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EX-10.14

3

ASSOCIATION CONTRACT DATED DECEMBER 1997







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EXHIBIT 10.14

SWORN TRANSLATION NO. 30154 OF A DOCUMENT WRITTEN IN

SPANISH TO WHICH,

FOR IDENTIFICATION PURPOSES, THE SEAL OF THIS OFFICE IS

AFFIXED, AS

WELL AS TO THIS TRANSLATION.

EMPRESA COLOMBIANA DE PETROLEOS ECOPETROL

" MIRADORES"



ASSOCIATION CONTRACT - WITH GAS INCENTIVES

ASSOCIATION CONTRACT



ASSOCIATE:



HARKEN DE COLOMBIA,



LTD.

SECTOR:



MIRADORES



EFFECTIVE DATE:



FEBRUARY 22ND, 1998



The contracting parties namely: Empresa Colombiana de Petroleos,

hereinafter

referred to as ECOPETROL, an industrial and commercial State owned

enterprise,

with its own corporate existence, created by means of Act 165 of

1948, and

currently governed by its by-laws amended by Decree 1209 of June

15th, 1994,

with its main office in Santafe de Bogota, represented by ENRIQUE

AMOROCHO

CORTES, of legal age, bearer of citizenship card No. 5.555.193





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issued in Bucaramanga, resident of Santafe de Bogota, who states: 1.

That in his

capacity as President of ECOPETROL he acts in representation of the

Company and



2. That for the execution of this Contract he has been authorized by

the Board

of Directors of ECOPETROL under Minutes No. 2169 of October 16th,

1997 and on

the other hand, HARKEN DE COLOMBIA, LTD., a company organized under

the laws of

Cayman Islands, with main domicile in Santafe de Bogota, hereinafter

referred to

as THE ASSOCIATE , with a branch established in Colombia and main

domicile in

Santafe de Bogota, under Public Deed 406 of February 19th, 1993,

issued by the

Eleventh Notary Public's Office of the Circuit of Santafe de Bogota,

herein

represented by GABRIEL GUSTAVO CANO VELASQUEZ, of legal age, bearer

of the

citizenship card No. 8'265.559 issued in Medellin, who states: 1.

That in his

capacity as Legal Representative, he acts on behalf and

representation of HARKEN

DE COLOMBIA, LTD. and 2. That in order to enter into this Contract

he has been

fully authorized as verified in the certificate of existence and

representation

issued by the Chamber of Commerce of Santafe de Bogota. Under the

mentioned

conditions, ECOPETROL and the ASSOCIATE hereby verify that they have

entered

into a contract contained in the following clauses:





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CHAPTER I - GENERAL PROVISIONS

CLAUSE 1 - OBJECT OF THIS CONTRACT

1.1 The purpose of this Contract is the exploration of the Contract

Area and the

exploitation of the nationally-owned hydrocarbons as may be found

therein, as

described in Clause 3 hereinbelow:

1.2 According to article 1 of Decree No. 2310 of 1974, the

exploration and

exploitation of nationally owned hydrocarbons is entrusted to

ECOPETROL , who

may carry out these activities directly or under contracts with

Private Parties.

Based on said provision, ECOPETROL has agreed with the ASSOCIATE to

explore the



Contract Area and to exploit the Hydrocarbons which may be found in

the area

under the terms and conditions provided hereunder, in Annex A and

Annex B B

(Operating Agreement) which are part of this contract.

1.3 Without affecting the provisions hereunder, it is agreed 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 Colombian law to anyone exploiting nationally-owned

Hydrocarbons

in this country.

1.4 ECOPETROL and the ASSOCIATE agree that they will carry out the

exploration

and exploitation operations in the Contract Area; that they will

split between

themselves the





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costs and risks thereof in the proportion and under the terms

contemplated in

this Contract and that the properties acquired and Hydrocarbons

produced and

stored shall be property of each Party in the proportions set forth

hereunder.

CLAUSE 2 - APPLICATION OF THE CONTRACT

This contract applies to the Contract Area, as defined in Clause 3

hereinbelow

or when Clause 8 has been applied, to such portion thereof as in

subject to the

terms of this Agreement.

CLAUSE 3 - CONTRACT AREA

The Contract Area is called "MIRADORES" with an extension of twelve

thousand

nine hundred and thirty eight ( 12.938) hectares five hundred and

sixty five

(565) square meters, located within the jurisdiction of the

municipalities of

Mani, Department of Casanare. All points of the polygon, where

Cusiana flows,

the right bank was taken as boundary of the contract. Therefore, 104



square

meters were deducted from such polygon, formed by vertex ( 13.168

hectares ),

the area measured with planimeter (229 hectares 9.539 square

meters ). This area

is described below according to the map attached as Annex "A", which

makes part

of this contract, as well as the corresponding charts : "ASIVA-1567"

Geodesic

Vertex from Instituto Geografico Agustin Codazzi has been taken as

reference

whose Gauss plane coordinates with 3o





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East Origin are: N-981.664.04 meters, E-886.281.72 meters,

corresponding to

geographical coordinates Latitude 4o 25'57".086 North of Equator,

longitude 69o

06'19".493 to the West of Greenwich. From this vertex continuing N

46o 41"

53".956 W direction 22.373.97 meters to reach point "A", departure

point to mark

boundaries whose coordinates are N-997,009.00 meters, E-869,999.00

meters. From

this point, N 37o 17'12".094 E for a distance of 14.492.01 meters

until reaching

point "B", whose coordinates are N-1'008,539.05 meters, E-878,778.31

meters.

From this point, S30o 54'58".169 E , 1,793.93 meters until reaching

point "C"

whose coordinates are N-1'007,000.00 meters, E-879,700.00 meters.

Line "B-C" has

a S 30o 54'58".169 E direction and a longitude of 1,793.93 meters

and it is

totally adjacent to a section of "C-B" line from Alcaravan sector of

Harken de

Colombia Ltd. From point "C" continuing to reach point "D" whose

coordinates are

N-1'004, 171.12 meters, E-886,467.14 meters. Line C-D totally

adjoins a section

of line "B-A" from Alcaravan Sector of Harken de Colombia Ltd., with

a S

67o18'48".529 E direction and 7,334.62 meters distance. From this

point,

continuing S 36o 20'11".348 W for a distance of 15,979.27 meters,

until reaching

point "E" whose coordinates are N-991,299.00 meters, E-876,999.00

meters. From

this point, continuing N 50o 47'43".379 W , 9,033.50 meters until



reaching point

"A" departure point and closing of the boundary.





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PARAGRAPH 1: In the event that any person files a claim with the

pretense that

he owns the hydrocarbons of the subsoil of the Contract Area,

ECOPETROL shall be

in charge of the case and of the obligations arising thereto.

PARAGRAPH 2- In the event that part of the Contract Area is extended

on areas

that are or have been reserved and declared included in the National

Parks

system, THE ASSOCIATE, agrees to abide the conditions imposed by

competent

authorities,

without implying an amendment of this Contract and without any right

to claim

against ECOPETROL pursuant to clause 30 paragraph 30.4 hereunder.

CLAUSE 4 - DEFINITIONS

For purposes of this Contract, the terms mentioned below shall have

the

following meaning:

4.1 CONTRACT AREA: The land defined in Clause 3 above, subject to

Clause 8.

4.2 FIELD: Such portion of the Contract Area in which there are one

or more

totally or partially overlapped Structures, with one or more

hydrocarbon

reservoirs- or capable of producing Hydrocarbons . Such reservoirs

could be

found





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separated by geological reasons such as: synclinal, faults, wedging

of

reservoir rocks, changes in porosity and permeability; they can also

be of

different geological ages, separated by relatively impervious



strata, totally or

partially overlapping or not overlapping at all.

4.3 COMMERCIAL FIELD: It is the field that ECOPETROL accepts as

capable of

producing Hydrocarbon in economically exploitable quantity and

quality in one or

more Production Targets defined by ECOPETROL.

4.4 GAS FIELD: It is the field, that based on the information

supplied by THE

ASSOCIATE, will be rated by ECOPETROL as Non Associated Natural Gas

Producer (

or free natural Gas) in the definition of its commercial nature.

4.5 EXECUTIVE COMMITTEE: The body formed within thirty (30) days

following

acceptance of the first Commercial Field to supervise, control, and

approve all

the operations and actions performed during the life of the

contract.

4.6. DIRECT EXPLORATION COSTS Expenses reasonably incurred by the

Associate for

the acquisition of seismic, drilling of exploration wells as well as

for

locations, completion, equipment, and tests of such wells. Direct

Exploration

Costs do not include administrative or technical support from the

headquarters

and local offices of the Company.

4.7. JOINT ACCOUNT The records to be kept by means of accounting

books, in





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accordance with Colombian Law for crediting or debiting the Parties

for their

Participation in the Joint Operation of each Commercial Field.

4.8 BUDGET PERFORMANCE The funds actually spent and committed in

each of the

programs and projects approved for a given period of time.

4.9 STRUCTURE: It is the geometric form with geological closure

( anticlinal,

synclinal, etc) which the formations present, in which there is

accumulation of

fluids.



4.10 EFFECTIVE DATE: The calendar day on which the term of sixty

(60) days

counting from the signing date the contract ends and as of which,

all the

contract terms are counted subject to the validity of the contract.

4.11. CASH FLOW Constituted by the physical movement of money

(income and

expenditure) that the Joint account must undertake in order to take

care of the

various obligations contracted by The Association.

4.12 ASSOCIATED NATURAL GAS Mixture of light hydrocarbons as a gas

cap or in

solution in the reservoir and produced jointly with liquid

hydrocarbons.

4.13 NON ASSOCIATED NATURAL GAS ( PRODUCTION OF): Hydrocarbons

produced in a

gaseous state on the surface under standard conditions, with average

values

(weighted per production), with an initial Gas/Oil ratio above

15.000 standard

cubic feet per barrel of liquid Hydrocarbon and a





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

4.14 DIRECT EXPENSES All those expenses of a monetary nature on the

Joint

Account to pay for personnel directly involved in the Association,

of goods and

supplies, service contract with third parties as well as procurement

for general

expenses required for the joint operation within the normal

development of its

activities.

4.15 INDIRECT

EXPENSES Refers to the administrative and technical support that the

associated

operation demands from the Operators's own organization,

occasionally.

4.16 COMMERCIAL INTEREST When referring to Colombian Pesos, the

current interest

for ninety (90) days Fixed Term Deposits ( FTD) certified by the

Bank

Superintendency or the corresponding body for the corresponding



period; if

applicable to US Dollars, it is the prime rate as fixed by The City

Bank of New

York or entity approved for such purpose.

4.17 INTEREST IN THE OPERATION Each Party's share of the obligations

and rights

in the exploration and exploitation of the Contract Area.

4.18 DEVELOPMENT INVESTMENTS Refers to the amount of money invested

in assets

and equipment which are capitalized as a Joint Operation's assets in

a

Commercial Field after declaring the commercial value of the same.





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4.19 HYDROCARBONS: any organic compound mainly formed of the natural

mixture of

carbon and hydrogen as well as any substances accompanying or

deriving

therefrom, with the exception of helium and rare gases.

