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To Re-invent Itself: a permanent challenge for Terpel 2016: a year of innovation, service, and new business

2016 MANAGEMENT REPORT

2016 was a memorable year for the country. After 50 years of armed conflict, the government came into a peace agreement with the guerrillas of the FARC, and opened a new chapter in the history of Colombia. This, with no doubt is a milestone for the economy of the country and entrepreneurial activity in which Terpel plays a critical role. At international level, and also relevant for the results of the company and economy in general, 2016 was a year we will all remember: US presidential elections, uncertainty about the future movements of the rate of monetary policy by the Federal Reserve, and Brexit that separated England from the European Union impacted financial markets, and stock and exchange movements of the country worldwide (the official Exchange rate (TRM) was marked by a tendency to rise that took US dollars up to COP$3.000 level at the end of the year). In terms of sectors, the fuel market in Colombia maintained its dynamics. Face to 2015, although the sales of fuels grew 9% approximately mainly due to the closing of the Venezuelan border (reduction of the smuggling), the sales of diesel were impacted by the lower growth of the economy, and consequently, by the mid-year trucker strike that lasted almost 2 months becoming the longest of the history of the country. In this context, Terpel achieved the growing of its market participation in all its businesses through competitive strategy and wide coverage. Our strategy focused on the people and allowed us to keep being the best option in terms of service, infrastructure, and price for our clients. Also, during 2016, we ratified our commitment with development and wellbeing of the regions within the framework of our purpose of being the “Country Ally.” This way, we continue transforming the fuel-distribution sector in Colombia by advancing with steam pace in the path we draw to be the number-1 company in the heart of Colombians. Our achievement is reflected in solid financial and social results that allow us to keep having the confidence and back-up of our several stakeholders. The constant and determined work of our team, affiliates, franchised, distributors, suppliers, and permanent support of our shareholders are elements that facilitate our growth and development.

At Your Service! In 2016 We continue advancing in our promise of being the best option in infrastructure, service, and price in the market, so that gas stations of the network have more satisfied and truthful clients with our brand, every day. These were our advances:

Renovation - Renewed image in close to half of the network. Inspired and focused in the individuals, we

advanced in the renewal of the image of our gas stations (EDS, for its initials in Spanish). At the end of 2016, a total of 896 gas stations (EDS), almost half of our network had a renewed image

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and modern infrastructure. Also, we reached 287 refurbished restrooms for the comfort of our consumers.

- More supplementary services. The increase in supplementary services in the network has allowed us to be closer to our final clients, and adjust the format and service to the needs of almost 2 million users who visit our gas stations daily.

Unique and Differentiator Services and Products

Our focus in the individuals has encouraged us to innovate and propose an integrated service and product offer beyond the fuel tanking generating, this manner, memorable experiences to a more exigent, informed consumer with greater election capacity. During 2016 we advanced in the development of the following initiatives:

- Rumbo Terpel – modality Mi Empresa: 40 clients joined our early-payment service for small and medium companies.

- PagoClick: Through this digital application, our users can make easy, trustful, and save

payments of fuel and products from their cell phone at Tiendas Altoque (Altoque Stores).

- Motorcycles exclusive isles: In 2016, we grew and reached 17 isles with this format, which

provides a complete service to close to 7 million motor cyclers in the country.

- Supplementary services: We have now 14 points of ziclos auto-washing and 16 deuna kiosks in the main cities of the country.

o New Tiendas Altoque: At the end of 2016, we reached 32 stores in the entire country.

Inspired in Colombian tastes and traditions, we consolidate as the largest network of convenient stores in gas stations of the country.

o Deuna Kiosks: We reached 16 deuna kiosks with proven technology that will allow us to

multiply this format in several stations, which space facilitates its quick implementation.

o Ziclos Car washing: We reached 14 car-washing points, and along with our services for moto cyclers, we launched the first motorcycles-exclusive washing place with a unique format in Latin America. We opened 2 of these washing places for motorcycles before the end of year.

- Masterlub Motos Lubrication Centers: We launched the first format of this type in the city of Neiva. An exclusive space specialized in lubricant change for motorcycles where a professional service of experts on the care of motorcycles is offered.

- Terpel Celerity 10W40: A new product in the market was made available to consumers, which allows four-stroke engines to increase their power.

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Colombianism:

In responding to the consolidation of the competitive strategy, at the end of 2016, we launched the Vive el Colombianismo (Live Colombianism) advertising campaign inspired in what characterizes Colombian people and make them unique. This initiative shows how the services of the company arise from traditions, amiability, warmth, and tastes of each region of the country.

