



18.10.1



Premiums paid for insurance taken out for the benefit of the

operations that The Contract refers to, together with all of the

expenses and indemnities accrued and paid, an all losses, claims and

other expenses that have not been covered by the insurance companies,

including the legal services mentioned in Clause 18 (number 18.7) in

this Agreement, shall be charged to the Joint Account.



18.10.2



When no insurance exists, the actual costs incurred, mentioned above,

and paid for by the Operator, shall also be charged to the Joint

Account.



CLAUSE 19 - CREDITS

19.1



Incomes



The Operator shall credit the Joint Account for incomes resulting from

the following items:

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64

19.1.1



Collection of insurance with respect to the Joint Operation, the

premiums for which have been charged to such operation.



19.1.2



Sale of geological information, when previously authorized by the

Parties, provided that the collection of such information was charged

to the Joint Operation.



19.1.3



Sale of property, plants, equipment and materials owned by the Joint

Operation.



19.1.4



Rental payments received, the reimbursement for claims of customs

duties and tax or transportation, etc. shall be credited to the Joint

Operation if such lease payments or reimbursements pertain thereto.



19.1.5



Any other income from operations or contractual income authorized by

the Executive Committee on behalf of and for the service of the Joint

Account.



19.2



Warranty

In the event of defective equipment, once the Operator has received

the corresponding adjustment from the manufacturer or its agents,

credit shall be made to the Joint Account.



CLAUSE 20 - DISPOSAL OF EXCESS

20.1



MATERIALS AND EQUIPMENT.



Excess materials and equipment

The Operator shall advise the Parties in writing regarding the Joint

Operation's surplus materials and equipment, thirty (30) days after

finalizing the inventory that Clause 21 of this Annex refers to. Each

of the Parties shall designate a representative to review the status

and establish which materials or equipment are to be put up for sale.

For the purchase of the useable materials or equipment, ECOPETROL

shall have the first option and THE ASSOCIATE the second option; these

options shall be exercised within sixty (60) days following the date

of notification. In the event that they are not purchased by these,

the Operator shall report it in writing and they shall be put up for

auction.



20.2



Disposal of capital equipment and materials.

Set forth in Clause 22 (number 22.9) of The Contract, the Operator may

sell the materials and equipment owned by the Joint Account under the

following conditions:



20.2.1



The sale by the Operator to Private Parties of major materials and

capital equipment that may have been charged to the Joint Account

shall only be made with the approval of the Executive Committee. The

revenue shall be credited to the Joint Account. Only for this



particular purpose, major materials are defined as any asset that has

an estimated sales value that is greater than the amount that is

approved by the Executive Committee for such purpose, as a result of

the request submitted in advance by the Operator, set forth in Clause

19 (number 19.3.2) of The Contract.

20.2.2



Minor materials charged to the Joint Account and not required for the

operation or which are returned to the warehouse, may be sold by the

Operator and its proceeds shall be credited to the Joint Account.



20.2.3



For any abandonment and dismantling of the assets whose cost or

estimated value is greater than the amount approved by the Executive

Committee for this purpose, as a result of a request presented

beforehand by the Operator set forth in Clause 19 (number 19.3.2) of

The Contract, prior authorization by the Executive Committee is

required.

<PAGE>

65

20.2.4



Neither of the parties is under the obligation to purchase the

interest of the other in surplus materials, whether they are new or

second- hand. The withdrawal of major items of surplus materials, such

as towers, tanks, motors, pumping units and piping shall be subject to

approval by the Executive Committee. However, the Operator shall have

the right to dispose of the damaged or useless materials in any

manner.



20.2.5



All of the taxes that may be caused on account of the sale or transfer

of materials or assets from the Joint Account shall be the Operator's

responsibility, for the account of the Joint Account.



CLAUSE 21 - INVENTORY

At ECOPETROL's request, the Operator shall submit the necessary information to

perform the inventory analyses in warehouses and the Parties shall agree upon

their joint participation in inventory control. The Operator shall provide the

ease and cooperation that ECOPETROL may require to carry out the physical task

of accounting for the fixed assets at the facilities at each Commercial Field,

prior agreement with the respective Subcommittee, regarding the date, time and

number of persons who are to perform the inventory.

21.1



Inventory and Audit

Set forth in the existing norms and, at least once every three (3)

years, the Operator shall perform an inventory of all of the Joint

Operation assets.



21.2



The notification of the intention of carrying out an inventory shall

be given by the Operator to the Parties in writing with at least one

(1) month advance notice to the date on which it is to commence, so

that the latter can be present. However, non- attendance by one of the

Parties to carry out the inventory does not jeopardize or reduce the

validity and effectiveness of the inventory thus carried out by the

Operator.



21.3



The Operator shall provide the Parties with a copy of each inventory,

with a copy of its reconciliation, and shall submit the results to the

Subcommittees of the Joint Operation, which shall study the report and

shall propose the actions to be taken in this regard.



21.4



Inventory adjustments for surpluses or shortfalls shall be brought to

the attention of the Executive Committee for its consideration and

approval.