4.20 GASEOUS HYDROCARBONS: This includes all hydrocarbons produced

in gaseous

state on the surface and reported under standard conditions ( 1

absolute

pressure atmosphere and a temperature of 60o F).

4.21 LIQUID HYDROCARBONS: This consists of crude

oil and condensates, as well as those produced in such state as a

result of gas

treatment when necessary, reported under standard conditions.

4.22 PRODUCTION TARGETS The reservoirs located within the discovered

Commercial

Field and defined as commercial producers.

4.23 JOINT OPERATION The activities and works 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 perform

directly, on their

behalf, the operations necessary for the exploration and

exploitation of the

Hydrocarbons found in the Contract Area.





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4.25 PARTIES: On the effective Date, ECOPETROL and THE ASSOCIATE.

Subsequently

and at any time, ECOPETROL as Party of the first part and THE

ASSOCIATE or its

assignees as Party of the second part.

4.26 EXPLORATION PERIOD: The period of time available THE ASSOCIATE

to comply

with the obligations stipulated in Clause 5 hereinbelow, which shall

not exceed

six (6) years as from the Effective Date, except in the cases

contemplated under

Clauses 9 (paragraphs 9.3 and 9.8) and 34.

4.27. EXPLOITATION PERIOD: The time elapsing from the end of the

Exploration

Period or the Retention Period, should there be any, until the end

of this

contract.

4.28 RETENTION PERIOD: A period of time that might be requested by

THE ASSOCIATE

and granted by ECOPETROL to initiate the Exploitation Period of each

Gas Field

discovered within the Contract Area, that due to its specific

conditions does

not make feasible its development at a short term and therefore an

additional

time for construction of infrastructure and/or development of the

market is

required.

4.29 EXPLORATION WELL: Any well designated as such by THE

ASSOCIATE,

to be drilled or deepened on its own account in the Contract Area,

in search of

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

determine the

stratigraphy of an area. In order to fulfill the obligations agreed

in Clause 5

hereunder, the respective Exploration





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Well will be determined by ECOPETROL and THE ASSOCIATE.



4.30 EXPLORATORY (OR DEVELOPMENT) WELL: It is any well previously

scheduled by

the Executive Committee for production of Hydrocarbons discovered in

the

Production Targets within each Commercial Area.

4.31 BUDGET: The basic planning tool by means of which money

resources are

assigned for specific projects to be applied within a calendar year,

or part of

a year, so as to accomplish the goals and objectives proposed by THE

ASSOCIATE

of the Operator.

4.32 EXTENSIVE PRODUCTION TESTS The operations performed on one or

several

producing exploratory wells, to evaluate their production conditions

and

reservoir behavior.

4.33 REIMBURSEMENT The Payment of fifty per cent (50%) of the direct

exploration

expenses in which THE ASSOCIATE has incurred.

4.34 EXPLORATION ACTIVITIES Operations carried out by THE ASSOCIATE

which are

related to the search of Hydrocarbons and the discovery thereof

inside the

Contract Area.

4.35 RESERVOIR: This is any rock under the surface in which

hydrocarbons

are accumulated in their pore space, under production or capable of

producing

Hydrocarbons and behaving as an independent unit in terms of its

petrophysical

and fluid properties, and having a common pressure system

throughout.





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CHAPTER II- EXPLORATION

CLAUSE 5. TERMS AND CONDITIONS

5.1.1 During the first (1st) year as of the Effective Date of this

Contract, the

ASSOCIATE agrees to reprocess one hundred and sixty five (165)

kilometers of

available seismic and to acquire a new seismic program consisting of



a minimum

of twenty five (25) kilometers. During the second year THE ASSOCIATE

shall drill

one (1) Exploratory Well until reaching the formations that may

produce

hydrocarbons in the area. At the end of the first year THE ASSOCIATE

shall have

the option of relinquishing the Contract providing it has complied

with the

above-mentioned obligations.

5.1.2 During the third year, THE ASSOCIATE shall drill one (1)

Exploratory Well

until reaching those formations apt to produce Hydrocarbons in the

area. At the

end of said year the Contract will terminate, if its extension has

not been

requested and authorized pursuant to paragraph 5.2 of this Clause or

if a

commercial field has not been discovered, except for the provisions

of Clause 9

paragraph 9.5.

5.2 If THE ASSOCIATE has complied satisfactorily with the

obligations set forth

in Clause 5, ECOPETROL shall, on THE ASSOCIATE's request, extend the

Exploration

Period year-by-year for up to an additional three (3) years, and

during





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each annual extension THE ASSOCIATE shall be under obligation to

carry out

Exploration Operations in the Contract Area, consisting of the

drilling of one

(1) Exploratory Well until penetrating the formations that may

produce

Hydrocarbons in the area.

5.3 If during any one year of the Exploration Period THE ASSOCIATE

should decide

to carry out work covering the following year's obligations, it

shall request

ECOPETROL's approval to perform such operations. If the request is

accepted,

ECOPETROL shall determine how and for what amount such obligations

are to be

transferred.



5.4 During the life of this Contract, THE ASSOCIATE may carry out

Exploration

Activities in such areas as it may retain pursuant to Clause 8 and

THE ASSOCIATE

shall be solely responsible for the risks and costs of such

operations and

therefore, shall have full, sole control over the same, although the

maximum

length of the Contract shall not be changed for this reason.

CLAUSE 6. SUPPLY OF INFORMATION DURING EXPLORATION

6.1 ECOPETROL shall supply THE ASSOCIATE, whenever the latter may so

request,

with any information on its possession within the Contract Area. The

costs of

reproduction and supply of such information shall be charged to THE

ASSOCIATE.





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6.2 During the Exploration Period, THE ASSOCIATE shall deliver to

ECOPETROL once

obtained, and in accordance with ECOPETROL's data supply manual, all

the

geological and geophysical information, cores, edited magnetic

tapes, processed

seismic sections and all the field information supporting it,

magnetic and

gravimetric profiles (logs) , all of it in reproducible original

copies of

geophysical data, reproducible originals of all the records on the

wells drilled

by THE ASSOCIATE, including the Final Composite Chart on each well,

and copies

of the Final Drilling Report, including analyses of core samples,

results of

production tests and any other information relating to the drilling,

study or

interpretation of any kind whatever made by THE ASSOCIATE for the

Contract Area,

to ECOPETROL, without any limitation whatsoever. ECOPETROL has the

right at any

time and through such procedures as it may consider appropriate, to

witness any

operations and verify the information listed above.

6.3 The Parties agree that any geological, geophysical and

engineering

information obtained hereunder is of confidential nature during



three (3) years

following obtainment of said information. From said moment, such

information

will be available except for the interpretations made by the Parties

on said

information. The released information mainly consists of seismic

information,





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potential methods, remote sensors, and geochemistry, with their

respective

supports, soil and sub-soil mapping, well logs, electric logs,

formation tests,

biostratigraphic , petrophysical and fluid analyzes, and production

histories.

By agreement between the Parties in each case, information may be

exchanged with

companies associated or not associated with ECOPETROL. It is

understood that

this agreement is without prejudice to the obligation to furnish the

Ministry of

Mines and Energy with any information it may request under current

legal and

regulatory provisions. It is understood and agreed that The Parties

may, at its

sole discretion, supply such information as may be required by its

affiliates,

consultants, contractors, finance institutions, and as required by

the competent

authorities with jurisdiction over the associates or its affiliates,

or under

regulations of any stock exchange in which capital stock of the

Parties or

related corporations is listed.

CLAUSE 7: EXPLORATION BUDGET AND PROGRAMS

THE ASSOCIATE shall have the obligation, in accordance with the

provisions of

this Contract, to prepare the programs,the time chart for activities

to be

developed and the budget to be executed at a short term ( for the

next calendar

year) and the projection for the next two (2) years with the

estimated budget,

necessary for the





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exploration of the Contract Area. Such projection, programs, time

chart and

Budget shall be submitted to ECOPETROL for the first time, within

sixty (60)

calendar days from the date of execution of this contract and

thereafter, within

the first ten (10) calendar days of each year. On a quarterly basis,

THE

ASSOCIATE, shall deliver ECOPETROL a technical and financial report,

listing the

different exploratory activities carried out, prospects for the area

based on

the information obtained, the allocated budget and the exploration

costs

incurred until the date of the report, commenting for each case the

causes

originating the main deviations . At ECOPETROL's request, the

ASSOCIATE shall

give the explanations on the report, during meetings to be scheduled

on a

half-year basis. Information submitted by THE ASSOCIATE in the

reports and

explanations dealt with herein shall in no case be considered as

accepted by

ECOPETROL. Financial information shall be subject to auditing by

ECOPETROL under

the terms set forth in Clause 22 of Annex "B" (Operating Agreement)

hereunder.

CLAUSE 8: RESTITUTION OF AREAS

8.1 If, at the end of the initial Exploration period of three years

or of such

extensions as may have been obtained by THE ASSOCIATE, pursuant to

Clause 5,

paragraph 5.2, a commercial field has been discovered in the

Contract Area, such

an area shall be reduced to fifty per cent (50%); two (2) years

later, the area

shall be reduced to an extension





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equal to fifty per cent (50%) of the remaining Contract Area, and

two (2) years

thereafter, such area shall be reduced to that of the Commercial



Field or

Commercial Fields then in production or under development, plus a

two and a half

(2.5 ) kilometer-wide reserve zone surrounding each Field and it

shall be the

only part of the Contract Area to remain subject to the terms of

this contract.

In order to enforce this Clause, an imaginary mesh or grid will be

overlapped to

the initially contracted area divided in ten rows and columns in a

north-south

direction, whose boundaries will be given by the north and east

coordinates,

maximum and minimum of marking of the boundaries, defining the base

cells for

restitution of the area dealt with herein. Every time a restitution

of areas is

made, the imaginary grid or mesh, will be adjusted based on the new

coordinates

of the Contract Area.

8.2 THE ASSOCIATE shall determine the areas which it will hand back

to

ECOPETROL, based on the above-mentioned imaginary mesh or grid . For

this

purpose, it will hand back up to two lots made up of one or more

adjoining cells

trying to keep a sole polygon, unless THE ASSOCIATE proves that this

is not

possible or convenient, for which it will require ECOPETROL's

approval.

Notwithstanding the obligation of returning the areas dealt with in

Clause 8

(paragraph 8.1) THE ASSOCIATE is not bound to restitute areas under

development

or production including two and a half (2.5)





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kilometer wide reserve zones surrounding such areas, except in the

event that,

for reasons attributable to THE ASSOCIATE, the development or

production

operations are suspended continuously for more than one year without

justified

cause, in which case THE ASSOCIATE shall relinquish such areas to

ECOPETROL and

the Contract shall terminate in respect to said areas or part of an

area. The

provisions of this clause shall also apply to the Exploitation under



the sole

risk mode.

8.3 RETENTION PERIOD: If THE ASSOCIATE has discovered a Gas Field

and files a

request for definition of the commercial nature for such field dealt

with in

clause 9 paragraph 9.1; with said request it shall ask ECOPETROL

granting of a

Retention Period ; fully justifying the reasons to be granted said

period of

retention.

