Differentiating factors in our operation
Science, Innovation,
and Technology at Ecopetrol
In 2021, considerable progress was made in the Science, Technology, and Innovation (ST+I) strategy, for which Ecopetrol’s Board of Directors approved the integration of the Innovation and Technology Center (ICP, for its Spanish acronym) with the Digital Vice Presidency (VDI) in October 2021. This structural change centralizes the coordination of the strategy, under the leadership of the VDI, and ensures an integrated approach of the Science (research and development), Technology (digital and technological appropriation), and Innovation agenda as a fundamental driver of the 2040 Strategy.
Ecopetrol’s 2021-2040 Vision for Science,
Technology, and Innovation (STI)
By 2040, Ecopetrol will be a strategic orchestrator of technological and digital ecosystems at the national and global level, which will allow the Company to develop and maximize the necessary capacities to accelerate the Energy Transition.
For this, Ecopetrol seeks to generate a cumulative ebidta of
USD 20 y
USD 30
trillion by 2040,
enabled by technology and innovation, by implementing an operating model for joint planning with the business and an STI strategic portfolio to prioritize opportunities and capital allocation, generating an optimal balance between the needs and the long-term challenges of the operation.
In 2021, three (3) major cross-cutting subject areas were prioritized to strengthen the medium and long- term portfolio
1
Asset optimization (process automation, recovery technologies, and data analytics).
2
Decarbonization (CCUS – Carbon Capture, Use and Storage, and Hydrogen).
3
Circular Economy (Water Management and Waste Management.
The operating model that will materialize the STI aspirations consists of four (4) systems, which ensure a timely time-to-market and greater access to new opportunities.
Ecopetrol Group’s Digital Strategy
Ecopetrol Group’s digital transformation strategy incorporates the necessary digital capabilities and solutions to fulfill the value proposition and the objectives of the Group by means of four (4) pillars:
Transformation
Create business value with innovative solutions and an agenda aligned with the corporate strategy.
Productivity
Design and implement agile, simple, complaint, and productive processes to guide people toward activities that generate value.
Extension of capabilities
Promote smart digital operations and infrastructures.
Cybersecurity
Ensure safe and available digital operations.
Graph 19.
Ecopetrol Group’s digital strategy
Source: Digital Vice Presidency
The Digital Vice President is responsible for implementing the Digital Transformation Strategy at Ecopetrol, together with its four (4) components.
For Ecopetrol, it is essential to enable innovation and technology capabilities at the service of the corporate strategy. The agile generation of value and the digital mindset acquired by all Group collaborators has allowed us to manage a strategic portfolio that captures value and imprints innovation in each process that we tackle. Hence, the launch of digital vehicles for the creation and management of knowledge: the Digital Agenda and Campo D, with their digital factories and Innovation Study.
The first wave of the Digital Agenda set the beginning of the digital transformation, with 10 projects and programs focused on building the foundational digital base throughout the value chain, including the corporate segment, by creating capabilities that ensure access, trust, and the creation of a technological base. The second wave has a more strategic approach that strengthens the capability to generate value by laying proactive, agile, and flexible foundations to respond to the two (2) main challenges of the corporate strategy – core business competitiveness and the energy transition – and to the challenges of the environment.
Campo D is a productivity space that boosts the digital evolution of the Company. Its methodology connects teams and people through agile and flexible digital solutions focused on user experience and co-creation.
Balance Ecopetrol Digital 2021
For the Digital Agenda project portfolio and the products of Campo D, revenues in the amount of
USD 93.3
millones
For the Digital Agenda project portfolio and the products of Campo D, revenues in the amount of
136.6 %
compliance.
The wave 2 approach was implemented this same year, establishing 13 strategic programs with revenues estimated at USD 600 million that endorse the Digital Transformation proposition of USD 1 trillion over a period of five (5) years.
The Digital Agenda highlights the implementation of advanced analytics to monitor the gross refining margin and the reduction of payment cycles to oil service contractors from 120 days to 60 days.
