Annual Report 2017

01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

ANNUAL REPORT 2017

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Company Name: Empresa Nacional del Petróleo. Address: Avenida Apoquindo 2929, 5th, Las Condes, Santiago, Chile. Chilean Tax Identification Number: 92.604.000-6. Organization: State-owned entity created by Law 9,618. Ownership: State of Chile. Telephone: (56-2) 280 3000. Fax: (56-2) 280 3199 / 280 3179. Zip Code: 7550246. Website: www.enap.cl. External Auditors: Deloitte Auditores y Consultores Limitada. Securities Registry: Nº 783, of the Superintendency of Securities and Insurance, dated October 4, 2002. Line of Business: Exploration, production, and sales of hydrocarbon and its derivatives; production, transport and sales of energy and electric power. Main Subsidiaries: ENAP Refinerías S.A., Tax Identification Number: 87.756.500-9, SVS Special Register of Reporting Entities Nº 95. ENAP Sipetrol S.A, Tax Identification Number: 96.579.730-0, SVS Special Register of Reporting Entities Nº 187, according to Law 20.382. Contact Information: Investor Relations: [email protected]

2 / ENAP MEMORIA ANUAL 2017 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA CONTENTS 01 04 2017: ENAP, STATE- CORPORATE GOVERNANCE OWNED ENERGY Sustainable Development COMPANY Safety and Occupational Health ...... 82 Environmental Management...... 94 Milestones in Management...... 12 Commitment to Communities...... 107 The Company...... 20 Community Management...... 113 Brief History...... 23 International Subsidiaries...... 154 Senior Management...... 25 Awards and Recognition...... 162 Board of Directors...... 28 Compliance Management...... 165 Products...... 32 Risk Management...... 173 International Presence...... 33 Market Risk Factors...... 180 Oil Processing...... 34 Procurement...... 194 Gas Processing...... 35 ICAT Management...... 196 Electricity Generation Process...... 36 02 05 BUSINESS LINES PEOPLE MANAGEMENT AND ORGANIZATION Exploration and Production (E&P)...... 204 Refining and Commercialization (R&C)...... 228 Gas and Energy (G&E)...... 264 People Management...... 39 ENAP’s Personnel...... 41 Management of Third Parties...... 62 06 03 CONSOLIDATED BUSINESS ENVIRONMENT FINANCIAL STATEMENTS

Affiliated Companies...... 283 Oil International Market...... 71 Consolidated Financial Statements...... 296 Oil Domestic Market...... 77

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LETTER FROM THE CHAIRMAN OF THE BOARD

In 2014, ENAP prepared the 2014- Aware that to grow in this area re- 2025 Strategic Plan, which it has quires a profound cultural change, developed consistently with three we are satisfied with the progress fundamental strategic objectives: To made. Finally, operational efficiency promote the exploration and produc- is another fundamental aspect of tion of hydrocarbons in Magallanes, the 2014-2025 strategy. In this area, using non-conventional technolo- there is progress. The growth in in- gies; increase the efficiency, stability, vestment, production, and diversifi- safety and profitability of the supply cation were made with a significant of refined fuels by its own refineries; increase in labor productivity. and contribute to the development of These advances were made in the the electricity market by promoting context of a hydrocarbon market cri- In recent years, the global energy in- a competitive and reliable supply of sis, with sharp drops in prices, which dustry is rapidly evolving towards a natural gas. thanks to the company’s adequate more responsible and conscious de- To meet these objectives, the compa- coverage policies, had no adverse ef- velopment, changing the way company strengthened its capacity to man- fects on the results. On the contrary, nies in the sector participate today, age investment projects that would the EBITDA margin steadily rises 0.5% with a special focus on sustainability allow it to increase its investments in of sales in 2012 to reach 15% in 2016. and the environment. defined strategic areas in a reliable At the same time, the company’s eq- ENAP is not outside of that scenario. and profitable manner. Simultaneous- uity recovers from US $ 83 million in Today it is a robust, sustainable, dy- ly, ENAP has focused on developing 2012 to US. $ 838.6 million in 2017. namic and articulating company of its capacity to carry out an environ- In 2017, ENAP managed to consoli- pioneering solutions for the energy mental management to the highest date its good financial results over sector in Chile. To do this, the com- standard, and with the community, the last five years, reaching an EBIT- pany must maintain an integrated op- it has transformed the safety of its DA of more than US $ 660 million, eration, taking advantage of the op- personnel and subcontractor workers and closing the year with profits of portunities that exist in the market, into a fundamental objective, which US $ 23.7 million. without neglecting sustainability as a has been monitored at the board level critical factor, which meant incorpo- in all sessions. rating key areas such as safety, social

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development, and the environment into its strategy.