21.5



With due timing and through midnight of the last day of the term set

forth as the Exploitation Period, the Parties shall carry out

inventories of the materials that are in the warehouses and that are

the property of the Joint Account, as well as of the products produced

that are in the collection batteries, the pipes that lead from them to

the storage tanks and in the storage tanks, all within the

exploitation sites, and such inventories shall be distributed between

the Parties, after having deducted the royalties, in the same manner

provided for in Clause 13 of The Contract.



CLAUSE 22 - AUDIT

Subject to Clause 17 (number 17.4) in this Agreement, the Parties may, through

their own auditors or their representatives, examine and control the Operator's

records related to the joint properties and the operation of these. Similarly,

ECOPETROL may carry out audits to the records of the Fields exploited by THE

ASSOCIATE under the sole risk method. In order to facilitate the review of the

Direct Exploration Costs that Clause 17 (number 17.2.1) of this Agreement refers

to, once THE ASSOCIATE or the Operator advises the Parties regarding the date on

which any reimbursable

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66

Exploration Work is to commence, THE ASSOCIATE or the Operator shall allow that,

prior timely notification, ECOPETROL auditors periodically examine the accounts

for such Exploration Work, in such a way that, when the existence or not of a

Commercial Field is accepted, the aforementioned review has already been

performed under the best conditions of timing and location. In the audit reviews

that are provided for in this Agreement, in addition to the representatives for

the Parties, representatives from the Comptroller General of the Republic may

also intervene, if such organization deems it convenient for this to be the

case. The costs and expenses of such review shall be for the account of the

interested Party.

22.1



Once the audit report is delivered, THE ASSOCIATE or the Operator

shall have a maximum six (6) month term in order to respond and

support the objections made. Once this term expires, without the

Operator having responded, it shall be considered that the objections

have been accepted and consequently, all shall proceed accordingly.

The notes or observations from the audit that are not resolved within

the three (3) months following this term shall be resolved set forth

in Clause 20 of The Contract.



CLAUSE 23 - RATE AND FEE CHARTS

23.1



Subject to the aforementioned limitations, the services rendered to

the Joint Operation for facilities that are ECOPETROL or THE

ASSOCIATE's exclusive property, shall be charged at the corresponding

rates, in order to allow for the recovery of the actual costs. Such

costs shall include the normal costs for work, salaries, social

benefits, depreciation and other operational expenses, bearing the

following in mind:



23.1.1



The rate for transportation units that is normally calculated, using

as a basis the time of operation, shall include the time required for

loading and unloading, the time elapsed waiting to be loaded, and the

waiting time for unloading to take place. Charges for transportation

units assigned to the operation shall include Sundays and holidays,

except when the vehicles are out of service for repairs.



23.1.2



When the material for aforementioned operations is transported

together with other materials by river or land fleet that is the

exclusive property of ECOPETROL or of THE ASSOCIATE, the charge shall

be made based on the tonnage transported, at rates that are not any



higher than commercial ones.

23.2



Rates for the lease of equipment and tools

The procedure to calculate the lease rate for equipment and tools that

are the property of the Parties, excluding drilling equipment and

major equipment, where the rates are to be calculated separately and

approved by the Executive Committee, shall comprise a value for

depreciation plus a value for maintenance, and the procedure shall be

as follows:



23.2.1



Description, model, number, date of purchase and original cost of the

equipment.



23.2.2



Site where the equipment is to be used, reasons for leasing it and

estimated time of use.



23.2.3



Value of the annual depreciation for the equipment, calculated based

on the depreciated book value and its estimated remaining useful life

(the minimum book value considered shall be ten percent (10%) of the

original cost, that is to say, the salvage value).



23.2.4



The annual maintenance value shall be a percentage of the original

cost, which may vary between five percent (5%) for new equipment and

up to fifteen percent (15%) for equipment

<PAGE>

67

that has already been depreciated, depending on the time it has been

depreciated. For example:

Equipment A: (Five [5] years of life)

Time (in years) 1, 2, 3, 4, 5: equipment one hundred percent (100%)

depreciated

Maintenance: 5, 6, 7, 8, 9: 15%.

Equipment B: (Ten [10] years of life)

Time (in years) 1, 2, 3, 4, 5, 6, 7, 8, 9, 10: equipment one hundred

percent (100%) depreciated.

Maintenance: 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15: 15%.

Note: The time for useful life and depreciation shall be those that

are established by accounting techniques applicable to oil operations.

23.2.5



The rate for annual lease is equal to the value provided for in Clause

23 (number 23.2.3) of this Agreement, plus the one established in

number 23.2.4 of this same Clause.



23.2.6



The rate for monthly or daily lease of equipment shall be equal to the

provided for in Clause 23 (number 23.2.5) in this Agreement, divided

by twelve (12) or by three hundred and sixty five (365), as

appropriate.



23.2.7



No lease charge shall be made for "stand by," but it shall be charged

to Private Parties.