8.3.1 THE RETENTION PERIOD shall be requested by THE ASSOCIATE and

granted by

ECOPETROL prior to the date on which the last restitution of areas

dealt with in

paragraph 8.1 of this clause is to be made.

8.3.2 The Retention period shall not exceed four (4) years. If the

term

initially granted as Retention Period were not sufficient, upon a

written and

justified request from THE ASSOCIATE, ECOPETROL may extend the

Retention Period

for an additional term, the addition of the initial period and its

extension

shall not exceed four (4) years.





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CHAPTER III- EXPLOITATION

CLAUSE 9. TERMS AND CONDITIONS

9.1 To commence the Joint Operation hereunder, it is considered that

the

exploitation operations shall start on the date when the Parties

acknowledge the

existence of a Commercial Field or when the events provided for in

Clause 9

(paragraph 9.5) have occurred. The existence of a Commercial field

will be

determined by means of THE ASSOCIATE's drilling a number of wells

within the

proposed Commercial Field, sufficient to allow for the area capable

of producing

Hydrocarbons and the commercial nature of the field to be reasonably

defined. In

this case THE ASSOCIATE shall notify ECOPETROL in writing on the

discovery of a



Commercial Field, furnishing the studies on which such conclusions

are based.

ECOPETROL, within a ninety (90) calendar days as of the date on

which THE

ASSOCIATE delivers all the support information and carries out the

technical

presentation to ECOPETROL, shall accept or object the existence of

the

Commercial Field. ECOPETROL may request any additional information

that it deems

necessary within the next thirty (30) days following the date of

submission of

the first support information.

9.2.1 If ECOPETROL accepts the existence of the Commercial Field, it

shall give

notice to THE ASSOCIATE, within the ninety (90) calendar days

referred to in

Clause 9 (paragraph





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9.1) , specifying the area of the Commercial Field and will then

start to

participate, in the development of the Commercial Field discovered

by THE

ASSOCIATE under the terms of this contract.

9.2.2 ECOPETROL shall reimburse THE ASSOCIATE fifty per cent (50%)

of Direct

Exploration Costs covered by THE ASSOCIATE under its account and

risk within the

Contract Area, prior to the date of submission of the studies to

define the

commercial nature of each new discovered Commercial Field, pursuant

to paragraph

9.1 of this Clause.

9.2.3 The amount of these costs shall be determined in US dollars

taking as

reference the date on which THE ASSOCIATE has made such

reimbursements;

therefore, costs incurred in Colombian pesos shall be liquidated at

the exchange

rate certified by the Bank Superintendency or other competent body,

effective on

the date fixed herein.

PARAGRAPH: Once the amount of the direct Exploration Costs to be

reimbursed in



US dollars has been defined, this value shall be adjusted from the

time of its

reimbursement, per each year or fraction of year, until the date

determined by

the Ministry of Mines and Energy as initiation date for exploitation

of the

respective Field, with the international inflation rate of the

respective year,

and in its absence, with the one of the preceding year. The

international

inflation value to be used shall be the annual percentual variation

of the

consumer price index of industrialized





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countries taken from " International Financial Statistics" of the

International Monetary Fund ( page S63 or as amended) and in its

absence, the

publication agreed by the Parties.

9.2.4 Reimbursement of direct exploration costs as mentioned in

Clause 9

(paragraph 9.2.2) shall be made by ECOPETROL to THE ASSOCIATE as

from the time

the field is placed in production by Operator with the amount in

dollars

equivalent to fifty per cent (50%) of its direct participation in

the total

production of the corresponding field, after deducting the

percentage

corresponding to royalties. PARAGRAPH: If dealing with a Gas

Commercial Field,

said reimbursement shall be made by ECOPETROL to THE ASSOCIATE, as

from the time

the field is placed in production by Operator with the amount in

dollars

equivalent to one hundred per cent ( 100%) of its direct

participation in the

total production of the corresponding Field, after deducting the

percentage

corresponding to royalties.

9.3 If ECOPETROL does not accept the existence of the Commercial

Field referred

to in Clause 9 ( paragraph 9.1), it may indicate to THE ASSOCIATE

the additional

works it may consider necessary to demonstrate the existence of a

Commercial

Field, the cost of such work not to exceed TWO MILLION DOLLARS (US



$2.000.000),

nor to require a period of more than (1) one year for its

completion, and in

that case the Exploration Period for the Contract Area shall be

automatically

extended by a period of time equal to that





23

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No.30154/Err

agreed upon between the Parties as necessary for the completion of

the

additional work requested by ECOPETROL under this Clause, without

affecting the

provisions on reduction of areas in Clause 8 ( paragraph 8.1.)

9.4 If after the completion of the additional work requested thereby

under

Clause 9 (paragraph 9.3) , ECOPETROL accepts the existence of the

Commercial

Field referred to in Clause 9 (paragraph 9.1), it will start to

participate in

the development operations in the field under the terms set forth in

this

Contract, and shall reimburse THE ASSOCIATE in the manner provided

in Clause 9 (

9.2.3, 9.2.4) for fifty per cent (50%) of the cost of the additional

work

requested, pursuant to Clause 9 (paragraph 9.3) , and the works

performed will

become the property of the Joint Account.

9.5 If ECOPETROL does not accept the existence of a Commercial Field

after

completion of the additional work under Clause 9 (paragraph 9.3) THE

ASSOCIATE

has the right to perform such work as it may deem necessary for the

exploitation

of the field and to reimburse itself for two hundred per cent (200%)

of the

total cost of the work performed on its own account and risk in the

respective

field for purposes of this Clause , and up to fifty per cent (50%)

of the Direct

Exploration Costs, incurred by the ASSOCIATE before the date of

submission of

the studies to allow for the commercial nature of the respective

field to be

defined. For purposes of this Clause, reimbursement







24

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No.30154/Err

shall be made with the value of the produced Hydrocarbons, minus the

royalties

dealt with in Clause 13, deducting the production , gathering,

transportation

and sale costs. If the ASSOCIATE selects the sole risk mode, it is

understood

that the exploitation terms, commences as of the date on which

ECOPETROL gives

notice to THE ASSOCIATE that it does not accept the commercial

nature. For the

purpose of the liquidation of the value in dollars of the

reimbursements made in

pesos, they shall be liquidated at the exchange rate certified by

the Bank

Superintendency or other competent body, effective on the date on

which THE

ASSOCIATE has made such reimbursements. For purposes of this Clause,

the value

of each barrel of Hydrocarbon produced in such a field during a

calendar month

shall be the average per-barrel price received by THE ASSOCIATE from

sales of

its share of the Hydrocarbons produced in the Contract Area during

the same

month. Regarding reimbursement of the Direct Exploration Costs, the

provisions

of paragraph of Clause 9 (paragraph 9.2.3) shall apply.

Once THE ASSOCIATE has reimbursed itself according to the percentage

set forth

in this Clause, all wells drilled, facilities and any kind of assets

acquired by

THE ASSOCIATE for exploitation of the field and paid for as

indicated in this

Clause, shall become property of the Joint Account, free of charge,

upon

acceptance by ECOPETROL of participating in the development of such

field.







25

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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

ASSOCIATE's

right to reimburse itself for the investment it may have made on its

own account

in the manner and for the percentage indicated in Clause 9

(paragraph 9.5). Once

THE ASSOCIATE has obtained this recovery, ECOPETROL shall start to

share in the

economic results of the fields developed on THE ASSOCIATE's

exclusive account.

9.7 The boundaries of a Commercial Field shall take into

consideration all the

geological and geophysical information and that of the wells drilled

within such

a field or relating to it.

9.8 If upon expiry of the six (6) year Exploration Period referred

to in Clause

5 (paragraph 5.2) THE ASSOCIATE has drilled any or several

Exploratory Wells

which indicate the possible existence of a Commercial Field,

ECOPETROL, at THE

ASSOCIATE's request, shall extend the Exploration Period by the

length of time,

not exceeding one year, required by THE ASSOCIATE in order to prove

the

existence of such a Commercial Field, without prejudice as to the

provisions of

Clause 8.

9.9. If after accepting the commercial nature of

one or more fields, THE ASSOCIATE continues meeting the exploratory

obligations

agreed in Clause 5, at the same time it may





26

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carry out the exploitation of said fields before ending of the

exploration

period defined in Clause 4, paragraph 4.26, but only as of the date

of

expiration of this period, shall commence to count the exploitation

period. When

dealing with Gas Fields and ECOPETROL has granted the Retention

Period, the

Exploitation Period for each Field shall commence as of the date of

expiration

of the respective Retention Period.



9.10 If as a result of the drilling of Exploration Wells after

defining the

existence of a Commercial Field, THE ASSOCIATE proves the presence

of additional

accumulations of Hydrocarbons related to said Field, it shall

request ECOPETROL

enlargement of the Commercial Field and determination of its

commercial nature,

following the procedure set forth in Clause 9 (paragraphs 9.1 and

9.2.1). If

ECOPETROL accepts the commercial nature, it shall reimburse THE

ASSOCIATE fifty

per cent (50%) of the Direct Exploration Costs exclusively related

to the

enlargement of the area of the Commercial Field, under the terms of

paragraphs

9.2.3 and 9.2.4. If ECOPETROL does not accept the existence of a

Commercial

Field, THE ASSOCIATE shall have the right to reimburse itself up to

two hundred

per cent (200%) of the total of the work performed on its own

account and risk

for exploitation of Exploration Wells resulting producers and up to

fifty per

cent (50%) of the Direct Exploration Costs incurred by THE ASSOCIATE

exclusively





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No.30154/Err

related to definition of the commercial nature . Such reimbursement

shall be

made out of the value of the Exploration Wells resulting producers,

minus the

Royalties, under Clause 21 ( paragraph 21.2 ) until the percentages

defined

hereunder.

CLAUSE 10 - TECHNICAL CONTROL OF THE OPERATIONS

10.1 The parties agree that THE ASSOCIATE is the Operator and, as

such, with the

limitations set forth in this contract, have control of all the

technical

operations and activities it may considered necessary for an

efficient and

profitable exploitation of Hydrocarbons found within the area of the

Commercial

Field.

10.2 The Operator is under obligation to carry out the development



and

production operations in accordance with known industrial standards

and

practices using the best technical methods and systems required for

an economic

and efficient exploitation of Hydrocarbons, and fulfilling any legal

and

regulatory provisions on the subject.

10.3 The Operator shall be considered to be an enterprise distinct

from the

Parties hereto for any purposes hereunder, as well as for the

application of

civil, labor and administrative legislation and for Operator's

relations with

personnel in its employment, under Clause 32.

10.4 Operator will have the right to resign as such, by





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means of a written notice given to the Parties six (6) months in

advance of the

effective date of such resignation. The Executive Committee shall

then designate

a new Operator, pursuant to Clause 19 (paragraph 19.3.2).

CLAUSE 11 - EXPLOITATION PROGRAMS AND BUDGETS

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

Commercial Field in

the Contract Area, the Operator shall submit an operating program

plus a Budget

for the rest of the current calendar year and a development plan ,

to be agreed

in the Executive Committee. If less than six an a half months are

left to the

end of the year, the Operator shall prepare and submit a Budget and

programs for

the following calendar year within a period of three (3) months.