Country Ally:

Our commitment of being relevant actors in complex situations and decisions of the country has always taken us, from our entrepreneurial vision, to make the best of our human team and infrastructure available, to the service of the country. This was evident, once more, in 2016, as we will highlight further in the document herein. On the other hand, we are convinced that reconciliation is the best way to reach sustainable peace and that this is, in turn, a crucial factor to make the economy and productivity in regions more dynamic. Also, that the improvement of education quality is a relevant requirement to have a more competitive and prosperous country.

- Presence in moment of crisis

o Our commitment with the mobility of the country made us one of the most relevant actors of the solution of the crisis generated by the longest trucker strike of the history of the country by achieving to solve logistics, financial, and security problems to bring fuel to the entire national territory, working jointly with national and local authorities of each place.

o Our presence and logistics support in the border area with Venezuela allowed the country to manage the difficult moments that occurred with no complications, due to the prolonged closing of the border achieving, among other, the supply capacity the country has to provide fuel at competitive prices to all border municipalities.

- Post-conflict and reconciliation

During 2016, we framed our actions addressed to the support of the peace process within the Restaurando Sueños (Restoring Dreams) program focused on the hiring of re-integrated individuals, financing of productive projects, promotion of commercial fairs (where re-integrated entrepreneurs offer their products and improve their income), possibilities of surveillance, and volunteering time that promote reflection and dialogue about reconciliation from the classrooms.

- A continuous challenge in the improvement of the education quality in Colombia

We continue working on the improvement of the education quality, and the leadership of Colombian

children and youngsters. Through Terpel Foundation, we impacted more than 330 thousand

benefited in 31 provinces of the country. It is important to highlight that after 3 years of intervention

in one of the programs of the foundation, Escuelas que Aprenden (Schools that Learn) in 30

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educational institutions of Florencia, Quibdó, and Barrancabermeja, 32% of the students reached

the highest level of performance in logical reasoning evaluated in mathematic tests, and close to

half of the students (52,5%) reached the superior level in the language test.

We act with integrity and commitment:

- Investors

Having an office to assist the investors’ consultations, providing timely financial information updated on our website, publishing timely financial statements, and holding events for the delivery of results are some of the points taken into account to hand out the Investor Relations acknowledgement to Terpel for the third consecutive year. This acknowledgement is granted by the Colombia Stock Exchange to companies registered in the securities market and which outstand for their commitment and good relation practices with investors, as well as high standards for the disclosure of information. Terpel also received the “AAA” rating by Fitch Ratings for its robust competitive position as market leader for the distribution and commercialization of fuels in Colombia.

- Affiliates

Thanks to the work and confidence of affiliates who are our main allies, the values of our brand come to the final consumer. Together, we designed the path of transformation of the fuel sector in Colombia. The transparency, honesty, and clarity with which we have always worked putting our visions closer and sharing our values are success factors in the long-term relation we have built. In 2016, we strengthened the place for communication and closeness of them with the brand through several

activities, such as relationship rounds, zonal committees, and regional committees. Also, we trained 78 of

our allies in the leadership workshop “Rompe tus Límites” (“Break Your Limits”) based on values,

development, and alignment of the human team.

We permanently innovate so that gas stations allied to the brand are preferred by the clients, and so the reach of profitability and sustainability both for affiliates and their families. In 2016, we conducted 2 promotion campaigns addressed to consumers, where 795 gas stations (EDS) selling more than 400,000 product units participated. In order to strengthen the motivation of the team of gas stations (EDS) (isle employees and administrators), we continue with our PITS program, which includes training on team work, service culture, and access to formal education programs, as well as prizes for gas stations (EDS) with best performance and activities for special celebrations. In 2016, we reached 7,730 isle employees and 915 participant administrators. We also strengthened the training of our zone chiefs to guaranty the accompaniment to our affiliate network in the implementation of several programs that generate value; and therefore, sustainability and growth of the businesses, in the long term.

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In addition, in 2016 we continued to facilitate the management of our allies through the Tienda Virtual Terpel (Terpel Virtual Store) where allies may purchase elements necessary for the operation of gas stations (EDS) and benefit with competitive prices resulting from the negotiations Terpel has had with its suppliers.