23.2.8



The aforementioned lease rates do not include transport, installation,

operation, lube and fuel costs, which shall be charged to the

operation that the equipment is destined for.



23.2.9



The aforementioned lease rates shall be applied to the possible use of

one hundred percent (100%) equipment and tools owned by the operation,

THE ASSOCIATE or the Operator, and vice versa.



23.2.10



In every case, the Subcommittees shall recommend to the Executive

Committee the use of leased equipment and may apply the rate system

that the latter may recommend.



23.2.11



The lease rate for equipment shall be calculated in United States of

America dollars, but for the respective collection, it shall be

invoiced in Colombian pesos, at the rate that the Parties may agree

to.



23.3



Rate for rental for warehouses and fixed assets

For the calculation of the lease rate for warehouses that are the

property of one of the Parties or of the Joint Account, for their

complete or partial use, a procedure shall be followed which shall be

agreed to by the respective Subcommittee.



CLAUSE 24 - CONTRIBUTIONS IN KIND

ECOPETROL or THE ASSOCIATE shall contribute in kind, those materials that they

may consider convenient, set forth in the agreements that may be established by

the Parties.

<PAGE>

68

PART III - ADMINISTRATIVE ASPECTS AND OTHER PROVISIONS

Section One - Executive Committee

CLAUSE 25 - CONDITIONS FOR FUNCTIONING

For the exercise of its functions, the Executive Committee shall fulfill the

conditions provided for in Clause 19 of The Contract, as indicated below:

25.1



The Executive Committee shall be alternately chaired by the Parties,

beginning with ECOPETROL.



25.2



The Executive Committee shall name its Secretary, alternating between

the persons designated by ECOPETROL and by THE ASSOCIATE. The Chair

and the Secretary shall fall n the same Party.



25.3



The Executive Committee shall meet in an ordinary manner during the

months of March, July and November, and in an extraordinary manner

every time that the Parties and/ or the Operator may consider it

necessary. At such meetings, the exploitation strategy being carried

out by the Operator shall be reviewed, as well as the Development Plan

and the immediate programs and plans. The Executive Committee may be

attended by the advisors that each of the Parties may consider

convenient, it being understood that each of the Parties shall bring

along the smallest possible number of persons.



25.4



For the ordinary meetings of the Executive Committee, the

representative entrusted with presiding the following meeting shall

notify the other representatives (the principal and his alternates) of

the other Party and of the Operator, with ten (10) days advance notice

of the date of the meeting, the venue and the issues to be discussed

(agenda).



25.5



Pursuant to Clause 18 (number 18.3) of The Contract, both for the

regular meetings as well as the extraordinary meetings of the

Executive Committee, the issues to be discussed that have not been



included in the agenda may be considered during the meeting, prior

acceptance by the representatives of the Parties on the Committee.

Section Two - Sub Committees

CLAUSE 26 - CREATION OF THE SUBCOMMITTEES

In development of the function provided for in Clause 19 (number 19.3.4) of The

Contract, the Executive Committee may create the advisory Subcommittees that it

may consider necessary. In any case, the Executive Committee shall designate a

Technical Subcommittee and Financial Subcommittee.

These Subcommittees shall be the organizations established to control and define

the technical, financial and legal considerations of The Contract before the

Executive Committee and shall be governed by The Contract and this Agreement.

Each Subcommittee shall establish its own internal regulation, approved by the

Executive Committee.

CLAUSE 27 - RIGHTS AND OBLIGATIONS

<PAGE>

69

27.1



Set forth in Clause 10 of The Contract,

Joint Operations itself, or through its

guidance of the Executive Committee. In

be responsible for the Joint Operation,

The Contract.



the Operator shall conduct the

contractors, under the overall

any event, the Operator shall

set forth in the provisions of



27.2



The following are among the Operator's obligations:



27.2.1



The preparation, presentation and implementation of the Development

Plan, the Budgets and Exploration and Exploitation Programs, as well

as for the approval of expenses.



27.2.2



The direction and control of all statistics and accounting services.



27.2.3



Planning and obtaining all services and materials required for the

proper development of the Joint Operation.



27.2.4



Providing all the technical skill and consulting required for the

efficient development of the Joint Operation.



27.2.5



Planning the tax effects and fulfilling all tax obligations that may

be derived from the operations performed and providing the timely

report to the Parties for the proportion that corresponds to each of

them.



27.2.6



Establishing a bank account for the exclusive management of the Joint

Account resources.



27.3



The Operator may not establish any encumbrance whatsoever on the

properties of the Joint Operation.



27.4



The resignation or removal of the Operator may be made without

prejudice of any right, obligation or responsibility acquired during

the time in which the Operator acted as such; if the Operator resigns

or is removed before fulfilling the obligations established in The

Contract, it may not charge the Joint Account for the costs and

expenses in which it incurred on account of the change. But if the

Executive Committee were to approve them, these charges and expenses

may then be charged to the Joint Account.



