Ecopetrol Secures Approval to Seek $700 Billion Loan from Davivienda

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Ecopetrol Secures $675 Million Loan for Investment Expenses

Bogota, Colombia – October 24, 2025 – Ecopetrol, ColombiaS largest oil company, has received authorization from the Ministry of Finance to contract an internal loan of up to 700,000 million Colombian pesos (approximately $675 million USD based on current exchange rates) from Banco Davivienda. The financing will support a range of investment expenses outlined in the company’s strategic plan.

Details of the Loan Agreement

The loan, structured as a non-rotating committed line of credit, will have a five-year term commencing upon the initial disbursement of funds. Interest rates will be variable and indexed to the Interbank Offered Rate (IBR), a common benchmark for international lending. This structure allows Ecopetrol to manage its financial obligations in line wiht prevailing market conditions.

Conditions and Safeguards

Resolution 2691, issued on October 21, 2025, by the Ministry of Finance, details the terms of the agreement, including provisions for events of default. These include failures in timely payment of principal and interest, factors impacting Ecopetrol’s payment capacity, concerns regarding the integrity of its financial reporting, and non-compliance with contractual obligations. Should any of these events occur, Banco Davivienda retains the right to demand immediate repayment of the outstanding debt, as stipulated in the contract.

Ecopetrol’s recourse and Contractual Rights

The agreement also protects Ecopetrol’s interests, granting the company the right to appeal to Banco Davivienda should disbursements be

What are the primary investment areas Ecopetrol will focus on with the loan funds?

Loan Details and Purpose

Ecopetrol, Colombia’s largest oil and gas company, has received approval to pursue a ample $700 billion loan from Davivienda, a leading Colombian financial institution. This significant financial maneuver signals Ecopetrol’s enterprising plans for future investments and operational expansion. The loan isn’t a single transaction, but rather a framework allowing Ecopetrol to access funds as needed over a defined period.

* loan Amount: $700 Billion (Colombian Pesos) – equivalent to approximately $175 million USD as of October 24, 2025 exchange rates.

* Lender: Davivienda, a major Colombian bank with a strong presence in retail and corporate banking.

* Purpose: Primarily earmarked for funding Ecopetrol’s 2024-2025 investment plan, focusing on exploration, production, refining, and transportation projects. A portion will also be allocated to renewable energy initiatives.

* Loan Structure: Likely a revolving credit facility,providing Ecopetrol with versatility in accessing funds.

Impact on Ecopetrol’s Investment Plan

This loan is a critical component of Ecopetrol’s broader investment strategy. The company has outlined a multi-billion dollar investment plan aimed at bolstering its core business and diversifying into cleaner energy sources. Key areas of focus include:

1. Upstream Development: Expanding oil and gas exploration and production activities, particularly in the Llanos Orientales and Putumayo basins. This includes investments in enhanced oil recovery (EOR) techniques.
2. Refining Capacity: Modernizing and expanding refining facilities,such as the Cartagena refinery,to increase processing capacity and improve product quality.
3. Midstream Infrastructure: Strengthening pipeline networks and storage facilities to ensure efficient transportation of crude oil and refined products.
4. Renewable Energy Transition: Investing in solar, wind, and biomass projects to reduce Ecopetrol’s carbon footprint and contribute to Colombia’s energy transition goals. This aligns with global ESG (Environmental, Social, and Governance) investing trends.
5. Petrochemicals: expanding petrochemical production to add value to its hydrocarbon resources.

Davivienda’s Role and Strategic alignment

Davivienda’s approval of this loan underscores its confidence in Ecopetrol’s financial stability and long-term growth prospects. The bank has a history of supporting Colombia’s energy sector and recognizes the strategic importance of Ecopetrol to the national economy.

* Strengthened Partnership: This loan reinforces the existing relationship between Ecopetrol and Davivienda, potentially leading to further collaboration on future projects.

* Economic Growth: By providing financial support to Ecopetrol, Davivienda is contributing to job creation, economic development, and increased tax revenues for the Colombian government.

* Financial Performance: The loan is expected to generate significant interest income for Davivienda,boosting its financial performance.

Implications for the Colombian Economy

The $700 billion loan has broader implications for the Colombian economy. Ecopetrol is a major employer and contributor to the country’s GDP. Increased investment by the company will stimulate economic activity across various sectors.

* Job Creation: Expansion projects will create numerous jobs in the oil and gas, construction, and renewable energy industries.

* Increased Tax Revenues: higher production and profits will lead to increased tax revenues for the government, which can be used to fund social programs and infrastructure projects.

* Energy security: Investments in oil and gas production will enhance Colombia’s energy security and reduce its reliance on imports.

* Foreign Investment: A strong Ecopetrol attracts further foreign direct investment into Colombia’s energy sector.

Risk Factors and Considerations

While the loan is a positive development for Ecopetrol and Davivienda, it’s crucial to acknowledge potential risk factors:

* Oil Price Volatility: Fluctuations in global oil prices could impact Ecopetrol’s revenues and ability to repay the loan.

* Political and Regulatory Risks: Changes in government policies or regulations could affect Ecopetrol’s operations and investment plans.

* Environmental concerns: Increased oil and gas production could raise environmental concerns and lead to stricter regulations.

* Currency Exchange Rate: Fluctuations in the Colombian Peso against the US dollar could impact the loan’s cost and Ecopetrol’s financial performance.

Ecopetrol’s Recent Financial Performance (Context)

Understanding Ecopetrol’s recent financial health is crucial. In the first half of 2025, Ecopetrol reported net profits of COP 15.2 trillion (approximately $3.8 billion USD), a significant increase compared to the same period in 2024. This strong performance demonstrates the company’s ability to generate cash flow and service its debt obligations.Key financial indicators include:

* Revenue: COP 68.8 trillion (approximately $17.2 billion