Employees Along with our commitment with equal opportunities, we widened our labor inclusion program for disabled people, in alliance with the Best Buddies Foundation. We strengthened our Clase T learning platform with which we trained more people, more flexibly, and diversify training or formation programs addressed both to Terpel employees and external audiences (suppliers, affiliates, and franchised). We developed academic contents that may be homologable in superior education institutions, mobilizing the professionalization of talent in labor competences. As a tool of commitment and root to corporate values through the SuperT program, 554 (51% more than in 2015) acknowledgements of daily and extraordinary contributions were delivered, in terms of service, innovation, and excellence. During 2016, we worked on the stabilization of the Central del Empleado (Employee Central), a self-management tool that speeds up the services of payroll and allow the management of information of all employees of the company. With this advancement, we become the first company in Colombia implementing 100% this platform.

Authorities and Communities As part of the accountability exercise and relationship, Terpel traveled across 22 cities of Colombia for a month, sharing economic, social, and environmental results with the stakeholders, as well as advancements toward the purpose of becoming the number-1 brand in the heart of Colombian people, through the presentation of the Sixth Sustainability Report.

Acknowledgement and Mentions

Reputation According to the results of the reputation monitor Merco Empresas y Líderes 2016 (2016 Merco Enterprises and Leaders), Terpel and its president Sylvia Escovar are part of the top 20 enterprises and leader of the general ranking with best reputation in the country.

The company went up 8 places in comparison to the 2015 ranking. The president Sylvia Escovar ranked 17, ascending 6 positions face to the ranking of the previous year. Merco E is a monitor that evaluates the reputation of enterprises worldwide. This measurement is done based on a rigorous assessment of 12 participant sources of information. In the 2016 version, 27,800 surveys were done among high directives, financial analysts, non-governmental organizations, unions, consumer associations, and economic information journalists, government, and social network influencers.

Innovation

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Terpel received the certification on good practices on innovation by Icontec and the Chamber of Commerce of Bogota. This certificate is granted to companies implementing an Innovation Management System (SGI) and complying with the reference created for both institutions, based on the NTC 5801-5202 rule called “Management of Investigation, Development, and Innovation.” The Industry and Commerce Superintendence Office granted Terpel the patent of invention for the Terpel Celerity 10W40 lubricant. This is a new product in the market that allows four-stroke engines to increase their power. In addition, the format deuna Kiosk received the prize Lápiz de Acero (Steel Pen) in the P.O.P. category awarding the best design for the promotion of products in sales points. Identity, quality, harmony, functionality, and innovation were the criteria assessed to hand out the prize.

Institutionalism The Tax and Customs Office (Dirección de Impuestos y Aduanas – DIAN) recognized Terpel for its active participation in the electronic invoice project in Colombia. We are the only wholesale company that has the new invoicing model structured according to new legal rules. The Office for Criminal Investigation (Dirección de Investigación Criminal) and Interpol of the National Police – DIJIN acknowledged the management of Terpel as one of the companies present in the province of Casanare and its back-up to consolidate the Entrepreneurial Security Front (Frente de Seguridad Empresarial), an initiative that looks to strengthen security schemes in favor of the entrepreneurial development of the country. Also, our active and determined participation in the solution of the mid-year trucker strike was expressly acknowledged by the Ministry of Mines and Energy Germán Arce outstanding the commitment of Terpel with the mobilization of the country.

Sustainability For the second consecutive year, Terpel measured the Dow Jones sustainability index (DJSI). Terpel added to the list of Colombian leader companies in sustainability worldwide. The company was included in the 2017 RobecoSAM Sustainability Yearbook, which is one of the more complete and recognized publications on good practices on corporate sustainability in the world. Furthermore, the company was acknowledged with the Bronze Class and Industry Mover due to its performance and management of the subject. The best ranking was obtained in the following areas: social report, corporate citizenship, and philanthropy, commitment with stakeholders, impact to community, occupational health, industrial security, and environmental report. Good results obtained in 2016 evidenced the permanent transformation of the company turned over excellence and passion for service. We will continue to work in benefit of the people along the country with integrity and discipline to consolidate Terpel as a more relevant organization for the sustainable development of territories.

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Following, we share a balance of our operations in the countries where we are present.