11.1.1 Future budgets and programs shall be submitted to the Parties

during the

month of May of each calendar year, for which the Operator shall

send to the

Parties their proposal within the first ten (10) days of the month

of May.

Within twenty (20) days from the receipt of the Budgets and

programs, the

Parties shall advise the Operator in writing on any changes they may



wish to

propose. When this happens, the Operator shall take into account any

recommendations and changes proposed by the Parties in drawing up

the Budget

and programs, which will be submitted for the Executive Committee's

final

approval at an ordinary meeting called for





29

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No.30154/Err

the purpose, held on July of each year. In the event the total

Budget has not

been approved before the month of July, those aspects of the Budget

on which an

agreement has not been reached, shall be approved by the Executive

Committee,

and those aspects not approved shall be immediately submitted to the

parties for

further review and final decision in the manner set forth in Clause

20.

11.1.2 The development plan shall become the guide document to carry

out the

technical, efficient and economic exploitation of each Field and

shall contain

the description of the activities to be developed and an estimate of

the

investments and expenses for the next five years, detailing the

annual

operations program and the Budget for the next calendar year.

11.2 The Parties may propose additions or revisions to the approved

Budget and

programs but, excepting cases of emergency, shall not be proposed

with more

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

decide on

the proposed additions and revisions at a meeting, to be held within

thirty (30)

days from the submittal of same.

11.3 The main purpose of the programs, Budgets and development plan

is:

11.3.1 to determine the operations to be carried out and the

expenses and

investments (Budget) that the Operator is authorized to undertake

during the

calendar day immediately following.







30

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No.30154/Err

11.3.2 To keep a projection of the development of each Field within

a medium to

long term horizon.

11.4 The terms program and Budget are understood to mean the work

schedule and

estimated expenses plus investments to be effected by the Operator

in the

various aspects of the operation, such as:

11.4.1 Capital investments in Production: drilling for the

development of

reservoirs; reconditioning or overhauling of wells; specific

construction for

production.

11.4.2 General Construction and Equipment: Industrial and camp

facilities,

transportation and construction equipment; drilling and production

equipment;

other construction and equipment.

11.4.3 Maintenance and Operating Expenses: Production expenses,

geological

expenses; administrative expenses for the operation.

11.4.4 Working Capital requirements

11.4.5 Contingency Funds

11.5 The Operator shall pay all the expenses and investments and

carry out the

development and production operations in accordance with the

programs and

Budgets referred to in Clause 11 (Paragraph 11.1), without exceeding

the total

Budget for each year by ten per cent (10%) , except if so authorized

by the

Parties in special cases.

11.6 The Operator shall not, of its own will, initiate any project

or charge the

Joint Account for any expenses not





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No.30154/Err

approved under the Budget, that exceed the amount of Forty Thousand

US dollars

(US$40.000) or its equivalent in Colombian currency per project or

per quarter.

11.7 The Operator is authorized to incur expenses chargeable to the

Joint Account without the Executive Committee's prior authorization

in cases of

emergency measures designed to safeguard the Parties' personnel or

property;

emergency expenses arising from fires, floods, storms or other

disasters;

emergency expenses indispensable for the operation and maintenance

of production

facilities, including the maintenance of wells in conditions to

produce with

maximum efficiency; emergency expenses indispensable for the

protection and

preservation of materials and equipment required in the operations.

In these

cases the Operator shall call a special meeting of the Executive

Committee as

soon as possible in order to obtain its approval to continue with

the emergency

measures.

CLAUSE 12. PRODUCTION

12.1 The Operator shall, with the approval of the Executive

Committee, determine

as required, or as necessary, the Maximum Efficiency Rate (MER) For

each

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

maximum rate

or production of oil that may be extracted from a reservoir in order

to obtain

the Maximum final recovery of the reserves. Estimated production

shall be

decreased as necessary to compensate for actual or anticipated

operating





32

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No.30154/Err

conditions, such as wells under repairs which are not producing,

capacity

limitations in collection lines, in pumps, separators, tanks,

pipelines and

other facilities.



12.2 The Operator shall determine periodically, at least once a

year, with the

Executive committee's approval, any area considered capable of

producing

Hydrocarbons in commercial quantity in each 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 the

production and

another showing each Party's production distribution for the

following six (6)

months. The production forecast shall be based on the Maximum

Efficiency Rate

(MER), as set forth in Clause 12 (paragraph 12.1) and adjusted to

each Party's

interests hereunder. The Production Distribution Program shall be

based on each

Party's periodic requests and, in accordance with Clause 14

(paragraph 14.2),

with such corrections as may be necessary to ensure that neither

Party, while

able to withdraw, receives less than the quantity to which it is

entitled under

the provisions of Clause 14, without prejudice as to the provisions

of Clause 21

( paragraphs 21.2) and Clause 22 (paragraph 22.5)

12.4 If either Party foresees a reduction in its capacity to receive

Hydrocarbons against the forecast supplied to the Operator, it must

so advise

the latter in the least time possible, and if such a reduction is

due to an

emergency





33

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No.30154/Err

situation, it shall notify the Operator within twelve (12) hours

from the

occurrence which gives rise to the reduction. Consequently, such a

Party shall

furnish the Operator with a new receipt schedule as based on the

appropriate

reduction.

12.5 The Operator may use the Hydrocarbons consumed in the

production

operations in the Contract Area, and such consumption shall be

exempt from



royalties referred to in Clause 13 (paragraphs 13.1 and 13.2)

CLAUSE 13. ROYALTIES

13.1 Liquid Hydrocarbons: During the exploitation of the Contract

Area, prior to

the distribution of the production corresponding to the parties, the

Operator

shall deliver to ECOPETROL, as a Royalty, twenty per cent (20%) of

the

supervised production of liquid hydrocarbons from such an area.

ECOPETROL on its

account and risk, shall take in kind from the tanks of the Joint

Account the

percentage of production corresponding to the royalty.

13.2 Gaseous Hydrocarbons: The Operator shall deliver to ECOPETROL

as a Royalty,

twenty per cent (20%) of the production of gaseous hydrocarbons,

under normal

conditions. Should said hydrocarbons require treatment in gas

plants, the volume

of hydrocarbons with royalties equivalent to twenty percent (20%) of

the

production shall be determined as the addition of the dry gas

produced in the

gas plants plus the equivalent in dry gas of the liquid products

produced, using

the conversion factors established in the





34

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No.30154/Err

current legal provisions. For Exploitation Fields under the sole

risk mode, THE

ASSOCIATE shall deliver ECOPETROL the percentage of Hydrocarbons

corresponding

to the royalties.

13.3 Out of the production percentage which accounts for the

Royalty , ECOPETROL

shall pay the entities legally appointed the royalties in favor of

the

Government, corresponding to the total production of the Commercial

Field, but

in no case shall THE ASSOCIATE be liable for any payment to such

entities for

this reason.

CLAUSE 14 - DISTRIBUTION AND AVAILABILITY OF HYDROCARBONS



14.1 Hydrocarbons produced, except for the hydrocarbons used for

operations

hereunder, and the hydrocarbons inevitably wasted in the operations

shall be

transported to the joint tanks of the parties or to other

measurement facilities

agreed by the Parties. Should an agreement not be reached, dealing

with gaseous

hydrocarbons the measurement point shall be : I) In the gas line of

each

separator when said gaseous Hydrocarbons do not require treatment in

gas plants,

or II) At the exit of gas plants when treatment is required in said

plants.

Hydrocarbons shall be measured in accordance with oil industry

standards and

methods, and such measurement shall be the basis for determining the

percentages

referred to in Clause 13, and the remaining





35

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No.30154/Err

hydrocarbons shall, from said moment on, be property of each Party

in the

proportions specified hereunder.

14.2 PRODUCTION DISTRIBUTION

14.2.1 After deducting the percentages covering royalty, the

remaining

hydrocarbons produced in each Commercial Field is property of the

Parties in the

proportion of fifty per cent (50%) for ECOPETROL AND FIFTY PER CENT

(50%) FOR

THE ASSOCIATE until the accumulated production of each Commercial

Field reaches

60 million barrels of liquid Hydrocarbons or the amount of 420 cubic

gigafeet of

gaseous hydrocarbons under normal conditions, whichever occurs first

( 1 cubic

gigafeet = 1 x 10 9 cubic feet).

14.2.2 Regardless of the classification of the Commercial Field

given by

ECOPETROL in the definition of the commercial nature, exceeding the

limits set

forth in paragraph 14.2.1 , the production distribution of each

Commercial Field

( upon deducting the percentage corresponding to the royalty) shall

be property



of the Parties in the proportion resulting from the application of

the R factor,

as follows:

14.2.2.1 If the Hydrocarbon reaching in the first place the limit

set forth in

paragraph 14.2.1 of this Clause was liquid Hydrocarbon, the

following table will

be applied:





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No.30154/Err





R FACTOR



0.0 to 1.050

1.0 to 2.050/R

2.0 or more





PRODUCTION DISTRIBUTIONS AFTER ROYALTIES %

ASSOCIATE

ECOPETROL





50

100-50/R

25

75



14.2.2.2 If the Hydrocarbon reaching in first place the limit stated

in

paragraph 14.2.1 of this Clause was the gaseous Hydrocarbon, the

following table

will be applied:





R FACTOR



PRODUCTION DISTRIBUTIONS AFTER ROYALTIES %

ASSOCIATE

ECOPETROL







0.0 to 2.050

50

2.0 to 3.050/(R-1)

100- [50/(R-1)]

3.0 or more

25

75



14.2.3 For the purposes of the preceding tables, R Factor shall be

defined as

the ratio of the income accumulated over the corresponding

accumulated expenses

corresponding to THE ASSOCIATE for each Commercial Field under the

following

terms:

R =



IA

--------ID+A-B+GO



Where:

IA (Accumulated Income of the ASSOCIATE): It is the value increase

of the

accumulated income corresponding to the volume of hydrocarbons

produced of the

ASSOCIATE after deducting royalties, at the price of reference

agreed by the

Parties, excluding hydrocarbons re-injected to the Contract





37

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Area Fields, hydrocarbons consumed in the operation and burnt gas.

The average reference price of the hydrocarbons shall be determined

by mutual

agreement of the parties. In order to determine the Accumulated

Income, the

basis shall be the monthly income which will be determined by

multiplying the

average reference price times the monthly production according to

the forms

designed by the Ministry of Mines and Energy for said purpose.

ID== (ACCUMULATED DEVELOPMENT INVESTMENTS): These are fifty per cent

(50%) of

the accumulated development investments approved by the Executive

Committee of

the Association. Accumulated Development investments made before the

initiation

exploitation date defined by the Ministry of Mines and Energy for

the respective

field, shall be adjusted to said date in the same manner as Direct

Exploration

Costs are adjusted under paragraph of Clause 9 ( subparagraph

9.2.3).

A: Exploration Direct Costs in which the ASSOCIATE incurs under

Clause 9

hereunder and adjusted pursuant to the provisions of Clause 9

( paragraph

9.2.3).

B: It is the accumulated refund of the aforementioned Direct

Exploration Costs

according to Clause 9 hereunder.