Our country continues to evolve towards the energy of the future and ENAP has assumed a key role. The company is at the same level of companies of its field in the most developed countries. Proof of this is the role played in the promotion of the Wind Farm in Magallanes and the inauguration of Cerro Pabellón, the first geothermal plant in South America, which will help Chile to diversify its generation mix, marking the beginning of a new path in the development of energy to boost the growth “Cerro Pabellón will be able to of the geothermal sector. produce around 340 GWh per Cerro Pabellón will be able to produce around 340 GWh per year, equivalent year, equivalent to the annual to the annual consumption needs of consumption needs of more than more than 165,000 Chilean households while avoiding the emission 165,000 Chilean households into the atmosphere of more than 166,000 tons of CO2 per year. while avoiding the emission into

Moreover, for the second consecutive the atmosphere of more than year, the company delivered natural gas to Argentina, marking a new 166,000 tons of CO2 per year” milestone in the energy integration process between both countries. As

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a government, through ENAP, we are with communities. Our message is future challenges require systemic committed to continuing this chal- clear: ENAP is a company with history innovations in which coordination lenge of bilateral integration between and a future, which has an expect- failures are significant. In particular, two sister nations. This agreement ant position in the national market, it the electrification of fuels offers the generates mutual benefits, since on has been able to promote large-scale country a scope with enormous ad- the one hand it provides an alterna- solutions, to manage an interesting vantages to advance to a low carbon tive to the energy requirements of portfolio of projects to expand and economy. ENAP can play a catalytic the trans-Andean country, and on diversify the energy supply, and that and accelerating role in the energy the other, it allows Chile to place gas throughout its more than 67 years of transition, generating advantages for available in other markets. history it has quickly overcome com- other sectors of the Chilean economy plex and circumstantial situations, by reducing its carbon footprint. In ENAP, human capital is more impor- such as those experienced in the last tant than physical or financial capital, I cordially invite you to continue con- decade. because in the area in which we oper- tributing so that ENAP continues to ate we require a high degree of spe- The achievements and scope of the be a contribution to the diversifica- cialization, in each and every one of different objectives of its Strategic tion of the national energy matrix. Our its areas. Our workers, professionals, Plan are not the result of chance. They future vision is optimistic and seeks and executives have amply demon- obey to a teamwork of executives, to continue advancing in the great strated that they are prepared to face professionals, and workers, oriented goals of competitiveness and devel- current and future challenges. to the achievement of long-range opment that this public, efficient and goals, taking advantage of synergies sustainable energy company needs to In this line, we highlight the focus and new business opportunities. achieve. on the safety of workers and facilities, which as a board of directors we After the Paris Agreement and Chile’s have established as the centerpiece commitment to mitigate greenhouse of ENAP’s operations, both in Chile gas emissions, it will be necessary to and abroad. For this reason, actions update the Strategic Plan of ENAP, have been implemented that aim to with a long-term vision that facili- make of ENAP as a state-owned en- tates the energy transition that our ergy company, an example in terms of country is making, with a recognized EDUARDO BITRAN COLODRO safety, environment, and relationship leadership to world level. However, Executive Vice-Chairman of Corfo Chairman of ENAP Board of Directors

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LETTER FROM THE CHIEF EXECUTIVE OFFICER

2017 was a complicated year for In the case of EBITDA, 2017 ended for ENAP given the adverse international the fifth consecutive year above the context, in which there were higher US $ 600 million that we proposed as crude oil purchase costs in relation to a floor when we assumed as Admin- 2016, as well as a lower Gross Margin istration in May 2014. Similarly, we of the Refining and Commercializa- closed a fifth year with profits and tion (R&C) Business Line compared positive financial indicators. These with last year, due to a higher cost results have allowed us to achieve an- of the refining basket, among other other of our objectives: to rebuild the factors. However, thanks to a great company’s assets. In 2017 we ended effort in terms of management, we with an equity of US $ 838 million, finished a good year in terms of goals which is 10 times more than the US $ and results. 83 million registered in 2012.

ENAP obtained an EBITDA of US$ 665 The important thing is that togeth- million and a consolidated profit of er with solid financial results, dur- US$ 24 million in 2017. These figures ing 2017 several milestones were confirm a trend of positive results achieved for the company, reinforc- from 2013 to date, which allows us to ing its strategic role and projecting it continue to strengthen the company into the future. financially and move forward with our Among the most relevant are the important investment plan. approval in the Congress of the Cor- porate Governance Law bill and its

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“The important thing is that together with solid financial results, during 2017 several milestones were achieved for the company, reinforcing its strategic role and projecting it into the future”

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subsequent promulgation by the the efforts have not been in vain and commitment and collaboration of the President of the Republic, Michelle that we are moving along the right whole organization (executives, work- Bachelet; the inauguration of Cerro path. We continue to apply stricter ers, collaborators and union leaders), Pabellón, the first geothermal plant in processes and standards in our op- we have progressed in the execution South America; the materialization of erations, both in Chile and abroad. of our investment plan and in closing the first energy swap in history with the gaps that we initially identified in It is very difficult to project an effi- Argentina; the rise in the corporate safety, environment, and relationship cient, sustainable and orderly com- reputation ranking; the leadership in issues with the communities close to pany if we do not achieve that all of energy efficiency; the transfer of the our operations. us who work in it return safely to our new corporate offices, and the sales homes on a daily basis. Without safe- Thus, for an average annual invest- record of fuel products. ty, it is impossible to build the ENAP ment of US$349 million between We value the achievements indicated of the future. 2007 and 2013, in 2014 we invested above, but we consider that the re- over US$ 400 million, in 2015 we in- We took the Administration in May sults obtained by ENAP in terms of vested US$ 635 million, we closed 2014, and since then we decided to safety deserve a separate mention. 2016 with investments of US$ 754 reposition ENAP as a strategic com- million, and in 2017 we invested more In 2017 we consolidated a decrease pany for the energy development in than US$ 705 million. This level of in our accident rates and achieved a Chile. To this end, we elaborated a investments has been made in a re- Frequency Index of 1.98, which means Strategic Plan to 2025, which includ- sponsible manner, ensuring excel- a reduction of 23.8% compared to ed the objectives of the government’s lence in the execution of projects. 2016. This figure brings us closer to Energy Agenda and established clear For us this is fundamental, consider- the goal of 1.8 that we imposed on guidelines for our business lines, in ing that in the coming years we will ourselves. by 2018, mandated by the order to ensure the sustainability of invest similar amounts, which will re- government’s Energy Agenda, and in the company in the long-term. quire external financing, even if the line with the best companies in the Thanks to a serious, well-organized, positive results are maintained. global oil industry. This shows that and systematic work that has had the