Consolidated Figures* In 2016, the sales volume of the company reached 2,452 million gallons that represent a growth of 6,1% in comparison to 2015. On the other hand, EBITDA was $659.628 million and gross profit was $196.516 million with 24,8% and 85,5% growth respectively face to 2015. Colombia* We re-affirm the leadership in the segments where we operate, thanks to the widening of our service and product portfolio, and the consolidation of our strategy focused on people. During the year, corporate sales reached $12,3 billion in 2016, consolidating Terpel, once more, as one of the largest private companies of the country and the leader in the fuel distribution sector.1 EBITDA was $552.675 million and net profit reached $196.516 million in spite the impact of the price of oil on inventories and lower margins on vehicular natural gas (VNG). * Non-audited figures

Business Lines

Gasoline and Diesel: The company ended up with 37,3% participation in diesel and 39,6% in gasoline face to a participation in diesel of 35,8% and 39,1% in gasolines in 2015.2 Gas Stations (EDS in Spanish): Regarding liquid fuels, we reached 1.326,5 million gallons in sales with 6,7% growth face to the previous year. We widened our network incorporating 17 new gas stations reaching a total of 224 own stations at the end of 2016. Aviation: In 2016, we sold 345,2 million gallons. We received the ISO 9001, 14001, 18001, and Norsok

re-certification in Colombia and in 5 airports in Dominican Republic. We implemented the JIG standard

(international rule) in processes and infrastructure. With the entering of the San José del Guaviare

airport, we widened our service network. We also increased our infrastructure in the airports of Santa

Marta, Cali, and Cartagena.

Vehicular Natural Gas: In 2016, the VNG business line closed with a market share of 44,4%, which means that, even in difficult times, this industry remains and has been leveraged by the influence of

1 These correspond to the lineal addition of income of companies in Colombia (Terpel, Opese, and Terpel Energía) with no

adjustments for eliminations. 2 In 2016, a change in methodology of measurement of the market was done when we included the volume of imported

product and GCINI (Grandes Consumidores Individuales no Intermediarios/Large no Intermediary Individual Consumers), in the calculation of intermediaries, which was previously excluded for not being part of the manageable market.

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massive transportation of special impact for Terpel with the operation of Transcaribe in which 500,000 m3/month were exceeded, in the first anniversary. Lubricants: sales volume of 9,8 million was reached, which allow registering a 15% growth face to 2015. We obtained the re-certification on the Management Integrated System ISO 9001, 14001, OSHAS 18001, NORSOK, and ONAC (accreditation for the Quality Control Laboratory according to the NTC SIO/IEC 17025 rule).

Regarding fuels for the industry, Carbones de Cerrejón granted the GIGANTES acknowledgement to Lubricantes Terpel for its operational excellence for outstanding performance during the first year of the agreement. Lubricantes Terpel presented its new product Terpel Maxter 15w40 Avanced with API CK-4 certification form the American Oil Institute, a specialized product for last-generation diesel motors that promises being at the forefront for complying with the highest international quality standards and environmental exigencies.

At the end of the year, Copec, Terpel’s shareholder signed a regional agreement with multinational ExxonMobil for the distribution of Mobil-brand fuels in Colombia, Peru, and Ecuador through our company. The transaction is subject to the approval of regulatory authorities. Dominican Republic Terpel celebrated its first five years in the Dominican Republic consolidating itself as an ally of the aeronautical industry thanks to its operative excellence, security, reliability, and technology. In 2016, 55,9 million gallons were sold exceeding 7% of the sales comparing to 2015. On the other hand, the resulting EBITDA was US$ ,8 million and net profit was US$4,8 million, which is a 47% and 71% growth face to 2015. We re-affirm our commitment as ally of the country and initiate our volunteering program called Tocando Corazones through which we contribute to the improvement of education in the influence areas of our operations. Thanks to disciplined work, and safe and responsible operation, the fuel-distribution company has widened its operation to reach 32,3% market share, which shows that air industry in Dominican Republic trusts in Terpel as its ally in land. Ecuador

Terpel complied with its first decade contributing to the development of Ecuador. During 2016, 145,2 million gallons of fuel were sold exceeding sales in 4% in comparison with 2015. On the other hand, resulting EBITDA was US$3,1 million and net profit was US$0,7 million, which is a 2% and 5% growth respectively face to 2015. Panama

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We continue our growth way in the Panamanian market consolidating the strategy in the company. In 2016, 248,1 million gallons of fuel were sold exceeding 16% the sales in 2015. Meanwhile, resulting EBITDA was US$19 million and net profit was US$7,6 million, which is 41% and 113% growth respectively, in comparison with 2015. According to the Brand Health study, for 2016 we maintained the first place in the mind of the Panamanian consumer both of the Terpel brand and for the Va&Ven convenience-store network. An example of this is the 3% growth in our market share, moving form 33,8% in 2015 to 36,7% in 2016. We widened our coverage incorporating 11 new gas stations to the network, to close with a total of 127 gas stations, among own and affiliate ones.