27.5



Once the Operator is notified of his removal or of the acceptance of

its resignation, for the transfer or responsibilities, ECOPETROL shall



audit the Joint Account and shall perform an inventory of all of the

properties of the Joint Operation. Such inventory shall be used for

purposes or return and accounting for the procedure of such transfer

or responsibilities. All costs and expenses incurred with respect to

such inventory and audit shall be for the account of the Joint

Account.

27.6



The Operator shall not be responsible for any loss or damage on

account of the Joint Operation, unless such damages or losses are the

result of:



27.6.1



Gross negligence by the Operator



27.6.2



Failure to obtain and maintain any of the insurance required in Clause

33 of The Contract, except when the Operator has made all possible

efforts to obtain it and maintain them, and the results of such

efforts have been fruitless, a situation which the Operator must first

communicate to the Parties in writing.

<PAGE>

70

Section Four - Contracting Procedure

CLAUSE 28 - SUPPLIER REGISTRATION AND BIDDERS LIST

28.1



It shall be the Operator's responsibility to maintain an updated

registration of vendors, classified pursuant to the various activities

that the operation may require, as well as to establish the

qualification criteria for the firms to be included in the bidders'

list. The respective Subcommittee may request a review of the criteria

before approving the bidders' list.



28.2



ECOPETROL may review the Operator's vendor registration on an annual

basis and may suggest to it, through the respective Subcommittee, that

vendors be included or excluded from the registration. Despite the

above, ECOPETROL may, at any time, by means of a request that duly

explains the motives, request the withdrawal of persons or entities

from the registration.



28.3



In all cases that imply soliciting proposals to contract, the vendor

registration shall be consulted, recording a statement on the

corresponding document.



28.4



The persons or entities that are included in the vendor registration

shall accredit technical, moral and economic solvency, in addition to

the experience, not only of the company but that of its partners as

well, and also that of its technicians that are permanently hired by

it.



28.5



Set forth in the aforementioned criteria, the Operator shall establish

a registration of qualified vendors, which shall be updated

periodically, set forth in their performance.



28.6



In the Fields that are exploited under the sole risk, THE ASSOCIATE

shall have the right that is provided for in Clause 10 (number 10.6)

of The Contract.



CLAUSE 29 - BIDDING PROCESS

29.1



Responsibility: The Operator shall be responsible for preparing the

Request for Proposals in due time, and shall submit it to

consideration by the corresponding Subcommittee.



29.2



The list of those invited to submit proposals shall be prepared based



on the information in the Registration of Vendors.

29.3



In every bidding process, the Operator shall invite at least three

companies. If this were not to be possible, a statement shall be made

with respect to the justification in the report of recommendations to

the respective Subcommittee.



29.4



It shall be endeavored not to invite more than six (6) companies, in

order to avoid additional costs in the assessment of the proposals

and, similarly, to provide a greater opportunity to the participating

companies to successfully obtain the respective contract.



29.5



All other factors being the same, the order of priorities to be

included in the list of bidder shall be as follows: - Companies

registered and with headquarters in the department or departments

where the Commercial Field or Fields are located, but with a branch

established in such department. - Colombian companies whose

headquarters are outside the department or departments where the

Commercial Field or Fields are located, but with a branch established

in such department. - Foreign companies with a branch in Colombia. Foreign companies that do not have a branch in Colombia.

<PAGE>

71

29.6



In the list of companies to be invited to submit proposals, those

companies that are technically and commercially qualified and that

have not had the opportunity to participate in similar bids in the

past shall also be kept in mind.



29.7



The Operator shall prepare the bid documents and shall submit these to

the consideration of the respective Subcommittee with sufficient

advance notice.



29.8



It shall be clearly expressed in the bidding documents that:



29.8.1



Cost shall be one of the criteria to be considered, though not the

sole one, for the award of the contract;



29.8.2



The assessment of the bid shall bear in mind other factors other than

cost, which shall be included in the bid documents;



29.8.3



All proposals that exceed the range of real cost for this activity

shall be disqualified;



29.8.4



The proposals are to be submitted set forth in the terms of the

invitation, and the failure to observe this requirement may lead to

not being considered as valid proposals;



29.8.5



The request for proposals shall include a table with the details of

the prices which is to be filled out by the bidders, in order to

facilitate comparing the proposals;



29.9



The list of bidders shall be reviewed and approved by the Technical

Subcommittee before the invitations to bid are sent out.



29.10



Once the bid documents have been distributed, the following rules

shall apply:



29.10.1



Any information, modification or clarification of the original bid

documents shall be sent out to all the bidders. The Procurement and

Supplies Department of the Operator shall be responsible for these

changes. The changes shall be duly justified by means of a document in

writing.



29.10.2



No bidders can be added or deleted from the list of bidders originally

approved by the corresponding Subcommittee.



29.10.3



Any bidder that does not abide by the bid procedures and rules, or

that may violate the Operator's business ethics code shall be

disqualified immediately.



29.11



The content and format for all of the materials in a request for

proposals shall fulfill the requirements of the procedure known as

"Documentation format submitted to the Technical Subcommittee" and

shall be submitted to the consideration of the corresponding

Subcommittee.