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Another reason to be proud is that we commitment of our workers. There- have a Corporate Policy on Gender fore, the invitation today is to renew Equality and Work, Family, and Per- our commitment to ENAP and its fu- sonal Life Conciliation. I am certain ture, so that we continue to move for- that in order to build the energy com- ward together in the task of consoli- pany we dream of, we must promote dating ENAP as the strategic energy a more equitable work environment company that faces the challenges of without discrimination for women a complex and demanding industry. and men who wish to contribute their Let us continue working eagerly to talents to the development of ENAP continue strengthening ENAP and and the country. take it on the path of modernity, sus- In all, we are satisfied with having tainability, and efficiency. completed in 2017 a series of achieve- Affectionately, ments for the company and having finished for the fifth consecutive year with profits despite the complex international scenario. We are also clear that there is still a long way to go towards our final goal of being a model energy state-owned company, not only in terms of efficiency and results, but also in areas such as safety, respect for the environment, and the relationship with our neighboring communities.

The important achievements accom- plished to this date are not due to chance but to the joint effort of the MARCELO TOKMAN RAMOS entire company, in particular, the Chief Executive Officer Empresa Nacional del Petróleo

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01 ENAP, STATE-OWNED ENERGY COMPANY

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MILESTONES IN MANAGEMENT 2017

plant extracts the geothermal fluid from the reservoir found during the exploration phase of the project, and once the fluid has completed the generation of electric- March 31 ity, it is injected back into the reservoir, guaranteeing the long-term sustainability of this resource.

May 18

ENAP Places US$ 250 Million Bonds in the Local Market

ENAP placed bonds for UF 6.5 million (equivalent to US$ 250 million) in the lo- May 18 cal market. The placement rate was 1.87% with a spread of 67 base points, while the cover rate was 2.05%.

March 31 The facility consists of two units with a The term of this issue is 10 years, with gross installed capacity of 24 MW each. semi-annual interest payments and Cerro Pabellón, the First Geothermal Once fully operational it will be able to capital amortization at maturity. Banco Plant in South America, Begins produce around 340 GWh per year, equiv- Santander-Chile acted as a financial advi- Operations alent to the consumption needs of more sor to ENAP, while Santander Corredores than 165,000 households in Chile, and de Bolsa Limitada was the placement Cerro Pabellón, the first geothermal plant will prevent an annual emission to the at- agent. in South America, began to inject ener- mosphere of more than 166,000 tons of gy into the Sistema Interconectado del This issue provoked great interest, gener- CO2. Norte Grande, SING (Norte Grande Inter- ating a demand of 2.5 times by the inves- connected System). The initiative of 48 Cerro Pabellón incorporates the most tors. Prior to the transaction, ENAP held a MW was developed by Enel Green Power advanced geothermal technology, which roadshow in Santiago with local investors. (81.7%) and ENAP (18.3%) and is located makes it very suitable to the extreme The proceeds from this placement will be at 4,500 meters above the sea level in the conditions of an area marked by high fully allocated to the refinancing of short- commune of Ollagüe, Atacama Desert. thermal oscillation and high geographical term liabilities, to prevent the increase of altitude. In order to generate energy, the ENAP’s current levels of debt.

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May 19

Chile and Argentina Sign Natural Gas Supply Agreement for the Second Consecutive Year May 19 May 25 The agreement by which Chile will send natural gas to Argentina during the winter was signed in ENAP headquarters. In this way, and for the second consecutive year, our country will provide hydrocarbon to the neighboring country, to face the winter consumption.