GO (Accumulated Operational Expenses): These are the accumulated

operation

expenses approved by the Executive Committee of the Association in



the

proportion corresponding





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No.30154/Err

to the ASSOCIATE, plus accumulated transportation costs of the

ASSOCIATE. It is understood that the transport costs are the

investment and

operation expenses incurred to transport the hydrocarbons produced

in the

commercial fields located in the Contract Area, and from the

Contract Area to

the export port or to the place agreed to take the price to be used

for

estimation of IA income . (Such transport cost shall be determined

by mutual

agreement of the parties once the exploitation stage commences whose

existence

of the Commercial field has been accepted by ECOPETROL.

The Operation Expenses include Special Contributions or of similar

nature

directly applied to exploitation of hydrocarbons in the Contract

Area.

All values included in the determination of R factor after the date

for

commencement of the exploitation defined by the Ministry of Mines

and Energy,

shall be taken in current dollars.

For this purpose the expenses in pesos must be converted into

dollars at the

Market's Representative Rate of Exchange certified by the Bank

Superintendency

or authorized entity, effective force on the date when the

corresponding

disbursements took place.





39

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No.30154/Err

14.2.4 ESTIMATION OF THE R FACTOR: The production distribution based

on the R

factor shall be effective as of the first day of the third calendar

month after

such month when the accumulated production in the contract area



reached 60

million barrels of liquid hydrocarbons or the amount of 420 cubic

gigafeet of

gaseous Hydrocarbons under normal conditions, in agreement with

paragraph

14.2.1.

Computation of R factor will be carried out based on the accounting

closing date

corresponding to the calendar month in which the accumulated

production reached

60 million barrels of liquid hydrocarbons or the amount of 420 cubic

gigafeet of

gaseous hydrocarbons under normal conditions, in agreement with

paragraph

14.2.1.

The resulting production distribution shall apply until June 30th of

the

following year. As of such date, the production distribution

applying R Factor

shall be estimated for one year periods (from July 1st to June 30th)

based on

the values accumulated on December 31st of the immediately preceding

according

to the corresponding accounting closing date.

14.3 In addition to the jointly-owned tanks and other facilities,

each party

will have the right to build its own production facilities in the

Contract Area

for its own sole exclusive use, upon the fulfillment of any legal

requirements.

The transport and delivery of each Party's





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No.30154/Err

Hydrocarbon to such a pipeline or other storage facilities that are

not jointly

owned, shall be made on the sole account and risk of the Party

receiving the

Hydrocarbons.

14.4 Should production be obtained in places not connected with

pipelines, for

the Joint Account, the Parties may agree to install their own

pipelines up to a

point where Hydrocarbons can be sold, or to a place connecting with

a public

pipeline. If the parties agree to construct such pipelines, they



shall execute

the contracts that they deem suitable for this purpose, and they

shall appoint

the Operator in agreement with standing legal provisions.

14.5 Each party shall own the Hydrocarbons produced and stored as a

result of

the Operation and which are placed at its disposal, as set forth

hereunder, and

it must receive it in kind or sell it or dispose of it separately,

at its own

expense, as provided in Clause 14 ( paragraph 14.3).

14.6 If either Party cannot, for whatever reason, separately dispose

of or lift

all or part of its share of Hydrocarbons hereunder, from the JointAccount-tanks

the following provisions shall apply:

14.6.1 If it is ECOPETROL which is unable to lift its Hydrocarbons

quota, in

other words, (share plus royalty), in whole or in part, in

accordance with

Clause 12 ( paragraph 12.3) hereunder, the Operator may continue to

produce the

field and deliver to the ASSOCIATE, in addition to the portion

representing THE

ASSOCIATE's share on the basis of





41

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No.30154/Err

one hundred per cent (100%) of the MER, all such Hydrocarbons as the

ASSOCIATE

may elect and be able to lift, up to a limit of one hundred per cent

(100%) of

the MER, crediting ECOPETROL, for subsequent delivery, for the

volume of

Hydrocarbons that ECOPETROL was entitled but did not lift. But with

respect to

the volume of Hydrocarbons not lifted which covers ECOPETROL's

royalties for the

month, THE ASSOCIATE, at ECOPETROL's request shall pay ECOPETROL in

United State

dollars the difference between the quantity of hydrocarbons actually

lifted by

ECOPETROL and the quantity of Hydrocarbons ECOPETROL is entitled to

for the

Royalty referred to i Clause 13 ( paragraphs 13.1 and 13.2);

providing however,

that any Hydrocarbons lifted by ECOPETROL shall be applied firstly



to the

payment in kind of the Royalty and any lifting thereafter shall be

applied to

ECOPETROL's share under Clause 14 ( paragraph 14.2).

14.6.2 If it is THE ASSOCIATE who is unable to lift is assigned

portion under

Clause 12 (paragraph 12.3), in whole or in part, the Operator shall

deliver

ECOPETROL, based on one hundred per cent (100%) of the MER not only

the royalty

and ECOPETROL's share, but also such Hydrocarbons as ECOPETROL may

be capable of

lifting, up to a limit of one hundred per cent (100%) of the MER ,

crediting THE

ASSOCIATE for subsequent delivery for such portion of its share as

it has been

unable to lift.





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No.30154/Err

14.7 When both parties are able to receive the Hydrocarbons assigned

to them

under Clause 12 (paragraph 12.3) hereunder, the Operator shall

deliver to the

Party who had been previously unable to receive its share of the

production, at

such parties' request, not only its share in the Operation but a

minimum of ten

per cent (10%) per month of the other Party's production

entitlement, by mutual

agreement of up to one hundred per cent (100%) of the share not

received, until

such time as the total quantities credited to the Party which had

been unable to

receive its Hydrocarbons have been cancelled out.

14.8 Without prejudice as to the legal provisions governing the

matter, each

Party shall be free, at any time, to sell or export its share of the

Hydrocarbons obtained hereunder, or to dispose of same in any way.

CLAUSE 15. USE OF ASSOCIATED GAS

In the case of discovery of one or more fields of Petroleum in

liquid state with

associated gas, the Operator within the two (2) years from the

commencement of

the commercial production of the field defined by the Ministry of

Mines and



Energy, shall submit a Project to use the Natural Gas, for the

benefit of the

Joint Account. The Executive Committee will approve the project and

will

determine the period necessary for the implementation of such plans.

If the

Operator does not submit any project within two( years) or does not

perform the

approved plan within the terms determined by the Executive

Committee, ECOPETROL

may take





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No.30154/Err

for itself, on a free-of-charge basis all the associated gas

available from the

exploitation reservoirs to an extent that is not required for

efficient

operation of the field.

CLAUSE 16. UNITIZATION

When an economically exploitable reservoir extends continuously in a

structure

located in another or others areas, Operator shall implement, in

agreement with

ECOPETROL and in any other Party concerned, upon approval of the

Ministry of

Mines and Energy, a joint exploitation plan which must conform to

Hydrocarbons

exploitation engineering techniques.

CLAUSE 17. INFORMATION AND INSPECTION UNDER EXPLOITATION

17.1 The Operator shall deliver to the Parties, at the same time it

becomes

available, reproducible originals (sepia) and copies of the

electric,

radioactive and sonic logs of well drilled, history, core analyses,

production

tests, surveys of reservoirs, and any routine reports made or

received in

connection with the operations and activities carried out in the

Contract Area.

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

risk, to

inspect through authorized representatives, the wells and facilities

of the

Contract Area and the activities related thereto. Such



representatives shall

have the right to examine cores,





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No.30154/Err

samples, maps, well-drilling logs, surveys, 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.

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

(paragraph

6.3) hereinabove.

CHAPTER IV- EXECUTIVE COMMITTEE

CLAUSE 18. FORMATION

18.1 Within thirty (30) calendar days from the acceptance of a

Commercial Field,

each Party shall name a representative as well as the respective

first and

second alternates, who shall form the Executive Committee, notifying

the other

Party in writing of the names and addresses of its representative

and

alternates. Each Party may change its representative or alternate at

any time,

but shall give written notice thereof to the other Party. The vote

or decision

of each Party's representative shall be binding upon the respective

Party. If

the principal representative of either Party is unable to attend a

Committee

meeting, he shall designate in writing the alternate who is to

attend the

meeting and such alternate shall have the same authority as the

principal.





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18.2 The Executive Committee shall hold ordinary meetings during the

months of

March, July and November, at which the exploitation program carried

out by the

Operator, the development plan as well as immediate plans, shall be

reviewed.

Annually, in the ordinary meeting of July, the Executive Committee

shall discuss

and approve the annual Operating Program and Budget of the

expenditure and

investment for the following calendar year.

18.3 The Parties and the Operator may request that special meetings

of the

Executive Committee be called to analyze specific conditions of the

operation.

The representative of the Committee shall give ten (10) calendar

days advance

notice of the meeting , stating the date and subjects to be

discussed. Any

subject not included in the Agenda of the meeting may be discussed

upon

acceptance thereof by the Parties' representatives on the Committee.

18.4 The representative of each Party shall have a vote in all

matters discussed

in the Executive Committee, equivalent to the percentage of the

total interests

in the Joint Operation. Any decision or resolution taken by the

Executive

Committee, in order to be valid, must have the affirmative vote of

over fifty

per cent (50%) of the total Interests. Any decisions taken by the

Executive

Committee in accordance with this procedure shall be binding and

final upon the

Parties and the Operator.





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CLAUSE 19. FUNCTIONS

19.1 The Parties' representatives shall form the Executive Committee

which shall

have full authority and responsibility to formulate and adopt

Exploitation,

Development and Operations Programs and Budgets under the Contract.

A



representative of the Operator shall attend meetings of the

Executive Committee.

19.2 The Executive Committee shall designate its Secretary. The

Secretary shall

carry full, detailed records and minutes of all the meetings, as

well as notes

on any discussions and on the decisions taken by the Committee.

Copies of the

minutes, in order to be valid, shall be approved and signed by the

Parties'

representatives within ten (10) working days after meeting adjourns

and shall be

delivered to them as soon as possible.

19.3 The Executive Committee's responsibilities are, among others,

as follows:

19.3.1 To adopt its own regulations

19.3.2 To designate Operator, in case of resignation or dismissal,

and to

determine the rules that the latter must fulfill when it is a person

different

from the Parties, stating the causes for his dismissal.

19.3.3 To designate an outside Auditor of the Joint Account

19.3.4 To approve or disapprove the annual Operations Program and

Budget of

expenditures, and any modification or revision thereto, and to

authorize

extraordinary expenditure.





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19.3.5 To determine policies and rules on expenditure

19.3.6 To approve or disapprove any recommendation of expenses made

by Operator

( not included in the approved Budget), when such expenditure

exceeds the sum of

forty thousand US dollars ( US$40.000) or its equivalent in

Colombian currency.

19.3.7 To provide assistance to the Operator and to decide on

matters referred

for the Committee's consideration.

19.3.8 To create any sub-committees that it may deem necessary and



set the

functions to be performed by same, under the direction of the

Executive

Committee.

19.3.9 To define the type and frequency of drilling, operation and

production

reports, and any other information to be furnished by Operator to

the Parties,

chargeable to the Joint Account.