Mexico In 2016, 14,6 million VNG were sold exceeding 16% of the sales for 2015. On the other hand, resulting EBITDA was US$3,7 million and net profit was US$0,9 million, which is 14% and 42% growth respectively face to 2015. Peru In 2016, 32,1 million fuel gallons were sold exceeding 17% the 2015 sales. On the other hand, resulting EBITDA was US$ ,3 million and net loss was US$0,8 million, which is a drop of 20% in EBITDA and US$0,6 million in net loss face to 2015. We strengthened our network with 3 new VNG stations, 3 of liquid fuel, and 2 petroleum liquid gas (PLG) for a total of 38 to year end. Legal Aspects On June 28th, 2016, the situation of the entrepreneurial group existing between Terpel and some of its subordinates was registered in the commerce registry. Consequently, following are listed the control companies part of the entrepreneurial group:

Lutexsa Industrial Comercial Cía. Ltda. Administración Estratégica de Gasolinera del Ecuador Adesgae S.A. Gazel Perú S.A.C. Combustibles Ecológicos Mexicanos S.A. de C.V. Organización Terpel República Dominicana S.A.S. Petrolera Nacional S.A. Terpel Energía S.A.S. E.S.P. Vonport Corp. Orlyn S.A. Transmarine Transportation & Barging S.A. Fuel Petroleum Services S.A. Operaciones y Servicios de Combustibles S.A.S. Noliber S.A. en Liquidación

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It is important to mention that as of December 31st, 2016 none of the companies pertaining to the Grupo Empresarial Terpel has legal restrictions to develop its corporate purpose, nor it has any lawsuits or material litigation that may deteriorate financial results at closing for 2015. In addition, thanks to the strict compliance of the laws and regulations related to the activities they develop, abiding by the principles of free market and the permanent respect to the rights of the consumers no fines or sanctions were imposed against the companies pertaining to the group. Face to significant regulation changes for the development of the activities of the companies, it is noteworthy that with resolution 40577, dated June 9th, 2016 the Ministry of Mines and Energy authorized the use of petroleum liquid gas (PLG) as carburant in internal combustion motors, carburant in auto motor transportation (auto gas), and other PLG uses, and authorized pilot tests in the national territory. Also, it is important to note that by means of resolution 41053 of 2016 of the Ministry of Mines and Energy, the restriction for the import of carburant alcohol was lifted. In addition, the issue of the tax amendment by means of law 1819, dated December 29th, 2016 outstands. Now, regarding reports listed in article 446 of the Commerce Code – disbursements – and the set forth in article 29 of law 222 of 1995 – entrepreneurial group – it is noteworthy that such information was made available to the shareholders, during the period provided by valid regulations, for the exercise of the right of inspection, prior to the holding of the meeting, including the following:

Disbursements, Expenses, and Obligations Abroad Regarding the provided in article 446 of the Commerce Code, following are consolidated disbursements for salaries, fees, per diem expenses, bonuses, cash and in-kind provisions, disbursements for transportation, and any other kind of remunerations each directors of Organización Terpel S.A. could have received, as well as disbursements for the same reasons, made in favor of advisors or manager linked or not to the company by means of a work agreement, when the main duties performed were processing matters in public or private entities, or providing advice or preparing studies to process such matters. Also, expenses for advertising and public relations are listed, money or cash, or other goods of the company abroad, and foreign currency obligations and investments in other national or foreign companies, as follows: a) In 2016, disbursements for per diem, travel expenses, and other payments in cash for directive personnel

of the company were $26 million b) Fees paid for attending the board of director during 2016 were $637 million c) Fees paid to advisors during 2016 were $21,653 million d) Cash transfers and other goods, for free, in favor to body corporate were as follows:

IDENTIFICATION – NAME- VALUE (MILLIONS) - DONATION

IDENTIFICACION NOMBRE VALOR (millones) DONACIÓN

900.015.103-0 Cámara de Comercio e Industrias 1 Dinero

900.197.038-1 Fundación Cerrejón 10 Dinero

900.753.664-6 Fundación para el Progreso 193 Dinero

830.132.769-2 Fundación Terpel 5.000 Dinero

TOTAL 5.204

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CHAMBER OF COMMERCE AND INDUSTRY

(DINERO = CASH)

e) Advertising and publicity expenses for 2016 were $38,086 million

f) Money and obligations abroad of Organización Terpel S.A. are listed are follows: 1. Accounts abroad:

IDENTIFICATION ENTITY VALUE

133379014 J.P. MORGAN US$1.718.329,12

2. Obligations abroad: as of December 31st, 2016 the company has no obligations abroad.

g) Investments of the company as of December 31st, 2016 added $404,007,617 and are as follows:

Identification Name % Share Investment Value

(million)

20521921618 PGN Norte S.A.C. 25,00 1.977

20521021880 PGN Sur S.A.C. 25,00 1.267

76004261-7 Organización Terpel Chile S.A. 100,00 832

76127612-3

Inversiones Organización Terpel Chile

S.A. 100,00 46.096

CEM970905VB3

Combustibles Ecológicos Mexicanos

S.A. de C.V. 100,00 13.432

1019-225-

108400 DV-92. Petrolera Nacional S.A. 100,00 246.152

900433032-9 Terpel Energía S.A.S. E.S.P. 100,00 9.467

1-30-78033-1 Terpel República Dominicana S.R.L. 100,00 38.199

20511995028 Gazel Perú S.A.C. 100,00 45.357

8060018226 Sociedad Aeroportuaria de la Costa 11,00 372

8902061329

Terminal de Transportes de

Bucaramanga 10,12 424

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Other investments 432

Total 404.008

Relation at Entrepreneurial Group Level

Notwithstanding the independence of each individual enterprise integrated into the conglomerate and the responsibilities of its administration bodies, there is an organizational structure of the Grupo Empresarial that defines for all 3 levels of government – Shareholders’ Meeting, Board of Directors, and Top Management – key bodies and positions, as well as the relation among them, which is public (published on Terpel’s website), clear, and transparent. Hence, and for 2016, Organización Terpel S.A. entered into transactions with affiliates, subsidiaries, shareholders, and related bodies that occurred within the frame of valid regulations. In developing them and towards greater transparency, the Vice-Presidency of Legal Corporate Affairs provided a monthly Report of Transactions with Related Parties made available to the Board of Directors. In this report, all transaction entered into by Organización Terpel and/or related companies with the administrators of the company and/or related companies were revealed. The previous understanding that according to valid regulation “administrators are the legal representative, liquidator, factor, members of the board of directors or councils, and whoever exercises or has those duties according to the bylaws.” Also, two or more individuals or body corporates are related parties when one of them participates direct or indirectly in the administration, control, or capital of the other one. It can also be an individual if this exercises control, significant influence, or is a member of the key personnel of the management of the company he or she reports to, when exercising his or her duties. Within the framework of such operations at entrepreneurial group level, the most relevant one was that with Gazel Perú S.A.C. in November, 2016 when the Board of Directors of Organización Terpel S.A. approved the capital contribution to Gazel Perú S.A.C. for an amount of USD$2,000,000.00 There were no material operations during the relevant exercise, among controlled companies and other entities due to the influence or controlling interest, as well as operations during the relevant exercise among the controlling company and other entities in interest of the controlled one. There were no decisions made or that were left to make by controlled companies due to the influence or on the interest of the controlling company. Likewise, there were no relevant decisions made or that were left to make that the controlling company has made or left to make in the interest of the controlled companies. In addition, our controlled companies performed the following relevant operations:

Operaciones y Servicio de Combustibles S.A.S.: The merger of the companies Operaciones y Servicios de Combustibles S.A.S. (absorbing company) and Masser S.A.S. (absorbed company) by means of which the absorbing company acquired the rights and obligations of the absorbed company in compliance with legal requirements and formalities.

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Combustibles Ecológicos Mexicanos S.A. de C.V.: the General Meeting of Shareholders of the company decides to purchase the share participation of its minority shareholder correspondent to 14,731 shares with the consequent reduction of capital of the company of 442,353 to 427,622 shares.