The steps taken by the state-owned companies responsible for making this agreement viable, ENAP (Chile) and ENARSA June 12 (Argentina), with the support of both governments, allowed exporting a total volume of 276 million cubic meters between June 1 and August 31 this year, equivalent to 3 million cubic meters per day, thus strengthening energy integration be- January 2019, will allow the continuity of June 12 tween the two nations. operations of the Nehuenco Complex and involves a minimum payment that could ENAP Starts LPG Shipments to Aysén The volumes of natural gas were supplied reach approximately US$ 400 million, with a Discount to Distributors by ENAP, ENEL Generación, and Aprovi- during the term of this Agreement. sionadora Global de Energía (part of the ENAP initiated the delivery of Liquefied CGE group), and were delivered through Both companies have signed a supply Petroleum Gas (LPG) in tanker trucks to Electrogas and GasAndes gas pipelines, in contract, which is effective from 2016 to the region of Aysén, which will allow a sig- the central zone. 2018, and had previously signed a simi- nificant discount on its value that could lar contract for 2015, so the agreement reach 10%. The initiative aims to encour- May 25 signed this week allows to extend the age the diversification of the region’s energy matrix, whose main input to heat ENAP and Colbún Sign Contract for Gas commercial relationship between both homes is firewood, which has worsened Supply and Regasification Service for 12 companies in the long-term and on terms air quality in recent years. Years and conditions beneficial to both parties. At present, the LPG market in the Aysén ENAP and Colbún S.A. signed a “Natural The agreement includes the delivery of Region is freely accessible to any inter- Gas Supply with Reserved Regasification natural gas from GNL and the regasifi- ested party. In fact, three distribution Capacity Contract” for liquefied natural cation service, allowing Colbún to lease companies operate in the area, which gas (LNG) for a period of 12 years. The shipments of ENAP or third parties to ac- are mainly supplied by the production of Contract, which will come into force in cess such resource.

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July 4

The bill establishes a Board of Directors composed of seven members: two appointed directly by the President of the Republic, four coming from proposals of the High Public Management System (ADP in Spanish), and one to be elected by the company’s employees. This sets a fixed management model without the representation of guilds nor the integration of State Ministers.

Likewise, it establishes the need to have a five-year business plan, setting up a clear governance, which represents the decision-making, supervision, and executive roles for the different tasks of the July 27 company. Together with the modernization of ENAP’s Corporate Governance, the project considers the authorization for the Ministry of Finance to make a capital ENAP Cabo Negro plant, in the Region of July 4 contribution of US$ 400 million, from the Magallanes. As of June 2017, ENAP sells entry into force of the law and up to the Senate Approves Bill that Modernizes directly in the city of Coyhaique, optimiz- following 12 months. ing transport logistics, which will allow ENAP’s Corporate Governance the aforementioned discount to be ap- July 27 Congress concluded the processing of plied to the price of the product placed in the bill that modernizes ENAP’s Corporate President Promulgates Law that that location. This city recorded last win- Governance. The bill was approved by the Modernizes ENAP’s Corporate ter one of the worst levels of pollution in Chamber of Deputies with 98 votes in fa- Governance the country, and also one of the highest vor, and now can be promulgated by the electricity rates, due to the use of diesel President of the Republic. President Michelle Bachelet enacted the for electricity generation. law that modernizes the Corporate Gov- The initiative establishes the creation of ernance of ENAP, an initiative that will al- In addition to supporting the diversifica- an independent and professional Board of low the establishment of an independent tion of Aysén’s energy matrix, ENAP also Directors, which will guide its objectives and professional Board of Directors, and seeks to consolidate its commercial pres- towards the medium and long-term, as the capitalization of up to US $ 400 mil- ence in regions close to Magallanes, as is well as a capitalization of US$ 400 million lion as financial support to maintain its the case in the Region of Aysén. as financial support to maintain its invest- investment plan. ment plan.

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In the presence of authorities at the Pala- cio de la Moneda, the President said, “as of today ENAP will match the companies of the most developed countries”. With this new governance, ENAP will be able to participate in the electricity business, taking August 25 advantage of its role as a strategic company for the energy development of Chile. We are strengthening a state-owned company that is essential for the country, which now has more tools to meet its strategic challenge. A more modern company will contribute to the development of electricity, sectoral competition, and the promotion of Non-Conventional Re- newable Energy (NCRE) “. September 6 August 25

Fitch Ratings Maintains ENAP’s Ranking State to provide financial support since ENAP presented the most competitive of- and Improved its Outlook the Ministry of Finance will be in charge fer from the list of local and international Fitch Ratings reported that it maintained of overseeing the company’s budget and companies that participated in the tender the “A” rating for ENAP and improved its investment plan while approving any ad- made by the Provincial Government of outlook from “negative” to “stable”, reflect- ditional debt commitment that must be Santa Cruz and the Argentine Institute of ing the relevance that the state-owned borne by the state-owned company. Energy. energy company has for the country. Ac- September 6 The new onshore area (of 3,195 km2) is cording to the report, ENAP is responsible adjacent to the Coirón block, developed for delivering a significant part of Chile’s ENAP is Awarded a New Exploration by ENAP and the U.S. company Cono- energy supply. Block in Argentina and Consolidates its coPhillips in Chilean territory (Magallanes Position in that Country The credit rating agency indicates that Region); this will allow important synergies thanks to the knowledge of the re- its analysis includes three factors: the ENAP, through its international subsidiary gional subsoil in the area and the experi- financial strengthening of the company; ENAP Sipetrol Argentina, was awarded a ence of ENAP on both sides of the Andes. the fact that the state has not distributed new concession area called El Turbio Este, In the future, the participation of the dividends in the last eight years; and the in the south of the province of Santa Cruz, North American giant in the exploitation recently approved capitalization of up to in the neighboring country. The award of El Turbio Este, along with ENAP is not US$ 400 million authorized in the Corpo- will allow to incorporate new reserves and ruled out, consolidating the Chilean com- rate Governance Law. increase the hydrocarbon contribution to pany as a leader in the oil and gas industry the energy supply of Argentina and the Fitch Ratings emphasizes that ENAP’s rat- in the Austral Basin. region. ing reflects the incentive of the Chilean