+560 digital business products have been developed in Campo D, 212 in 2021, in the digital factories. These developments include robots, analytical models, and portals.
Graph 20.
Digital investment plan
Digital investment plan
Source: Digital Vice presidency
Digital capabilities
The Group continues to democratize the use of digital capabilities to exchange information between people, businesses, and devices. The digital capabilities implemented in 2021 included:
Cloud computing (Cloud).
Advanced analytics.
big data.
Robotics.
IoT.
Blockchain.
Machine learning.
Artificial intelligence.
At Ecopetrol, people are both the reason for transformation and the main enabler, which is why we implemented digital capabilities and solutions, including artificial intelligence, to ‘de-robotize’ human talent by incorporating smart assistants in our business processes to exploit people’s knowledge, freeing them from repetitive tasks. For this reason, we implemented initiatives aimed at solving business issues, such cost optimization models, simulation of logistics scenarios, development of predictive models to anticipate the behavior of fundamental variables in the field, among other applications.
Moreover, to expedite the adoption of digital capabilities in the country, Ecopetrol launched 20 challenges, through the 100×100 challenges program, of which 11 were already executed, also contributing to the generation of employment and growth.
Science and Technology at Ecopetrol
The main research, technological development, and technology demonstration activities at Ecopetrol and the Group are conducted through the ICP, together with the businesses and corporate areas.
In 2021, the ICP focused its efforts on capturing opportunities and mitigating risks in the midst of energy transition. The research, development, and innovation (R+D+i) initiatives generated revenues in the order of
USD 254.8
million,a
un cumplimiento del
160%
compliance compared to the annual goal of USD 158.4 million.
In 2021, Ecopetrol invested COP 156.9 billion in the ICP. This represents a 94% increase compared to 2020,
reflecting the lead role of technology and innovation in the 2040 Strategy through Cutting-Edge Knowledge pillar, distributed between an investment budget of COP 8.565 billion and a manageable budget of COP 70.336 billion.
Gráfico 21.
Investments and expenses on I+D+i13
Investments and expenses on I+D+i13
13. Updated chart in MUSD.
In 2021, the projects with the highest execution levels were the Study of Technologies to turn production water into a profitable and sustainable resource at Ecopetrol, the Study of New Technologies to Increase the Recovery Factor, the Study of Advanced Materials deriving from asphaltenes and their potential applications, the Study of Technology Appropriation for Ecopetrol S.A.’s Energy Transition, and the 2021- 2022 Investment for Operational Continuity and Purchase and Replacement of laboratory equipment and the pilot plant.
The technology marketing and transfer strategies focused on monetizing previously licensed technologies and ensuring that the technology and innovation portfolio approved for licensing in 2021 by the Business Opportunities Committee was aimed at reducing risks. In 2021, eight (8) technologies were approved to be transferred to third parties and four (4) technologies were licensed after validating risk and opportunity criteria. Businesses were insured in the amount of nearly USD 4.1 million for royalties and contract value.
The most relevant technologies licensed in 2021 were:
Technology to lower costs in the transport of heavy crude oil and valorize LPG-ECO-DILUYE (2).
Polymer Valve (1): Technology to optimize polymer injection in EOR (Enhanced Oil Recovery).
Technological solution incorporating artificial intelligence for the early detection of faults in wells using an artificial lift system with electro-submersible pumping -ECOGEO (1).
Key Technological Differentiators
and Intellectual Property:
1
Ecopetrol has +200 researchers, +20,000m2 in technological infrastructure, +40 experimental areas, and +2,600 high-tech equipment.
2
Our research facilities for the molecular characterization of fluids and products, the development of advanced materials, and the improved recovery of hydrocarbons, Non-conventional Reservoirs, and cleaner fuels, are almost unique in Colombia and Latin America.
3
The Intellectual Property inventory, with respect to technological products, registered between 2017 and 2021 is as follows:
Table 20.