29.12



The internal approvals that are required by the Operator and by

ECOPETROL depend on the estimated value of the contract, set forth in

the internal procedures of the former and the latter.



CLAUSE 30 - AWARDS OF CONTRACTS AND PURCHASE ORDERS

30.1



The Operator is responsible for awarding bids for contracts and

purchase orders. For this purpose, it shall submit its recommendation

to the respective Subcommittee, subject to the procedures that have

been established by the Executive Committee for this purpose.

<PAGE>

72

30.2



Value: The awards shall be based on the best global (overall) value.

The lowest price does not always mean the best proposal, since, in

addition to the amount, other aspects are borne in mind, such as

scheduling and quality, experience, reputation and the Colombian

content submitted by the bidder. In the event that the contract is not

awarded to the lowest amount proposal, such decision should be

justified.



30.3



Justification in writing: The Operator shall present a recommendation

in writing to the corresponding Subcommittee, justifying the contract

and purchase order award, subject to the procedures that are

established for such purpose by the Executive Committee. Such

justification shall include a summary of the commercial and technical

assessments of the proposals received and the basis for the Operator's

recommendation.



30.4



Direct contracting: Direct contracting shall be supported and

presented in writing to the respective Subcommittees, clearly

identifying their justification. The Operator may contract directly,

without having to go through a bidding process, in any of the

following events:



30.4.1



When only one vendor can be obtained, within the time frame required

to satisfy the project schedule;



30.4.2



When an item or service Contract before in a direct manner does not

have an equivalent or satisfactory substitute;



30.4.3



When a service or work is derived from a previous one or is an

extension to an existing contract or work order issued during the last

ninety days and the commercial conditions are not modified, or when

the evidence stemming from a recent bid justify contracting without

undergoing a bidding process;



30.4.4



When the Operator has standardized a specific item or service for all

of the applications within its are of operations and there is only one

known vendor for such item or service;



30.4.5



When it is considered that a sole item or service fulfills the

Operator's requirements within a specified delivery time period;



30.4.6



When an item or service is obtained for testing or assessment;



30.4.7



When there is an emergency. The Operator shall notify ECOPETROL at the

corresponding Subcommittee's immediately next meeting after such

emergency.



30.5



Partial awards: A bid can be awarded partially to two or more bidders,

provided that all of the following conditions are met:



30.5.1



The possibility of a partial award is specifically indicated in the

request for proposals;



30.5.2



The successful bidders have fulfilled the requirements established in

the Request for Proposals;



30.5.3



The partial award represents the best value for the items or services

that shall be obtained;



30.5.4



Any change in the scope of work or in the award criteria shall be

clearly communicated to all of the bidders before the partial award.



30.6



Rejection of proposals: The Operator may declare a bid null and void

when the respective Subcommittee finds motives to justify such

decision and/ or when the proposals are out of line with the actual

costs.



30.7



Notification to the unsuccessful bidders: The result of the award

shall be communicated in writing to all participants.

<PAGE>

73

30.8



Clarification: During the assessment period, the Operator may request

clarification from the bidders. The Technical Subcommittee shall

approve the significant commercial clarifications. No new approval

shall be required by the respective Subcommittee when clarifications

refer to technical issues. Clarifications that may affect the bid

shall be communicated in writing to all of the bidders.



CLAUSE 31 - MANAGEMENT OF CONTRACT AND WORK ORDER

31.1



The Operator shall be responsible for managing the contracts and

purchase orders during their execution.



31.2



The bases for contract or purchase order management are their

execution itself, which shall include all of the agreed- to prices,

schedule and quality requirements.



31.3



The Operator shall maintain a written record of all modifications to

the original contract. The cost impact for each change to the contract

shall be assessed by the Operator and negotiated with the vendor or

contractor before the contract price is changed.



31.4



Any change in the initially approved value of the contract shall be

subject to consideration by the respective Subcommittees and, if

required, shall be approved by the Executive Committee, set forth in

the procedure that is established for such purpose by the Executive

Committee.



31.5



The Operator is responsible for cost control.



31.6



Any additional work or job under the terms of the contract shall be



authorized by the Operator's Project Manager or Operations Manager,

who shall consult with the Procurement and Logistics Manager or with

the departments that fulfill these functions, before making any

modification to the contract. This dual responsibility ensures control

for the integrity of the change process. In the event that the changes

imply modifications to the text of the contract, these shall be

submitted to approval by the Operator's Legal Department.

31.7



Quality control shall be managed with the QA/QC (Quality Control /

Quality Assurance) process, which shall include the independent

inspection and verification of the work and shall be performed at

appropriate moments during the execution of the work.



31.8



The processes used by the Operator for cost control shall be described

in a cost control procedure.



31.9



The Parties shall receive a monthly report on work progress, with cost

documentation and schedule, including the analysis of the variations

with respect to the originally agreed- to Budget for the main

contracts and purchase orders.



31.10



Once the main contracts and purchase orders have been executed, a

detailed analysis shall be undertaken to assess the experiences

learned that could be applied to similar contracts or work orders, and

also in order to allow for improvements in their control.