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September 12

September 11 ENEL and ENAP Inaugurate Cerro Pabellón, South America’s First Geothermal Power Plant

Enel and ENAP inaugurated Cerro Pa- bellón, South America’s first geothermal power plant and the world’s first large- scale plant to be built at 4,500 meters above sea level. The ceremony, which took place after the second 24 MW unit of the plant started operating, was led by September 12 President Michelle Bachelet, and was attended by the Energy Minister Andrés Re- bolledo; the Minister of the Environment, Marcelo Mena; the CEO and General Di- rector of Enel, Francesco Starace; ENAP’s CEO, Marcelo Tokman; and the Head of September 11 pany in Chile’s energy sector. The private Enel Green Power, Antonio Cammisecra. and international placement of bonds was ENAP Makes an Important Bond led by Citigroup Global Markets, Inc.; JP This concluded the search for employing Placement for US$ 600 Million in the Morgan Securities LLC; and Merrill Lynch, geothermal energy in Chile and started International Market Pierce, Fenner&Smith Incorporated as fi- a new phase. This is an effort of almost nancial agents. a hundred years, including the first geo- ENAP made in New York a private bonds thermal committee created by CORFO placement of US$ 600 million in the in- The issue brought great interest, generating and ENAP five decades ago, and which il- ternational market. The placement rate a demand of almost 11 times the required lustrates precisely the role our company was 4.679% with a spread of 195 basis by the investors. The funds from this place- has today in the articulation of projects points, while the cover rate was 4.5%. ment will allow extending the average life of and solutions that promote a sustainable the company’s debt, further consolidating In an unprecedented manner and taking energy future. the financial strengthening that ENAP has advantage of the attractive market situ- made in recent years. Cerro Pabellón is a high-enthalpy binary ation, the term of this issue is 30 years, cycle plant and incorporates the most which in ENAP’s opinion reflects a histori- This bond will be used to refinance liabilities advanced geothermal technologies to cal moment for the state-owned company due in the medium and short-term, as well guarantee an optimum performance un- and shows the market’s confidence in as to meet the company’s current invest- der the extreme conditions of its location, ENAP and its future vision as a key com- ments included in its 2025 Strategic Plan. characterized by high-temperature variation and high altitude. In addition, the

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geothermal fluid extracted from the production wells, once completed the generation cycle in the plant, is injected back October 30 into the reservoir, guaranteeing the availability and long-term sustainability of the geothermal resource. One of the particular characteristics of geothermal energy is its ability to produce energy continuously, 24 hours a day.

October 30

Chile and Argentina Carry Out the First Energy Swap in History November 16 Argentina and Chile concluded the first energy swap in history, with the shipment of two million cubic meters of natural gas from the trans-Andean side (Province of Neuquén).

The operation, which was carried out in two phases, involved the dispatch from thorities of both nations the details of the owned energy company moved up 29 Argentina of the capacity that allowed shipment, together with the private ac- points, ranking 71st this year, well above LNG Quintero Terminal to operate with- tors involved in the operation: Aprovisio- the 100th position it achieved in 2016. out interruptions during the scheduled nadora Global de Energía ( a subsidiary of maintenance that was carried out in CGE) and GasValpo. ENAP was one of the four companies that these days, allowing mainly to cover a part climbed the most on the list, along with of the residential and industrial demand November 16 L’Oreal, Grupo CAP, and Lipigas. In the of the central zone of the country. The Leaders category, ENAP CEO, Marcelo Tok- ENAP Moves Up 29 Points in Corporate equivalent shipment from Chile must be man, ranked 67, moving 30 places over the Reputation Ranking 2017 made within 48 hours after receiving the 97 obtained the previous year. natural gas from Argentina. The whole op- ENAP achieved an unprecedented in- The study highlights that the quality of the eration involves a total volume of 4 million crease in the ranking prepared by the Cor- commercial offer and economic and finan- cubic meters. porate Reputation Business Monitor (Mer- cial results are among the main strengths co, Monitor Empresarial de Reputación The shipments were coordinated by ENAP, of national companies. However, it stated Corporativa), an institution that for eight on the Chilean side, and by ENARSA, the that the main challenges are in corporate years has ranked the 100 companies that Argentine state-owned energy company. responsibility and innovation. stand out in this field in Chile. The state- The companies coordinated with the au-

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December 4

New Premises of ENAP Head Office November 28 December 4 The change of premises of ENAP Head Office concluded on December 4. The new corporate offices are located in Apo- quindo 2929, Las Condes, near Metro To- balaba.

This move was aimed at achieving a better quality of life and wellbeing for ENAP workers. The Administration of the company looked for offices that would guaran- December 12 tee optimal spaces in terms of luminosity and ventilation, as well as a more equitable distribution, that would promote more collaborative working environments.