Intellectual property
Intellectual property
| Intellectual Property Registry | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Patents Granted | 5 | 15 | 8 | 8 | 8 |
| New Patent Applications Filed | 12 | 17 | 19 | 17 | 24 |
| Copyrights Obtained | 39 | 25 | 41 | 46 | 31 |
Source: Digital Vice presidency
Innovation Ecosystem
In the Digital Innovation Study, the Company collaborates with stakeholders from the STI ecosystem, promoting innovation through hacking challenges, using design and innovation methodologies to understand the needs, and proposing digital solutions together with the ecosystem, under an Innovation Management System certified with ICONTEC’s good practices seal.
The following aspects can be highlighted:
National Ecosystem
- The 100×100 program, which triggered the launch of 20 open innovation challenges to be solved by entrepreneurs, 11 in 2021 alone, has generated +95 jobs in this sector. This program was granted recognition for Good Sustainable Development Practices under the UN Global Compact’s SDG 8, Colombia chapter.
- A national innovation ecosystem was promoted with Innpulsa Colombia to identify solutions and strengthen national ventures, through open innovation and public-private collaboration.
International Ecosystem
- With Plug-and-Play, a Silicon Valley incubator, construction pilots were undertaken for non- productive times in drilling and for reservoir simulation.
- Ecopetrol participated in the Cleantech program (from Israel) that offers cutting-edge technological solutions for energy storage and implementation of advanced analytics.
- The TESG digital prototype was developed in partnership with IHS Markit and Microsoft for timely and transparent management in the reduction of greenhouse gas and methane emissions.
Through the ICP, Ecopetrol has established a network for co-research and co-development with national and international institutions. Similarly, with more than 30 agreements and seven (7) “Under the Same Roof” research partnerships, the company was able to strengthen the research, technological development, and innovation groups under the National Science, Technology, and Innovation System.
Recruitment and Supplier
Management
(102-43)
In order to engage in a transparent, timely, and active relationship with suppliers and institutions, Ecopetrol executed the 2021 Supplier Relationship Plan.
(308-1) (414-4)
The supply process takes place through a model that seeks the effective, responsible, and sustainable supply of products and services. The model is based on the segmentation of operations according to cost, opportunity, quality, and risk level. Along these lines, the Company has defined the following priorities for its Supply Strategy:
(308-1) (414-1)
Supply management is aligned with the 2040 Corporate Strategy and the “Generating Value with TESG” pillar. The performance evaluation of the Supply Strategy includes indicators focused on measuring the impact of the Company at the local level, as well as its efficiency. The achievements in 2021 are indicated below:
Table 21.
Number of contracts managed per year
Number of contracts managed per year
(102-9) (WEF 17)
12,213
2018
10,488
2019
8,521
2020
9,887
2021
Source: Vice Presidency of Procurement and Services
Table 22.
Number of contractors at the end of each year
Number of contractors at the end of each year
(102-9) (WEF 17)
3,817
2018
3,926
2019
3,480
2020
3,554
2021
Source: Vice Presidency of Procurement and Services
Table 23.
Local Hire
Local Hire
(204-1)
| Recruitment | Unit of measurement | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Total Contract Value | COP | 10,102,266,315,612 | 12,882,710,288,371 | 12,213,041,342,863 | 15,823,530,409,025 |
| Local Hire Value | COP | 5,106,717,402,056 | 7,299,754,112,650 | 6,003,572,900,536 | 8,413,035,379,158 |
| Proportion of local recruitment | % | 51 | 57 | 51 | 53 |
Source: Vice Presidency of Procurement and Services
Table 24.