CLAUSE 32 - INSURANCE

For purposes of Clause 33 in the Contract, with respect to Insurance, the

Operator shall deliver the following information to ECOPETROL, for the latter to

insure fifty percent (50%) of the assets corresponding to the Commercial Field:

<PAGE>

74

32.1



Description of the assets, differentiated, inasmuch as possible, as

follows:



32.1.1



Offices, camps and other non- industrial facilities



32.1.2



Collection stations, specifying tanks (number and capacity) and other

equipment.



32.1.3



Diverse warehouses and other facilities



Note:



The external pipelines and the wells are not insured under the fire

policy, since, in this case,



ECOPETROL assumes the risk directly.

32.2 Value of the assets, indicating only the value of the part that belongs to

ECOPETROL and indicating the percentage of the value that it represents.

32.2



Geographic location.



32.4



Date of receipt, as of which the risk is transferred to the Joint

Operation.



CLAUSE 33 - FORCE MAJEURE OR ACTS OF GOD

33.1



Clause 34 of The Contract only suspends fulfillment of those specific

obligations whose performance becomes impossible on account of events

that constitute force majeure or acts of God. Similarly, it only

interrupts the obligations on the assets, properties, production

facilities, etc. that are affected by the aforementioned circumstance.



The affected Party shall notify the termination of the force majeure,

providing details on the magnitude of the damages and the corrective

actions that affect the system.

33.2



If one of the Parties cannot, on account of force majeure or acts of

God, fulfill the obligations of this Contract, it shall notify this to

the other Party for its consideration, within ten (10) working days

following the date on which the cause was produced, specifying the

causes of its impediment, the estimated period of suspension of the

activities and the way in which it affects fulfillment of the

corresponding affected obligation. The other Party shall respond in

writing, either accepting the cause or not for force majeure or acts

of God.



33.3



The Party affected by the cause for force majeure or acts of God shall

recommence fulfillment of the affected obligations within a reasonable

term once such cause has disappeared, for which it shall advise the

other Party within ten (10) working days after the cause has

disappeared. In the event of partial or delayed execution of the

obligation affected by force majeure or acts of God, the Party that is

obligated to its fulfillment shall exert its best efforts to execute

it within the terms and conditions agreed- to between the Parties in

this Contract, having to continue with the fulfillment of the

remaining contractual obligations.



33.4



If the force majeure cause were to affect the execution of any of the

Exploration Work agreed to as part of the exploratory activities that

Clause 5 of this Contract refers to, the guarantee that supports the

fulfillment of the affected Exploration Work shall be extended for the

same period of time that the impediment may last, which were not

executed during this period of time. For such purpose, THE ASSOCIATE

shall extend or substitute such guarantee, as the case may be.

<PAGE>

75

CLAUSE 34 - REVISION OF THE OPERATIONS AGREEMENT

This Operations Agreement may be revised when the Parties consider it convenient

to do so, at the request of any of the Parties. For its revision or

modifications the Executive Committee is fully empowered to do so. This

Operations Agreement shall be valid until one of the following events occurs:

34.1



Termination of The Contract



34.2



Agreement in writing between the Parties



34.3



The signing of a new Agreement.



In faith of the previously mentioned, the Parties sign the present Operations

Agreement, in contract paper of ECOPETROL on the twentieth (20) day of the month

of December of the year two thousand two (2002).

EMPRESA COLOMBIANA DE PETROLEOS

ECOPETROL

(Signed) illegible

ALBERTO CALDERON ZULETA

President

HARKEN DE COLOMBIA LIMITED

(Signed) illegible

GABRIEL GUSTAVO CANO VELASQUEZ

Principal Legal Representative



WITNESSES

(Signed) Illegible

VICTOR EDUARDO PEREZ



(Signed) Illegible

ALBERTO TOVAR



<PAGE>

76

ANNEX C - LINEAMENTS FOR THE PREPARATION

OF THE DEVELOPMENT PLAN

ANNEX C - LINEAMENTS FOR THE PREPARATION

OF THE DEVELOPMENT PLAN

The present Annex establishes the main aspects that must be considered for the

preparation of the initial Development Plan and of the programs, projects and

annual Budget for each of the Fields discovered in the development of The

Contract, which shall be subject to the consideration of ECOPETROL. In this

document the general conditions of the Development Plan are described without

including a detailed explanation of the format or of the level of detail to be

presented, further than the coverage of the main issues identified herein.

Additional information may be presented in each Development Plan as it is

considered appropriate.

A.



INITIAL DEVELOPMENT PLAN



1.



Outline of the Development Strategy

Summary of the background of the Field, of the development strategy and of

the most relevant aspects of the economic and commercial conclusions.



2.



Description of the Field

Includes the geological synthesis of the Reservoirs discovered and the

determination of the geometry of the field. In this section the area

capable of producing Hydrocarbons of the different Reservoirs is determined

and the commercial area is delimited, using the plain Gauss coordinates, by

the projection in surface of the lowest level of Hydrocarbons commercially

exploitable.