Good Corporate Government

The Grupo Empresarial Terpel is committed with the adoption of good corporate government according to highest standards set forth for securities issuers in external circular 028 of 2014 of the Financial Superintendence Office of Colombia and supplementary regulations. The adoption of best corporate government practices is a commitment inspired on the principles of respect, integrity, trust, and equal treatment in all relations with the several shareholders and administration bodies at entrepreneurial group level. Therefore, in the execution of those practices, Organización Terpel S.A. has implemented the Report on Best Corporate Government Practices “Encuesta Código País” (“Country Code Survey”), which is available for consultation both on the corporate web page and the Financial Superintendence Office of Colombia. Regarding the capital structure, this did not have any variation during 2016 maintaining 195,999,466 ordinary shares out of which 14,574,961 were re-acquired, for a total of 181,424,505 outstanding ordinary shares. Out of this share composition, 56% is on the head of the major shareholder Compañía de Petróleos de Chile Copec S A. corresponding to 101,930,028 ordinary shares of Organización Terpel S.A. It is important to point out that except conflicts among shareholders, or between shareholders and the company or the Board of Directors, which due to express legal attribution have to necessarily be solved before the ordinary jurisdiction, the bylaws of the company include conflict resolution mechanisms such as direct agreement, amicable composition, settlement, or arbitration. We report herein that during 2016 no agreements among shareholders, or negotiations of shares and/or securities issued by the company by the top management have been reported in accordance with the set forth in the corporate Code of Good Government. Disputes among shareholders that would have made them to use dispute resolutions mechanisms included in the corporate bylaws did not occurred either. It is important to take into account that during the same period the rules regulating conflict of interest situations were complied with. To this respect, the employees of the company must act with due diligence and loyalty communicating situations where there are conflicts of interests observing the duty of confidentiality. All activities of the company are characterized for being delimited by values of integrity, respect, and trust; rules of commercial ethics and good commercial faith, respect to commercial laws and customs focused on the compliance of the corporate purpose with emphasis and priority in the common good and service to community. When an employee of the company faces a conflict of interest, he or she shall: 1.- inform the conflict in writing to the hierarchical superior with details on the situation. The superior shall appoint the employee who shall continue with the respective process; 2.- refrain from intervening direct or indirectly in the activities and decisions related to corporate determinations referring to the conflict or stop any acting when he or she knows about the conflict of interest. The members of the Board of Directors must inform the situation of conflict of interest to the Board of Directors. The doubt regarding the configuration of the acts implying conflict of interest does not release the member of the Board of Directors of the obligation of refraining to participate in the relevant activities. Decisions and actions of the administrators of Organización Terpel must be aimed by the meeting of interests thereof and respect to the rights of shareholders, and shall not be motivated by personal considerations. The relations of kindship or friendship, or expectations face to current or potential suppliers, contractors, clients, or

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competitors shall not affect their independence and best judgement in the protection of the interests of Organización Terpel S.A. and the corporate group. In relation to the administration structure, the top management of the company did not have any changes in composition. In terms of the Board of Directors, it is important to note that it is always appointed by the electoral quotient system set forth in article 197 of the Code of Commerce. The General Meeting of Shareholders for the period 2016-2019 increased the remuneration of its members from 4 minimum legally valid monthly salaries to 8 minimum legally valid monthly salaries per attended session. The following is the current composition. We must clarify that the résumés of the members are available to the public through the “Accionistas e Inversionistas” (“Shareholders and Investors”) section of the web site www.terpel.com:

Within the framework of competencies of the Board of Directors is to appoint the support committee that seeks to specialize on specific topics in order to generate effectiveness in management. To this date, the Board of Directors of Organización Terpel S.A. has 2 supporting committees: (i) The Compensation and Benefits Commitment; and (ii) the Audit and Corporate Good Government Commitment, which have strictly complied with the duties, and submitted relevant reports and recommendations to the Board of Directors. Following is the integration and main achievements: Regarding the Compensation and Benefit Committee: (i) Composition for the 2016-2019 period:

MEMBERS

José Óscar Jaramillo (Board of Directors Member)

Jorge Garcés (Board of Directors Member)

Sylvia Escovar Gómez (President Organización Terpel S. A.)

María Mercedes Carrasquilla (Vice-President Human and Administrative Management)

María Cristina Romero (Administrative Management)

(ii) Management:

PRINCIPALS ALTERNATES

1. Lorenzo Gazmuri Schleyer 1. Frederic Christophe Chaveyriat

2. Jorge Andueza Fouque 2. Eduardo Navarro Beltrán

3. Ramiro Méndez Urrutia 3. Jorge Andrés Garcés Jordán

4. Leonardo Ljubetic Garib 4. Rodolfo Castillo García

5. Jorge Alberto Bunster Betteley 5. Arturo Natho Gamboa

6. José Óscar Jaramillo Botero (independent) 6. Gabriel Jaramillo (independent)

7. Bernardo Dyner Rezonzow (independent) 7. Tulio Rabinovich Manevich (independent)

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The Compensation and Benefits Committee of Organización Terpel S.A., according to its policy, ensures that

the Human Management area of Organización Terpel S.A., as well as related companies, frame their

management within corporate guidelines and modern practices of comprehensive development of the human

being. Such committee has worked in the maintenance of an equal and competitive compensation to attract and

retain the people the company needs to comply with its mission and strategic objectives. In 2016, 2 meetings of

the committee where held where salary leveling up to the professional level were presented taking into account

the criteria of coherence, internal equity, and external competitiveness. In addition, topics on labor legislation

were analyzed, such as collective relations, UGPP, and administrative matters, among which is the delivery of

vehicles as work tool.