December 12

Cerro Pabellón is Recognized in the November 28 Bío Refinery), ENAP Magallanes and Stor- “Chile 2017 Best Entrepreneur and age and Pipelines Division (DAO). ENAP Is Distinguished as Leading Companies” Award Company in Energy Efficiency The categories of the prize were divided The first geothermal plant in South Amer- into Gold, Silver, and Bronze, according ica, Cerro Pabellón, developed by Enel ENAP outstand in the awarding of the to the level of progress and effort of the and ENAP, was recognized in the “Best “Energy Efficiency Seal 2017”, organized companies in this matter. ENAP received Entrepreneur and Companies” award by the Ministry of Energy and the Chilean the highest distinction by obtaining the given by Diario Financiero. The plant Energy Efficiency Agency, and was rec- Gold Seal in five of its facilities, where ranked second in the category “Sustain- ognized for 10 projects implemented in tangible energy efficiency measures have able Initiative”. Marcelo Tokman, ENAP five of its Business Units throughout the been implemented. country. CEO, received the award and said “we are The 22 companies that received the Seal very proud to have been pioneers in the The state-owned company stood out for of Energy Efficiency, are considered lead- promotion of this technology that uses a being the company that received the ers in this matter at a national level and country’s own resource, and also clean. As highest number of awards for a series of are characterized by making energy effi- a state-owned energy company, we are initiatives developed by its own employ- ciency a core policy within the company, ees in the subsidiaries of Concón (ENAP managing to reduce costs and increase Aconcagua Refinery), Hualpén (ENAP Bío productivity.

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committed to sustainability and to the development of projects that are respectful of the environment and its communities, and we will continue to look for opportu- December 21 nities that allow us to articulate beneficial solutions for Chile.”

December 21

Chilean-Argentine Chamber Rewards ENAP for a Key Role in the Integration with the Neighboring Country

The Chilean-Argentine Chamber awarded ENAP for its role in the process of integra- December 26 tion between the two countries, reflected in the first energy swap in the history of both nations and in gas shipments to the trans-Andean nation, started in 2016.

On the occasion, a recognition was given to Marcelo Tokman, the company’s CEO, ond occurred in June 2017, both of which This increase was influenced by the con- for “the transcendental participation of were carried out through the GasAndes stant growth in the sales of valuable prod- the state-owned company in the integra- Pipeline, which joins the Metropolitan ucts (gasoline, diesel, and kerosene) and tion between Chile and Argentina”. Region of Chile with the Province of Men- the improvement of delivery logistics. doza in Argentina. These fuels, which provide the highest Tokman thanked the award and said, “for margin for the company, will represent ENAP, as a state-owned energy company, December 26 94% of the total sales of ENAP fuels, well we are proud of our role as an articulator over the 81%, they represented in 2011. of different businesses that help to the in- ENAP Reaches Record Fuel Sales in tegration of both countries, and we hope 2017 In terms of market share (including diesel, to continue on this path that will certainly gasoline, and kerosene), ENAP went from For the fourth consecutive year, ENAP in- bring huge benefits for the citizens of 56% in 2015, to 62% this year, and it is creased its sales of fuels, reaching a re- both nations.” estimated to reach 65% in 2018, another cord level of 11,705 million cubic meters historic figure for the state-owned energy The process of integration between Chile (MMm3) of oil-based products, which rep- company. and Argentina had a new momentum resents an increase of 4.3% compared to when both governments agreed on the 2016 and confirms the good performance first shipment of natural gas from Chile, of its refineries. which occurred in 2016, while the sec-

ENAP MEMORIA ANUAL 2017 / 19 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

THE COMPANY

Company Profile and Structure develops ENAP’s operations abroad, reports to this Business Line. La Empresa Nacional del Petróleo (ENAP) is an state-owned company The Refining and Commercialization whose line of business is the Explo- (R&C) Business Line operates Acon- ration, production and sales of hydro- cagua, Bío Bío, and Gregorio Refin- carbon and its derivatives; and the eries, where the crude oil is refined production, transport, and sales of to transform it into fuel. This line in- energy and electric power. cludes the activities of the Storage and Pipelines Division (DAO, División ENAP has activities in Chile and de Almacenamiento y Oleoductos). abroad, through the international subsidiaries in Argentina, Ecua- Meanwhile, the Gas and Energy (G&E) dor, and Egypt. In Chile, it operates Business Line, created in August 2014, through three Business Lines: E&P, is in charge of the gas business and R&C, and G&E. some projects of Non-Conventional Renewable Energy (NCRE), such as The Exploration and Production (E&P) the Cerro Pabellón Geothermal Power business line is responsible for man- Plant, where ENAP participates as a aging the search and production of minority partner. This Business Line hydrocarbons and is in charge of the also has the mission of promoting a tender and subscription of Special Oil greater presence of gas in the energy Operation Contracts (CEOP, Contrato matrix of the country, according to Especial de Operación Petrolera). the Energy Agenda promoted by the These contracts allow the compa- Government of Chile. nies in the industry to associate with ENAP for the exploration of blocks lo- In this context, the sale of Liquefied cated in the Magallanes Region. The Natural Gas made by ENAP, distrib- international subsidiary Sipetrol that uting it from the Quintero Terminal,