19.3.10 To supervise the operation of the Joint Account.

19.3.11 To authorize Operator to execute contracts on behalf of the

Joint

Operation for amounts in excess of forty US dollars US$40.000.oo or

its

equivalent in legal Colombian currency and,

19.3.12 In general, to carry out all the functions authorized

hereunder that are

not the responsibility of any other entity or individual pursuant to

a specific

clause hereof or a legal or regulatory provision.





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CLAUSE 20- DECISION IN CASE OF DISAGREEMENT IN THE OPERATION

20.1 Any project relating to the Joint Operation, which requires the

Executive

Committee's approval for its implementation, as established

hereunder, and on

which the Parties' representatives on said Committee fail to reach

an agreement,

shall be submitted directly to the highest executive of each Party

resident in

Colombia, in order that they may take a joint decision. If the

Parties reach an

agreement or decision on the matter under discussion within sixty

(60) calendar

days from the date of submittal of the consultation, they shall so

advise the

Secretary of the Executive Committee, who shall call a Committee

meeting within

fifteen (15) calendar days following the receipt of the pertinent

advice, and

the members of the Committee are obliged to adopt such decision at

said meeting.

20.2 If the Parties fail to reach an agreement on the matter under



discussion

within sixty (60) calendar days from the date of presentation of the

consultation, the operations may be carried on pursuant to Clause

21.

CLAUSE 21. OPERATIONS UNDER THE RISK OF ONE OF THE PARTIES 21.1 If

at any time

one of the Parties wishes to drill an exploitation well not approved

under the

operations program, it shall give written notice to the other party,

at least

thirty (30) days in advance of the next Executive Committee





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meeting, of its wish to drill such well, including information such

as location,

recommendation to drill, estimated depth and costs. Operator shall

include such

proposal among the items to be discussed at the next Executive

Committee

meeting. If such proposal is approved by the Executive Committee,

the well shall

be drilled at the expense of the Joint Account. If said proposal is

not accepted

by the Executive Committee, the Party wishing to drill such well,

hereinafter

called the Participating Party, shall have the right to drill,

complete, produce

or abandon such well as its sole cost and risk. The Party not

wishing to

participate in the operation shall be called the Non-Participating

Party. The

Participating Party must start the drilling of such well within one

hundred and

eighty (180) days following its rejection by the Executive

Committee. If

drilling is not started within said period, the question must be

submitted again

for the Executive Committee's consideration. Upon request of the

Participating

Party, Operator shall drill the well for the account and at the risk

of the

Participating Party, provided that in Operator's opinion such

operation does not

interfere with the normal progress of the operations of the field,

and provided

the Participating Party has advanced to the Operator the sums deemed

necessary

by the Operator for the drilling. In case the said well cannot be



drilled by the

Operator without interfering with the normal progress of the

operations, the





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Participating Party shall be entitled to drill such well directly or

through a

competent service company, and in that case, the Participating Party

shall be

responsible for the operation, without interfering with the

performance of the

normal operations of the field.

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

producing

well, it will be administered by the Operator and the production of

such well,

after deducting the Royalty referred to in Clause 13, shall be

property of the

Participating Party, which shall pay all the costs of the operations

of such

well until such time as the net value of the production, after

deducting

production, gathering, storage, transport and other similar costs

and sales is

equal to two hundred per cent (200%) of the cost of drilling and

completion of

said well which, thereupon, and for the purposes of this Contract,

shall become

property of the Joint Account, as if it had been drilled with the

Executive

Committee's approval for the account of both Parties. For purposes

of this

clause, the value of each barrel of Hydrocarbons produced from the

above-said

well during any calendar month, before deducting the above-said

costs, shall be

the average per-barrel price received by the Participating Party

from sales of

its share of the Hydrocarbons produced in the Contract Area during

the same

month.





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21.3 If at any time one of the Parties wishes to recondition, deepen

to the

Production Targets or plug a well which is not in commercial

production or is a

dry hole drilled by the Joint Account, and if these operation have

not been

included in a program approved by the Executive Committee, such

Party shall

advise the other Party of its intention to recondition, deepen o

plug such well.

If there is no adequate equipment on the location, the procedure

provided for in

clause 21 (paragraph 21.1 and 21.2) shall be applied. If there is

adequate

equipment on the well-site to carry out the proposed operation, the

Party

receiving notice of the operation to be carried out by the other

Party shall

have a period of forty-eight (48) hours following receipt of the

notice, in

which to approve or disapprove the operation and, and if no answer

is received

during this period, it will be understood that the operation will be

carried out

for the account and at the risk of the Joint Account. If the

proposed work is

performed for the sole account and risk of a Participating Party,

the well shall

be administered in accordance with Clause 21 (paragraph 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

transport and

exportation of produced Hydrocarbons- which will be called

Additional

Facilities-, such Party shall so advise the other, in writing,

giving the

following information:





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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 commencement and length of the

construction . Within



ninety (90) days from the date of notice, the other Party has the

right to

decide whether or not it will participate in the proposed additional

facilities,

by means of a written notice. If such Party elects not to

participate in the

additional facilities, or fails to reply to the Participating

Party's Proposalwhich Party shall hereinafter be called the Constructing Party , the

latter may

proceed with the additional facilities and request Operator to

construct,

operate and maintain such Facilities at the sole cost and risk of

the

Constructing Party, without prejudice to the normal performance of

the Joint

Operations. The constructing Party may negotiate with the other

Party for the

use of said facilities for the Joint Operation. During the time the

facilities

are operated for the Constructing Party's sole account and risk,

Operator shall

charge to the latter all the costs of operation and maintenance of

the

additional facilities, in accordance with generally accepted

accounting rules.

CHAPTER V- JOINT ACCOUNT

CLAUSE 22 - HANDLING

22.1 Without prejudice to any provisions hereunder, expenses

covering

exploration operations shall be for ASSOCIATE's account and risk.





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22.2 As from the time the Parties accept the existence of a

Commercial Field,

and subject to the provisions of Clause 5 (paragraph 5.2), Clause 13

(paragraphs

13.1 and 13.2), the ownership of the rights or Interest in the

Operation of the

Contract Area shall be divided as follows: ECOPETROL fifty per cent

(50%) and

THE ASSOCIATE fifty per cent (50%). From then on any expenses,

payments,

investments, costs and obligations incurred and contracted for the

performance

of the operations hereunder, as well as Direct Exploration Costs



made by THE

ASSOCIATE before and after the recognition of the existence of each

Commercial

Field and its extensions, in agreement with Clause 9 (paragraph

9.10), shall be

charged to the Joint Account. Except as set forth in Clause 14

(paragraph 14.3)

and 21, all properties acquired or used from then on for the

performance of the

operation of the Commercial Field shall be paid by, and belong to,

the Parties

in the same proportion as described in this Clause.

22.3 The Parties shall provide Operator, within the first five (5)

days of each

month, at the Bank designated by Operator, with their shares of the

Budget, in

accordance with the requirements and in the currency in which the

expenses are

to be incurred, i.e, in Colombian Pesos or in US dollars, as

requested by

Operator under programs and Budgets approved by the Executive

Committee. Should

THE





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ASSOCIATE not have available the Pesos necessary to cover its share

of the Peso

contribution, ECOPETROL shall have the right to furnish such Pesos

and receive

appropriate credit against the dollar contribution payable by

ECOPETROL at the

official rate of purchase by the Bank Superintendency or the

pertinent

authorized entity, on the date ECOPETROL is to pay said

contribution, provided

this transaction is permitted under the legal regulations.

22.4 Operator shall present to the Parties monthly, within thirty

(15) calendar

days following the end of each month, a monthly statement showing

the funds

advanced, expenses incurred, outstanding liabilities, and a report

on all debits

and credits made to the Joint Account, which report shall be made

out in

accordance with Annex "B" hereto. If payments under Clause 22

(paragraph 22.3)

are not made within the term set forth and Operator elects to cover



same,

delinquent Party shall pay Commercial Interest in the same currency

in which

payment has been incurred during the period of the delay in payment.

22.5 Should either Party fail to timely contribute with the Joint

Account with

the sums due and payable within the term set therefore, as from the

due date

such Party shall be considered as the "Delinquent Party", and the

other Party as

the "Prompt Party". If the Prompt Party had paid the Delinquent

Party's share,

in addition to its own, the former shall have the right, after sixty

(60) days'

delay, to have





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Operator deliver to it the Delinquent party's total participation in

the

Contract Area (excluding the Royalty percentage), up to such amount

of

production as will give the Prompt Party a net income from sales

equal to the

sum not paid by the Delinquent Party, plus an annual interest equal

to the

commercial interest, as from sixty (60) days after the date of

commencement of

default. "Net Income" is understood to mean the difference between

the sales

price of the crude taken by the Prompt Party, less cost of

transport, storage,

loading and other reasonable expenses incurred by the Prompt Party

in the sale

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

any time

after thirty (30) days from having giving notice the Delinquent

Party, in

writing, of its intention to take all or part of the Delinquent

Party's share of

the production.

22.6.1 Direct Expenses of the Joint Operation shall be charged to

the Parties in

the same proportion that the production is distributed after

royalties.

22.6.2 Indirect expenses shall be charged to the Parties on the same

proportion



set forth for Direct Expenses in paragraph 22.6.1 above. The amount

of said

expenses shall be the result from taking the total annual value of

the

investments and expenses ( excluding technical and administrative

support) and

applying a+m (X-b) equation. In this equation "X" is the total value

of annual

investments and expenses, and "a" , "m" and "b" are constants whose





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values are shown in the following table with respect to annual

investments and

expenses:

AMOUNT OF INVESTMENTS AND EXPENSES CONSTANT





"X"

(US$)

"b" (US$)







1.

0

25.000.000

0

2.

25.000.001

50.000.000

25.000.000

3.

50.000.001

100.000.000

50.000.000

4.

100.000.001

200.000.000

100.000.000

5.

200.000.001

300.000.000

200.000.000

6.

300.000.001

400.000.000

300.000.000

7.

400.000.001

or more

400.000.000





VALUES

" to" (US$) m(frac)



0





0.10



2.500.000



0.08



4.500.000



0.07



8.000.000



0.06



14.000.000



0.04



18.000.000



0.02



20.000.000



0.01







The equation shall be applied only once per year in each case with

the value of

the constants corresponding to the total value of the annual

investments and

expenses.

22.7 The monthly statements of account referred to in Clause 22

(paragraph 22.4)

may be revised or challenged by either Party from the time they are

received by

them, up to two (2) years after the end of the calendar year covered

by such



statements, clearly specifying the corrected or challenged items and

the reason

given for the objections. Any account not corrected or challenged

within the

said period shall be considered as final and correct.

22.8 Operator shall carry account records, vouchers and reports for

the Joint

Account in Colombian Pesos, in





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conformity with Colombian law, and every debit or credit to the

Joint Account

shall be made in accordance with the accounting procedure , Exhibit

"B", made a

part of this contract. In case of any discrepancy between the

accounting

procedure and the provisions hereunder, the latter shall prevail.

22.9 Operator may sale 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 dealing with a Gas Field, for the benefit of

the Joint

Account, provided the amount of any one sale does not exceed five

thousand

United States dollars (US$5.000) or its equivalent in Colombian

pesos. Any sales

in excess of these amounts or sales or real property shall have to

be approved

by the Executive Committee. Sale of such materials or equipment

shall be made at

a commercial reasonable price according to the conditions of use of

the good.