3.



Reservoir Engineering

This implies the evaluation of the properties of the rocks and of the

fluids contained in the Field Reservoirs and other analysis that conduce

to:

a)



Determine the original volumes of Hydrocarbons in each Reservoir, the

tested, probable and possible Reservoirs of the Field (in each case,

based on its useful life, independently from the duration of the

Exploitation Period established in The Contract) and discriminated by

Liquid Hydrocarbons and Gas Hydrocarbons.



b)



Establish the forecast for production of Hydrocarbons that THE

ASSOCIATE expects to produce during each year of exploitation of the

Field, both for the tested Reservoirs and for the tested Reservoirs

plus those probable.



c)



Define the strategy for exploitation so that the production profile,

in the case of tested Reservoirs, achieves the Maximum Degree of

Productive Efficiency (MER) or the top of the production, in that case

in which THE ASSOCIATE identifies restrictions to achieve he MER, and

expose the preliminary strategy of exploitation of the probable

Reservoirs.

<PAGE>



77

d)

4.



Specify the program of obtainment of information to be executed for

the adequate administration of the Reservoirs.



Criteria of the Design of the Development Plan

Description of the logics and coherence of the Development plan and

synopsis of the criteria, bases and presumptives taken into consideration

for the design of the plan.



5.



Development Drilling and Completion

Back ground of the main aspects that refer to the drilling and completion

of Development Wells.



6.



Surface Installations

Presentation of the options of development that were taken into account,

the justification of the option chosen, its general specifications, key

aspects and diagram of each of the Production Systems; Treatment and

Storage; Transportation and Transfer, and of Support to the production of

Hydrocarbons that come from the Field.



7.



Construction and Assembly

Explanation of the strategy for the Development drilling and the

construction and assembly of the surface facilities and the assurance of

the quality.



8.



Operation and Maintenance

General Description of the scheme and logistics of the operation with its

corresponding proposal of the Organizational Letter for the handling of the

field with a background of the contingency plans for the control of the

critical factors.



9.



Abandonment of the Field and Restoration of the Area

Synthesis of the program, methods and practices foreseen for the

abandonment of the wells and the withdrawals of the surface facilities and

alternatives considered for the provision of funds for the abandonment of

the field and the recuperation of the area



10.



Economic and Commercial Aspects.

They include the evaluation of the commercialization options of the

Hydrocarbons discovered, the economic viability of the Field and the

reasons why such alternative was chosen. It must also include:

a)



Estimate of the Direct Exploration Costs incurred in before the

presentation of the initial Development Plan.

<PAGE>

78

b)



Annual budget and chronogram for disbursements on account of capital

expenses (investments) and operational (Direct and Indirect Expenses)

in current dollars during the exploitation of the Field, with relation

to the Reservoirs tested and the Reservoirs tested plus those

probable.



c)



Main economic indicators obtained in the economic evaluation and

optimization carried out for the determination of the commerciality of



the Field.

d)



B.



When it is necessary to unify the field or when the design of the

Development Plan suggests the need to share the production facilities

of the Field with other Fields discovered in the development of the

same Contract, or of another Association Contract, the proposal of a

unified exploitation plan that THE ASSOCIATE proposes to submit for

the consideration of others interested and/or the proposal of the

agreement to share facilities or other assets, including cost

assignments and other distributions necessary, must be attached.



PROGRAMS, PROJECTS AND ANNUAL BUDGET



The Operator, or THE ASSOCIATE if concerning a field exploited under the

modality of only risk, pursuant to that established in The Contract and in the

Operating Agreement (Annex B), shall prepare and present to the Parties the

proposal of the programs, projects and Budget for the following calendar year,

pursuant to the initial Development Plan accepted for the field.

For all effects of the presentation of the annual programs and projects, by

program it is understood the group of projects to be developed, or that by their

technical, operational and administrative characteristics deserve to be

controlled in a joint manner (for example: Building of Battery X). Each program

includes the presentation of the projects to be carried out, their sequence of

execution and the general conditions to which they must abide by to obtain a

determined result.

By project it is understood the group of activities proper of a work or an

specific necessary work for the development and production of the field.

(example: Civil work, Access roads, Facilities, Separation and Treatment System,

etc.). Each project shall be duly supported with the explanatory documents and

the technical and economic specifications.

The annual Budget shall be divided into Expense Budget and Investment Budget.

For all effects of the presentation, the Expense Budget shall be divided into

programs, groups and concepts of expenses and that of Investments in programs

and projects, in numerical order and continuous within each section of the

Budget. With respect to the Expense Budget, the programs and projects shall be

divided into expense groups and these into concept of expenses. By expense

groups it is understood the purpose or object of the expense (for example

Personnel Expenses) and by concept of expenses the specific assignment granted

(for example: Salaries, Social Benefits).

EXAMPLE OF THE INDEX OF THE INITIAL DEVELOPMENT PLAN

1.



Development Scheme of the field

.



History and Location of the Field



.

Development Strategy

<PAGE>

79



2.