20 / ENAP MEMORIA ANUAL 2017 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

where it receives the imported vol- independently. To do so, it has legal umes, has allowed dealing with the capacity and patrimony, and relates challenge of diversifying the coun- to the Government through the Min- try’s energy matrix. istry of Energy and the Ministry of Fi- nance, with the latter for budgetary ENAP operations in Ecuador, Egypt, purposes. and Argentina include the production of crude oil and gas, through allianc- Law 9.618 has been amended by es with leading companies in the oil subsequent laws. The updated text business. was approved by Decree-Law No.1 of 1986, of the Ministry of Mining. ENAP corporate management is based in the Head Office, located in From the enactment of the Law that Santiago, Chile. modernized the Corporate Gover- nance of ENAP, on July 27, 2017, the Legal Constitution: Ownership and higher administration of ENAP rests Control of the Company with a Board of Directors composed of seven members: two appointed As noted, Empresa Nacional del directly by the President of the Re- Petróleo is owned by the State of public, four coming from proposals of Chile. It was constituted by Law 9,618 the High Public Management System of June 19, 1950, and its bylaws were (ADP, Alta Dirección Pública), and approved on October 10, 1950, by De- one to be elected by the company’s cree 1,208 of the Ministry of Economy employees. This sets a fixed manage- and Trade at that time. ment model without the representa- It operates as a commercial company tion of guilds nor the integration of under public law and is administered State Ministers.

ENAP MEMORIA ANUAL 2017 / 21 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

On December 29, 1945, a group of visionary workers of CORFO, led by the engineer Eduardo Simián, brought forth the first jet of oil in Springhill, Tierra del Fuego

22 / ENAP MEMORIA ANUAL 2017 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

BRIEF HISTORY

On December 29, 1945, a group of vi- Thus, while ENAP was created formal- Another milestone was the creation sionary workers of CORFO, led by the ly by the State five years after this dis- of the Comando Unido de los Traba- engineer Eduardo Simián, brought covery, since its inception it already jadores del Petróleo, predecessor of forth the first jet of oil in Springhill, promised to become a strategic asset the FENATRAPECH, Federación Na- Tierra del Fuego. It was the same team for the country. cional de Trabajadores del Petróleo de led by Simián that recommended the Chile on July 24, 1961. The Comando creation of a company to commer- After some years and after forming Unido de los Trabajadores del Petróleo cially exploit the oil wells discovered a strategic development pole in Ma- was created from the Unión de Obre- in the southern part of Chile. gallanes, which included the process ros Petrolíferos (oil workers union) of production of liquid fuels and gas and the Asociación de Empleados de treatment in small volumes in the area ENAP (ENAP workers association), of Manantiales, the company was and was a leading organization for all ready for its next step. the trade union movements in Chile, helping oil workers to have a historical On November 12, 1955, under the pres- view of the importance of ENAP as a idency of Carlos Ibañez del Campo, the strategic company for Chile. Oil Refinery of Concón (today Acon- cagua Refinery) was inaugurated. Its Later, on July 29, 1966, with the open- purpose was to produce fuels on a ing of the company’s second oil refin- large scale and begin to compete in ery, this time located in Talcahuano the commercial and industrial refining (currently Hualpén), and the construc- business. After reaching a critical mass tion of two storage terminals, ENAP of clients in the central zone of Chile, begins its consolidation phase as a in 1959, the company built a Storage company dedicated to the oil explora- Plant in Maipú (current Storage and tion and production, in addition to the Pipelines Division (DAO)), which was fuels refining, storage, and marketing. connected to a multipurpose pipeline to transport crude oil derivatives to Since then its growth has been irre- the Metropolitan Region. versible: the Logistics business was

ENAP MEMORIA ANUAL 2017 / 23 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

created in 1981 and ENAP became a In 2011, a new stage was completed in energy and electric power, enhancing company holding. Later on, the com- the use of this mechanism: ENAP, to- its strategic role as a public energy pany expanded abroad through So- gether with Geopark, Wintershall, and company, with the aim of providing ciedad Internacional Petrolera S.A., YPF, submitted applications to the new solutions for the country’s devel- created in May 1990 (today Sipetrol), Ministry of Energy for five blocks, two opment. and has shown exploration successes of which were formalized and became in Ecuador, Argentina, and Egypt. In effective in November 2012. Today, ENAP is a key public actor for 2004, the refineries of the Fifth and the energy development of Chile and Eighth regions, along with the sub- The investment committed in the the territories in which it operates. Its sidiary responsible for the storage of CEOPs will increase the hydrocarbon purpose is to promote a sustainable fuels, Emalco, merged and formed a exploration and production activity energy future and seeks to take ad- single company: ENAP Refinerías S.A. in Magallanes. According to recent vantage of its capacity as articulator studies of hydrocarbon potential, the or a good orchestrator, connecting As a result of an alliance with British development of unconventional hy- the different actors to always develop Gas (BG), Endesa and Metrogas, in drocarbon has great prospects in the the best combination of energies, in October 2009, the liquefied natural region. order to promote the country’s energy gas terminal, LNG, was inaugurated in development. Quintero, which marked a milestone in Thus, in recent years ENAP has in- the ENAP’s development as a compa- tervened exploration wells through ny integrated into the energy sector. hydraulic fracturing to produce unconventional gas in the Arenal Block In the last decade, the company has in Tierra del Fuego and El Dorado- carried out extensive exploratory Riquelme Block, in the continental campaigns to find new oil and gas re- area of Magallanes. serves in Magallanes, through a policy of alliances known as special oil oper- Since 2016, ENAP is authorized to ation contracts (CEOP), which began also participate in the production, in 2007. transport, and commercialization of