22.10 Any machinery, equipment or other personal property or

facilities acquired

by Operator for the performance of this Contract, charged to the

Joint Account,

shall belong to the Parties by equal shares. However, if one of the

Parties

decides to terminate its interest in the Contract prior to the end

of the first

seventeen (17) years of the Exploitation period, except for the case

under

Clause 25, such Party agrees to sell part or all of its interest in







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the said items to the other Party at reasonable commercial price or

at their

book value, whichever is lower. In case the other Party should not

wish to

purchase such items within ninety (90) days following a formal offer

of same

made to it, the Party wishing to terminate shall have the right to

assign to a

third party its interest in such equipment and facilities. Should

THE ASSOCIATE

decide to withdraw after seventeen (17) years of the Exploitation

Period have

elapsed, its interest in the Joint Operation shall pass on to

ECOPETROL on a

free-of-charge basis, upon its acceptance.

CHAPTER VI-LENGTH OF THE CONTRACT

CLAUSE 23.



MAXIMUM LENGTH



This Contract shall have a maximum duration of twenty eight (28)

years counted

as from the Effective Date, divided up as follows: Up to six (6)

years as the

Exploration Period, under Clause 5, without prejudice to the

provisions of

Clause 9 (paragraphs 9.3 and 9.8); and twenty two (22) years as the

Exploitation

Period, counted as from the date of the termination of the

Exploration period.

It is understood that in the events contemplated hereunder in

respect to the

extension of the Exploration Period, it is considered that such

events shall in

no case extend the total term of duration beyond twenty eight (28)

years, except

as provided in paragraph 1 of this Clause.





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PARAGRAPH 1. The Exploitation Period for Gas Fields discovered

inside the

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

of

expiration of the Exploration Period or the Retention Period

granted. In no case



the total term of duration shall extend beyond forty (40) years

counted as from

the Effective Date.

PARAGRAPH 2. Notwithstanding the preceding, ECOPETROL and THE

ASSOCIATE, at

least five (5) years in advance to the date of exploration of each

Field, will

revise the conditions to continue the operation after the term

mentioned in this

clause. In case that the parties agree to continue the operation,

they shall

define the terms and conditions under which they will carry them

out.

CLAUSE 24. TERMINATION

This Contract shall terminate in any of the following cases:

24.1 Due to the expiration of the Exploration Period without THE

ASSOCIATE'S

having discovered a Commercial Field, except as provided in Clauses

9

(paragraphs 9.5, and 9.8 ) and Clause 34.

24.2 Upon expiration of the term of duration of the Contract , as

set forth in

Clause 23.

24.3 At any time at THE ASSOCIATE's discretion, upon fulfillment of

its

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

hereunder.





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24.4 Due to the special causes set forth in Clause 25.

CLAUSE 25. UNILATERAL TERMINATION CAUSES

25.1 ECOPETROL may terminate the Contract hereunder unilaterally at

any time

before expiration of the term agreed in Clause 23, in any of the

following

cases:

25.1.1. Due to the dissolution of THE ASSOCIATE and its assignees

25.1.2. In the event THE ASSOCIATE or its assignees were to assign

this Contract



in whole or in part without complying with the requirements under

Clauses 27.

25.1.3. Due to the financial incapacity of THE ASSOCIATE and its

assignees,

which incapacity is presumed to exist when a Court declares

bankruptcy or

creditors' proceedings are opened against them.

25.1.4 Due to failure to comply with the obligations entered into by

THE

ASSOCIATE hereunder. Upon expiration of each one of the periods

contemplated for

fulfillment of the exploratory obligations, THE ASSOCIATE shall

furnish a

written report evidencing compliance with the obligations of the

respective

period. In the event that said obligations have not been fulfilled,

THE OPERATOR

shall have sixty (60) calendar days to fulfill them diligently

according to good





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Petroleum practices. Should this term not be enough , the parties

may by common

agreement determine an additional term to fulfill said obligations.

If after

said term the agreed works have not been completed, a default will

be

constituted and therefore, Ecopetrol may proceed pursuant to Clause

25.3.

25.2 In case of a declaration of Unilateral Termination , THE

ASSOCIATE's rights

as set forth in this Contract shall cease both in its capacity as

Party thereto

and as Operator, if at the time of such declaration of unilateral

termination,

THE ASSOCIATE has both capacities.

25.3 ECOPETROL may only declare the

Unilateral Termination of this Contract after sixty (60) calendar

days have

elapsed from its having given written notice to THE ASSOCIATE or its

assignees,

clearly specifying the grounds invoked for making such a

declaration, and only

if the other Party has failed to present explanations satisfactory

to ECOPETROL



or if THE ASSOCIATE has failed to correct the failure in the

performance of the

contract without prejudice of the ASSOCIATE's right to file the

legal remedies

as it may consider advisable.

CLAUSE 26. OBLIGATIONS IN CASE OF TERMINATION





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26.1 Upon termination of the Contract pursuant to Clause 24 during

the

Exploration, Retention or Exploitation Period, THE ASSOCIATE shall

leave in

production any wells that are then producing and shall turn over all

constructions , pipelines, transference lines and other real

property of the

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

pass

free-of-charge to ECOPETROL, with any rights-of way and assets

acquired in

benefit of the Contract, even though either the former or the latter

be located

outside the Contract Area.

26.2 If this Contract terminates for any reason after the expiration

of the

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

ASSOCIATE's

interest in the machinery, equipment, and other personal property or

facilities

used or acquired by THE ASSOCIATE or by Operator for the performance

of this

Contract shall pass to ECOPETROL on a free-of-charge basis.

26.3 If the Contract terminates before the end of seventeen (17)

years of the

Exploitation Period, the provisions of Clause 22 ( paragraph 22.10)

shall apply.

26.4 In case this Contract is terminated due to the declaration of

Unilateral

Termination, made at any time, all the real or personal property

acquired for

the sole benefit of the Joint Account shall pass to ECOPETROL on a

free-of

charge basis.

26.5 Upon termination of this Contract for whatever reason and at

whatever time,



the Parties are obliged to





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fulfill satisfactorily their legal obligations between each other

and with third

Parties, as well as those contracted hereunder.

CHAPTER VII- MISCELLANEOUS PROVISIONS

CLAUSE 27. RIGHT OF ASSIGNMENT

27.1 THE ASSOCIATE shall have the right, upon prior written approval

by the

Minister of Mines and Energy and the President of Empresa Colombiana

de

Petroleos ECOPETROL, to assign or transfer all of part of its

interest, rights

and obligations hereunder to any person, company or group.

Consequently, any project involving assignment or total or partial

assignment of

the interests, rights and obligations in the contract, shall be

informed to the

Minister of Mines and Energy and to the President of Empresa

Colombiana de

Petroleos , Ecopetrol, through a written communication of THE

ASSOCIATE

indicating the essential elements of the negotiation, such as

prospective

assignee , value, interests, rights and obligations to be assigned,

scope of the

operation, etc. Within the next thirty (30) working days , the

Minister of Mines

and Energy and the President of Empresa Colombiana de Petroleos

Ecopetrol, shall

exercise the





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No.30154/Err

discretionary power to analyze qualifications of the prospective

assignees,

after which they will adopt their decision without being bound to

justify their

reasons. In all cases, the opinion of the Minister of Mines and

Energy shall



prevail.

27.2 Should more than thirty (30) working days elapsed, as of the

date of

reception of the request by the Minister of Mines of Energy without

THE

ASSOCIATE having received an answer, it is understood for all

purposes that the

request has been accepted.

27.3 Assignments made during the Exploration Period among companies

legally

established in Colombia, will not be subject to the above-mentioned

procedure

and shall be formalized through a written authorization by Empresa

Colombiana de

Petroleos, ECOPETROL, and signing of the respective instrument.

27.4 Any amendment or modifications in the contract relations of THE

ASSOCIATE

and Empresa Colombiana de Petroleos ECOPETROL, resulting from total

or partial

direct negotiations with respect to interests, quotas or stock in

THE ASSOCIATE

shall also subject to the approval procedure by the Ministry of

Mines and Energy

and of the President of Empresa Colombiana de Petroleos ECOPETROL.

27.5 However, said changes or amendments shall not require

authorization by the

Minister of Mines and Energy and Empresa Colombiana de Petroleos, in

the

following cases:





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27.5.1 When transactions are carried out at the stock exchange or

open stock

market.

27.5.2 If dealing with assignments or transfers resulting from

events beyond the

will of THE ASSOCIATE or of the companies supervising or directing

it, such as

government orders, legal judgement, partition and awarding of assets

and

auctions. 27.5.3 When negotiations are carried out among companies

supervising

or directing the ASSOCIATE, or its affiliates or subsidiaries, or

among



companies forming a same economic group, in whose cases it will be

enough to

give timely notice on said assignment to the Minister of Mines and

Energy and to

Empresa Colombiana de Petroleos ECOPETROL.

27.6 Except for the above mentioned exceptions, assignments,

transfers,

negotiations, transactions or operations dealt with herein, not

having approval

of the Ministry of Mines and Energy and of the President of Empresa

Colombiana

de Petroleos, ECOPETROL, shall give rise to application of Clause 25

of the

Association Contract.

27.7 Operations carried out for the development of this clause and

that

according to the Colombian tax law are assessable , shall pay the

corresponding

taxes.





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CLAUSE 28. DISAGREEMENTS

28.1 In all cases of disagreement or contradiction in the

interpretation of the

Clauses of this Contract in relation to those contained in Annex "B

" called

"Operating Agreement", the provisions of the contract shall prevail.

28.2 Any cases of disagreement between the Parties on matters of law

relating to

the interpretation and performance of the Contract, which cannot be

settled

amicably, shall be submitted for the cognizance and decision of the

jurisdictional branch of Colombian public power.

28.3 Any difference as to operational or technical matters between

the Parties

hereto by reason of the interpretation or application of this

contract, that

cannot be settled amicably, shall be referred for the final decision

of experts

, appointed as follows: one by each Party, and a third one, or

umpire, appointed

by mutual agreement of the two so designated. Should these two fail

to reach an

agreement as to the appointment of the third expert, the latter



shall be

designated, upon request of either party, by the Board of Directors

of the

Colombian Association of Engineers,"SCI", with headquarters in

Bogota.

28.4 Any difference of an accounting nature between the Parties

hereto by reason

of the interpretation and





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implementation of the Contract, that cannot be settled amicably,

shall be

referred for the decision of experts, who shall be Chartered Public

Accountants,

designated as follows: one by each Party, and a third one, or

umpire, appointed

by the two principal experts. Should these two fail to reach an

agreement, such

third expert shall be designated, upon request of either Party, by

the Central

Board of Accountants of Bogota.

28.5 Both Parties declare that the experts' decision shall have the

full effects

of a settlement between them, and in consequence, such decision

shall be final.

28.6 In case of disagreement between the Parties as to the

technical, accounting

or legal nature of the controversy, the same shall be considered to

be legal and

clause 28 (paragraph 28.2) shall apply.

