Pacific Rubiales has entered into an agreement with Oleoducto Central S.A. ("OCENSA") to acquire preferential rights to the use of available capacity on the OCENSA pipeline system for up to 160 million barrels of its oil for a 10 year period beginning February 1, 2010, in consideration for a one-time payment of US$190 million.
Under the terms of the agreement, the transport capacity of the contract is specified as follows:
In parallel to this agreement, the two companies have executed a related transportation contract to regulate the operating aspects of transporting oil through the OCENSA system. These volumes will be delivered by the company to OCENSA at either the Cusiana station or the El Porvenir station and will be pumped through to the Covenas terminal for which the company will pay the transportation tariff as set by the Ministry of Mines and Energy of Colombia for each segment of the OCENSA pipeline.
In addition to this agreement, Pacific Rubiales has also purchased 10 kbopd capacity in the OCENSA system to be accessed through the new truck unloading facility, currently under construction in the Cusiana station. All together, the company has secured a capacity of 60 kbopd in the OCENSA system for most of 2010 and 70 kbopd starting in January 2011.
Mr. Ronald Pantin, Chief Executive Officer, commented, "Given the anticipated growth of production from the entire Llanos basin and other basins in Colombia, and the limitations on existing transportation infrastructure, this agreement is a key initiative for us to secure the continuous flow of oil production from the Rubiales and Quifa blocks at a low and competitive transportation cost. In addition to this strategic advantage for us and for our customers, access to this infrastructure may also gives us the flexibility to buy diluents in Cusiana, providing substantial transportation cost leverage."
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