.



Production Curve and Investment and Expense Program



.



Commercial and Economic Conclusions



Description of the Field

.



Geology

.



Regional Frame



.



Local Frame



.



.



.



.



Structural



.



Geology of Reservoirs (Stratigraphy, Sedimentology and factors

that control the quality of the reservoir)



Geophysics - Seismic Information

.



Seismic Data Base



.



Seismic Data Processing



.



Analysis and Interpretation of Seismic Data



Petrophysics

.



Subsurface Logging Information



.



Data on recovered Nucleus



.



Calibration of the information on Logs and Nucleus



.



Analysis and Interpretation of Petrophysical data



Maps and Geological Patterns

.



Isopachous



.



Structural



.



Isoporosity



.

<PAGE>



Others

80



3.



Reservoir Engineering

.



.



.



Basic Reservoir Information

.



Rock Properties



.



Fluid Properties



.



Analysis of Nucleus and PVT



.



Gas-Oil and Oil-Water Contacts



.



Productivity of the wells



Simulation of Reservoirs

.



Models of Reservoirs



.



Predictions



Original Hydrocarbons "in-situ". OOIP and OGIP

.



Uncertainties



.



Calculation of Reservoirs (scenarios for Tested, Probable and Possible

Reserves)



.



Production Forecasts (of Tested Reservoirs and of Tested plus



Probable)

.



Exploitation Strategy

.



Development Wells Spacing (Productive and Injectors)



.



Pressure Maintenance Projects



.



Conservation and/or Use of Gas



.



Administration of Reservoirs and Obtainment of Data

.



Well Testing



.



Pressure Measurement and Fluid Sampling



.



Coring and Logging



.

<PAGE>



Production Behavior

81



.

.



Projects of Improved Recovery



.



Opportunities for Future Developments

.



4.



Well Testing



Criteria of the Design of the Development Plan

.



Logics of the Design



.



Regulations and Standards Observed



.



Environmental Criteria



.



.

5.



Production Optimization



.



Environmental Diagnostic and Impacts



.



Operational Limits



Functional Criteria

.



Production Mechanisms of the Reservoirs



.



Flow Rates and Production Capacities



.



Useful Life



.



Specifications of the fluids produced



Geotechnical Criteria



Development Drilling and Completion

.



Development wells

.



Location



.



Design of the Wells (pursuant to the purpose of the well, type

and trajectory of the hole.



.

.

<PAGE>



Drilling Strategy and Chronogram

Critical success factors (technical and operational)

82



.



.



6.



Completion of Wells under Development

.



Design of the completion of Producer and Injector Wells



.



Artificial Lifting



Subsequent Operations

.



Overhauling



.



Stimulation



Surface Installations (Diagram, Specifications and Key Aspects)

.



.



.



Production System

.



Systems considered



.



Justification of the system(s) proposed



.



Sub-system of Pressure Maintenance



.



Improved Recovery



Treatment and Storing System

.



Gathering



.



Separation and Treatment



.



Measurement and Sampling



.



Water, gas and impurities disposition



.



Storing



.



Pumping



Support Systems

.



Safety and Control of the Production



.



Telecommunications



.



Power Generation



.



Camping, Warehouses, workshops, Offices and Transportation

Terminals



<PAGE>

83

.

7.



Transportation System and Transference of Hydrocarbons.



Construction and Assembly

.



Strategy



.

8.



.



Coordination of Activities



.



Permissions and Licenses required



.



Construction and Assembly Chronogram



.



Required Services



Quality Assurance and Control



Operation and Maintenance

.



Proposal of an Organizational Letter of the Field



.



Operational Limits of the surface and subsurface systems.



.



General Vision of the Logistics of the Operation

.



Production



.



Health, Safety and Environmental Monitoring



.



Relations with the Community and the Government



.



Personnel lodging



.



Warehouses



.



Materials and Supplies



.



Displacement and Transportation



.



Communications



.

<PAGE>



Others

84



.



9.



.



Evaluation of Operational Risks



.



Organization and Training for Emergencies Response



Abandonment of the field and Restoration of the Area

.



.

10.



Contingency Plans



Methods and Practices of Abandonment and withdrawal of installations

.



Development Wells (Producers and Injectors)



.



Surface Installations



Restoration and recuperation of the area



Economic and Commercial Aspects

.



Commercialization

.



Market Opportunities and Options considered



.



Justification of the Option(s) proposed



.



Estimation of Incomes



.

.



.



Critical success factors



Direct Exploration Costs caused before the design of the Plan

.



Acquisition of Seismic Information



.



Exploratory Wells



Estimation of Capital Costs and Operation Expenses

.



Investments (Distributed between the main operations or goods)



.



Direct Expenses (Distributed between the main activities)



.

<PAGE>



Indirect Expenses

85



.



.



Disbursement Chronograms

.



Investments



.



Expenses



.



Total



Economic Analysis and Evaluation of the project

.



Economic Indicators



.



Sensibility Analysis



.



Exploratory Wells



</TEXT>

</DOCUMENT>