Number of Ecopetrol Contractor employees distributed by gender
Number of Ecopetrol Contractor employees distributed by gender
(102-9) (413-1) (WEF 17)
| Gender | Unit of measurement | 2018 | 2019 | 2020 | 2021 | |||||
| Male | # | 28,203 | 28,457 | 27,277 | 32,793 | |||||
| Female | # | 6,602 | 7,254 | 6,687 | 8,116 | |||||
| Total | # | 34,805 | 35,711 | 33,964 | 40,909 |
Source: Vice Presidency of Procurement and Services
Risk management
in the value chain
(308-2) (407-1) (408-1) (409-1) (414-2)
In order to correctly manage the risks associated with supply actions, Ecopetrol deploys evaluation procedures to identify and classify potentially high-risk suppliers. These procedures include:
Early warning system to constantly monitor supplier compliance with variables such as claims, incidents reported at the facilities, and overdue payments.
Identification of critical contracts to monitor supplier payment defaults to third parties.
Internal Procurement Risk Management System to manage the risks associated with the procurement of third parties, from the design to the issuance of insurance policies.
Supplier segmentation where Ecopetrol classifies its suppliers by their level of criticality, which, for the Company, are those that provide a critical component for its operations or that are sole suppliers.
In 2021, the Company had
3,554
Tier 1 suppliers (direct suppliers), of which
219
were identified as critical.
80%
of spending on suppliers corresponds to spending on critical suppliers.
Although the Company does not segment suppliers by criticality further up in the supply chain (Tier 2 onwards), the processes allow segmentation according to the strategy, product and service category, and type of supplier. The process takes these factors into account when identifying supply needs and determines which activities, given their criticality, must be procured and executed by Tier 1 suppliers, and which non-critical activities can be subcontracted or assigned to third parties for execution.
For Tier 2 suppliers and onwards (the suppliers of their suppliers), Ecopetrol has implemented internal regulations to guide the subcontracting process and the relationship with this stakeholder subgroup.
Table 25.
Supplier Evaluation
Supplier Evaluation
(308-2) (407-1) (408-1) (409-1) (414-2) (WEF 14) (WEF 21E) (WEF 22E)
| Frequency of supplier evaluation | % evaluated annually | % evaluated at least once every 3 years | Total |
|---|---|---|---|
| Critical suppliers | 0 | 100 | 100 |
| Suppliers with high sustainability risk | 100 | 0 | 100 |
Source: Vice Presidency of Procurement and Services
Table 26.
Supplier performance evaluation results in the following aspects
Supplier performance evaluation results in the following aspects
(308-1) (414-1)
| Evaluation aspects | Unit of measurement | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| HSE aspects14 | % | 98.4 | 99 | 99.7 | 98.3 |
| Management of the context | % | 98.3 | 99.1 | 99.6 | 99 |
| Administrative aspects | % | 98.3 | 98.4 | 99.3 | 92.9 |
Source: Vice Presidency of Procurement and Servicesy
When a supplier needs to close a gap identified in the evaluation process, they are asked to create a corrective plan and Ecopetrol periodically monitors these plans. In 2021, the Company approved the corrective plans of 24 critical suppliers.
In 2021, 100% of the suppliers with high sustainability risk, whose gaps were identified in the evaluation process, implemented corrective plans. Similarly, all suppliers for which a corrective plan was activated 12 months ago or more showed improvements in their ESG performance.
14. Includes: HSE management systems and technical certifications; the promotion of the national industry; local supply of products and services; environmental criteria; workforce diversity and inclusion and performance evaluations.
On the other hand, as part of its commitment to the well-being of Colombian communities, Ecopetrol deployed a Socioeconomic Recovery Strategy, prioritizing the following aspects:
Generation of diverse and inclusive jobs
This resulted in the hiring of
13,572 women
1,080 people without work experience (first job)
803 people from ethnic minorities
179 victims of armed conflict
115 people with disabilities
for a total of
15,749
diverse and inclusive hires.
Sourcing of local product and service suppliers
79%
of the products and services purchased by the Company and its suppliers came from local sources.
Participation of ventures in the supply chain
266
ventures
were hired in the amount of nearly
COP 17,998 billion.