Regarding the Audit and Good Government Committee: (i) Composition for the 2016-2019 period:

PRINCIPALS ALTERNATES

Bernardo Dyner Rezonzew (independent) Tulio Rabinovich Manevich (independent)

José Óscar Jaramillo Botero (independent) Gabriel Jaramillo (independent)

Frederic Chaveyriat Leonardo Ljubetic

(ii) Management: The Audit and Corporate Good government Committee exercising its duties and according to the set forth in the

policy: (i) reviewed the accounts of the company and monitored compliance of generally accepted accounting

rules. In such analysis, it reviewed financial information both annual and periodic before its delivery to the Board

of Directors emphasizing in accounting changes, accounting estimations, important adjustments as result of the

audit process, evaluation of the continuity of the business, and the compliance of valid laws and regulations that

affect the company; (ii) served as communication channel between the Board of Directors of the company and

the external auditor monitoring in turn the services of the latter; (iii) confirmed the appropriate performance of

control and disclosure systems of the company; (iv) proved that the Board of Directors complied with duties and

obligations, and lastly, (v) complied with applicable legal and bylaw provisions. Also, it proved that the operations

between Organización Terpel S.A. and its economic related are done in market conditions and do not infringe

equal treatment among the shareholders.

On the other hand, it is noteworthy that during 2016 the General Meeting of Shareholders gathered in 2 occasions: a) On March 29th, in ordinary meeting. The following bylaw amendments were approved at that meeting: (i)

the granting of unlimited powers to the legal representative when acquiring, selling, and transporting bio-fuels; (ii) the extension of the term of the Board of Directors from 1 to 3 years; (iii) the inclusion of the affirmation that all administrative, direction, employees, and other officer bodies must comply with corporate good government recommendations (“Encuesta Código País”/”Country Code Survey”) adopted by Organización Terpel; and (iv) the inclusion of activities of the port operator within the corporate purpose of the company.

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b) On December 15th, in extraordinary meeting in which the maximum corporate body approved the

assignment of the agreement for the acquisition of certain downstream operation of ExxonMobil, as follows: (a) in Colombia: lubricants (production plant) and fuels (retailer, wholesaler, and storage plants, which are operation they estimate to sell later on); (b) in Peru: aviation and lubricants (production); and (c) Ecuador: fuels (retailer and wholesaler) and agreements on lubricants. The price agreed was US$747,000,000 (seven hundred forty-seven million American Dollars of the United States), (US$492,000,000 company value and US$255,000,000 cash) payable at the time of the closing of the operation and prior authorization by the Industry and Commerce Superintendence.

In relation to control systems, it must be said that the company has fully complied with applicable regulations in relation to habeas data, and management and prevention of risk of money laundering and terrorism financing. This is how, according to the activities by Terpel as securities issuer, port operator, custom user, and cargo land cargo carrier, rules and regulations applicable in relation to prevention and control of risk of money laundering and terrorism financing have been strictly complied. The previously mentioned given that to date the company has policies and proceedings on this matter with an area specifically set for the management of associate matters. It has submitted the relevant report to competent authorities especially to the Unit for Financial Analysis and Information (Unidad de Análisis e Información Financiera - UIAF) and has continued with the training for all employees of the company on that subject-matter. Hence, in a continuous improvement process, policies and existing controls are constantly reviewed in order to identify possible improvements and strengthen our program for the prevention of money laundering and terrorism financing given legal and reputational impact, among other. Regarding habeas data, we stand out the compliance with the rules on the subject, the capitalizations done to the employees of the company, and the registry of the databases before the competent authority. On the other hand, during 2016, the Grupo Empresarial Terpel complied with the regulations on copyrights and intellectual property included in Colombian law. In concordance with the previously mentioned, Terpel’s brands are duly registered in accordance with law requirements and the agreements comply with legal requirements related to copyrights and intellectual property. Furthermore, the companies watch over the compliance and due protection of third-parties intellectual property and copyrights. Finally and in accordance with law 1676 of 2013, for the record, the administration of companies did not hinder the free circulation of invoices issued by the sellers and suppliers, at any time, and consequently has allowed the free negotiation and collection thereof from the legitimate holder.