CLAUSE 29. LEGAL REPRESENTATION

Without prejudice to THE ASSOCIATE's legal rights as a consequence

of legal

regulations or of the clauses of this Contract, ECOPETROL shall

represent the

parties before Colombian authorities on any matters concerning the

exploitation

of the Contract Area, whenever it be applicable to do so, and shall

furnish

Government officials and departments with any data and reports that

may be

legally required. Operator shall be obliged to prepare and furnish

ECOPETROL

with the pertinent reports. Any expenses incurred by ECOPETROL to



attend to any





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matter referred to this Clause shall be charged to the Joint

Account, and where

such expenses exceed five thousand United States Dollars ( US$5.000)

or its

equivalent in Colombian currency, the Operator's prior approval

shall be

necessary. The Parties represent, for purposes of their relations

with Third

Parties, that neither the provisions of this Clause nor any other

contained

elsewhere in this Contract implies the granting of a general power

of attorney

or the fact that the Parties have formed a civil or commercial

partnership or

any other relationship whereby either Party might be considered

together liable

for the acts or omissions of the other party or as having authority

or powers

that might be binding upon the other Party in relation to any

obligations. This

Contract is related to operations within the Republic of Colombia

and although

ECOPETROL is a Colombian industrial and Commercial State owned

enterprise, the

Parties agree that THE ASSOCIATE , should it be the case, may decide

to be

excluded from all the provisions of Sub-chapter K entitled PARTNERS

AND

PARTNERSHIPS of the Internal Revenue Code of the United States of

America. THE

ASSOCIATE shall make said election on its behalf in an appropriate

manner.

CLAUSE 30 LIABILITIES

30.1 Operator shall carry our the operations subject matter of this

Contract in

an efficient an adequate





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manner, in accordance with Petroleum industry practices



internationally accepted

for these type of operations, it being understood that Operator

shall at no time

be liable for errors of judgement or for any loss or damage that is

not due to

the Operator's gross negligence.

30.2 The liabilities contracted hereunder by ECOPETROL and THE

ASSOCIATE in

relation to Third Parties shall not be joint and, in consequence

each Party is

separately liable for its share of the expenses, investments or

obligations

resulting as a consequence of such liabilities.

30.3 Out of the value of the expenses incurred and the contracts

entered by the

Operator for a value exceeding forty thousand dollars of the United

States of

America (US$40.000) or its equivalent in colombian pesos which have

not been

timely authorized by the Executive Committee, except for the

assumptions of

Clause 11 (Paragraph 11.7) , the only party liable before third

Parties shall be

the Operator, who shall assume the total corresponding value. When

such expense

is accepted by the Executive Committee, the Operator will be

refunded the value

of the work, study or purchase, according to the guidelines defined

by the

Executive Committee. In case that the good or asset is not accepted

by the

Executive Committee, the Operator, if possible, may withdraw such

good

reimbursing the partners any cost that said withdrawal may cause to

the

operation. If it is not possible that the Operator withdraws such

good, or that

it declines to so, the resulting benefit or increase in equity

resulting from

said expenses or contracts, shall





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belong to the Parties in proportion to their participation in the

Operation.

30.4 ECOLOGICAL CONTROL. THE ASSOCIATE, in the development of all

contract



activities, shall timely comply with the provisions of the National

Code of

Renewable Natural Resources and of Environmental Protection and

remaining legal

provisions on the subject. For said purpose, THE ASSOCIATE agrees to

permanently

execute a preventive plan to guarantee conservation and restoration

of natural

resources in the areas where Exploration, exploitation and

transportation works

under this contract are carried out.

Said plans and programs shall be disclosed by THE ASSOCIATE to

national and

regional entities related to this matter. Also, specific contingency

plans shall

be established for emergencies and remedial actions. For said

purpose, THE

ASSOCIATE shall coordinate said plans and actions with competent

authorities.

The respective programs and budgets shall be prepared by THE

ASSOCIATE in

agreement with the pertinent clauses of this contract.

All costs incurred shall be on the ASSOCIATE's account in the

Exploration Period

and in the Exploitation under the sole risk modality, and by both

Parties

charged to the Joint Account during the Exploitation Period.





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CLAUSE 31. TAXES, CHARGES AND OTHERS

Any taxes and charges accruing after the establishment of the Joint

Account and

before the Parties receive their share of the production, that are

chargeable to

the exploitation of Hydrocarbons, shall be charged to the Joint

Account. Income,

patrimony and supplementary taxes shall be for the sole account of

each Party,

as applicable to each of them.

CLAUSE 32. PERSONNEL

32.1 When THE ASSOCIATE is the Operator, appointment of the

Operator's Manager

shall be made after consultation with ECOPETROL.



32.2 Pursuant to the terms of this Contract and subject to the norms

to be

established, Operator shall have autonomy in appointing the

personnel required

for the operations hereunder, being able to fix their remuneration,

functions,

rank, number and conditions. Operator shall adequately and

diligently train such

Colombian personnel as be required to replace the foreign personnel

that

Operator may consider necessary for the performance of the

operations hereunder.

In any case, Operator shall comply with the legal regulations

setting the

proportion of national and foreign employees and laborers.

32.3 TECHNOLOGICAL TRANSFERENCE. THE ASSOCIATE agrees to carry out

on its

account a training program for ECOPETROL professionals in areas

related to the

development of the contract.

In order to meet this obligation during the Exploration Period,

supervised

training may include among other subjects, the areas of geology,

geophysical

and the like,





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evaluation of reserves and characterization of oil reservoirs,

drilling and

production. Supervised training shall be carried out during all the

initial

exploration period and its extensions, through integration of

professionals

appointed by ECOPETROL, to the work group that THE ASSOCIATE

organizes for the

Contract Area or for other activities related to THE ASSOCIATE.

In order to opt for the waiver dealt with in Clause 5 hereunder, THE

ASSOCIATE

must have complied with the training programs herein contemplated.

During the Exploitation period, the scope, duration, place,

participants,

training conditions and other aspects shall be established by the

Executive

Committee of the Association.



All supervised training costs, except for labor costs caused in

favor the

professionals receiving them, shall be assumed by THE ASSOCIATE

during the

Exploration Period and by both Parties charged to the Joint Account

during the

Exploitation Period.

PARAGRAPH: In order to meet the obligations on Technology

Transference in

agreement with the provisions hereunder, during the first three

years of the

Exploration Period and for each year, THE ASSOCIATE agrees to carry

out

supervised training programs to Ecopetrol Professionals for thirty

thousand ( US

$30.000.oo) dollars of the United States of America per year. The

subject and

type of program shall be previously approved by ECOPETROL and THE

ASSOCIATE. In

the event that the Exploration Period is extended, supervised

training shall

consist of similar programs to those set forth herein.





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32.4 According to this contract, the Operator during the

Exploitation Period,

shall have the right to carry out any operations hereunder through

contractors,

subject to the authority of the Executive Committee to approve

contracts whose

value exceeds forty thousand dollars of the United States of America

(US$40.000)

or its equivalent in Colombian pesos.

CLAUSE 33. INSURANCE The Operator shall be covered by all

the insurance required by Colombian law. The Operator shall likewise

demand that

each contractor performing any work hereunder must obtain and

maintain

up-to-date such insurance as be deemed necessary by the Operator.

The Operator

shall further provide any other insurance considered necessary by

the Executive

Committee.

CLAUSE 34. FORCE MAJEURE OR ACTS OF GOD

The Obligations referred to in this Contract shall be suspended for



the entire

duration of time in which either Party is unable to meet them, in

whole or in

part, due to unforeseen events constituting force majeure or Acts of

God such as

strikes, lockouts, war, earthquake, floods or other catastrophes;

government

laws or regulations, or decrees hindering the provision of essential

material

and, in general, any no-financial reason that actually prevents the

operations

even though not listed herein but





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that affects the parties and is outside their control. Should either

Party be

unable due to force majeure or Acts of God to comply with the

obligations

hereunder, it shall promptly give notice thereof to the other Party,

for its

consideration, specifying the reasons which are preventing it. In no

case shall

occurrences of force majeure extend the total Exploration, Retention

and

Exploitation Period beyond the twenty eight (28) calendar years as

from the

Effective Date, as set forth in Clause 23, but any impediment of

force majeure

during the six (6) year Exploration Period referred to in Clause 5,

which lasts

over thirty (30) consecutive days, shall extend this six (6) year

period by the

same time as the length of such impediment.

CLAUSE 35. APPLICATION OF COLOMBIAN LAW

The Parties set the city of Santa Fe de Bogota, Republic of

Colombia, as the

domicile for any purposes hereunder. This Contract is governed

throughout by

Colombian law, and THE ASSOCIATE submits to the jurisdiction of

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 Party

hereto or as

Operator, has had access to all the resources and means of action



which may be

used under Colombian law before the jurisdictional branch of public

power.





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CLAUSE 36. NOTICES Notices or communications between the Parties,

connected with

this Contract shall require, in order to be valid, the mention of

the pertinent

Clauses, and sent to the Parties at the following addresses:

TO ECOPETROL:



Carrera 13 No.36-24 Santafe de

Bogota, Colombia.

TO THE ASSOCIATE:

Carrera 6A No. 115-65 Of 514 F

Santafe de Bogota, Colombia.

Any change of address shall be notified in advance to the other

party.

CLAUSE 37. VALUE OF THE HYDROCARBONS

Payments or reimbursements under Clauses 9 (paragraphs 9.2 and 9.4)

and 22

(paragraph 22.5), shall be made in United States Dollars, or in

Hydrocarbons, on

the basis of the current price and the limitations established under

Colombian

legislation for the sale of the dollar portion of the Hydrocarbons

from the

Contract Area destined for refining in national territory.

CLAUSE 38. PRICES FOR CRUDE HYDROCARBONS

38.1 THE ASSOCIATE's share of hydrocarbons hereunder, destined for

refining or

internal use, shall be paid delivered to the refineries where

Hydrocarbons are

to be processed or at the reception site, as agreed by the Parties,

abiding the

standing government rules or regulations or those replacing them.





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38.2 Any difference arising from the application of this clause

shall be settled



by the method provided for in this Contract.

CLAUSE 39. DELEGATION AND MANAGEMENT

THE PRESIDENT of EMPRESA COLOMBIANA DE PETROLEOS-ECOPETROL delegates

to the

Exploration and Production Vice President management of this

contract, pursuant

to ECOPETROL'S rules and provisions, with power to execute all

procedures

related to the Contract development. The Exploration and Production

Vice

President may exercise this delegation through the Associate

Operation Assistant

Vice-President.

CLAUSE 40. VALIDITY

To take legal effect, this contract requires the approval of the

Ministry of

Mines and Energy.

IN WITNESS WHEREOF, the parties sign, before witnesses, in Bogota,

on the twenty

fourth (24th) day of the month of December , nineteen hundred and

ninety seven

(1997).

EMPRESA COLOMBIANA DE PETROLEOS

ECOPETROL

SIGNED,

ENRIQUE AMOROCHO CORTES

President

HARKEN DE COLOMBIA, LTD

SIGNED,

GABRIEL GUSTAVO CANO VELASQUEZ

Legal Representative

Witnesses

Signed, Illegible signature

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



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