24 / ENAP MEMORIA ANUAL 2017 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

SENIOR MANAGEMENT

As of December 31, 2017, the members of ENAP’s senior management are:

ENAP BOARD OF DIRECTORS

INTERNAL AUDITS MANAGEMENT* COMPLIANCE MANAGEMENT Sandra Cortés Cereceda Alejandro Charme Chávez

CHIEF EXECUTIVE OFFICER EXECUTIVE DIRECTOR Marcelo Tokman Ramos Francisco Peralta Cortés

SAFETY AND OCCUPATIONAL CORPORATE AFFAIRS AND HEALTH (HS) MANAGEMENT SUSTAINABILITY MANAGEMENT Leonardo Canales Moreno Gabriel Méndez Serqueira

PLANNING AND CONTROL ADMINISTRATION AND FINANCE MANAGEMENT MANAGEMENT Denisse Abudinén Butto Ariel Azar Núñez

HUMAN RESOURCES MANAGEMENT LEGAL COUNSEL Javier Fuenzalida Santander Nicolás García Nielsen

ENAP SIPETROL S.A. (E&P)* ENAP REFINERÍAS S.A. MANAGEMENT GAS AND ENERGY (G&E)* MANAGEMENT MANAGEMENT Julio Aranis Vargas Marc Llambías Bernaus Alfredo del Carril Caviglia

* Mr. Alejandro Charme Chávez served as acting auditor. On September 25, 2017, Ms. Sandra Cortés Cereceda was appointed Auditor of ENAP. *On December 1, 2016, was created the Management of New Business Development; Mr. Alfredo del Carril Caviglia, Legal ENAP SIPETROL ENAP SIPEC ENAP SIPETROL ENAP ENAP BÍO BÍO ENAP Manager until that date, was appointed New Business Develop- ARGENTINA ECUADOR EGYPT MAGALLANES REFINERY ACONCAGUA ment Manager. On August 1, 2017, the New Business Develop- MANAGEMENT MANAGEMENT MANAGEMENT E&P MANAGEMENT REFINERY ment Management merged with the Gas&Energy Business Line MANAGEMENT MANAGEMENT and was eliminated. Mr. Alfredo del Carril was then appointed Martín Eduardo Tapia Sayed Rezk Patricio Estay Manager of Gas&Energy. Citaddini Alvayay Ramiro Parra Pelucchi Patricio Farfán *On August 7, 2017, Mr. Julio Aranis Vargas assumed the E&P Armendaris Bórquez management.

ENAP MEMORIA ANUAL 2017 / 25 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

Joining Date of ENAP Senior Executives

Id. # Name Profession Joining Date 16.654.431-9 Marcelo Tokman Ramos Economist 12.05.2014 9.969.428-9 Julio Aranis Vargas Mining Civil Engineer 07.08.2017 7.014.843-9 Marc Llambías Bernaus Industrial Civil Engineer 01.10.2013 23.687.801-5 Alfredo del Carril Caviglia Lawyer 01.08.2017 12.247.409-7 Javier Fuenzalida Santander Professor and Graduate in History 20.07.2015 9.907.068-4 Gabriel Méndez Serqueira Lawyer 15.07.2014 13.441.532-0 Nicolás García Nielsen Lawyer 01.08.2017 6.971.003-4 Ariel Azar Núñez Audit Accountant 22.10.2014 9.584.826-5 Alejandro Charme Chávez Lawyer 01.09.2014 11.476.504-K Leonardo Canales Moreno Execution Mining Engineer 02.11.2016 14.168.642-9 Denisse Abudinen Butto Industrial Civil Engineer 08.06.2016 8.541.023-7 Francisco Peralta Cortés Business Engineer 01.07.2014 12.804.555-4 Sandra Cortés Cereceda Public Accountant and Auditor 29.09.2017

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Joining Date of ENAP Directors

Law 21,025, published on August 7, 2017, modifies the Corporate Governance of ENAP. In effect, and consistent with the recommendations of the OCDE, the number of directors is reduced from 8 to 7. Of the seven members, two will be appointed directly by the President of the Republic, four will come from proposals of the High Public Management System (ADP in Spanish), and one will be elected by the company’s employees.

According to this new Law, the directors will last four years in their positions and may be renewed immediately for a new period, only once.

Name Date Joined the Board Board Session # Eduardo Bitran Colodro 11.03.2014 1,100 Carlos Carmona Acosta 26.03.2015 1,117 Alberto Salas Muñoz 9.05.2017 1,148 María Isabel González Rodríguez 05.03.2015 1,116 Bernardita Piedrabuena Keymer 05.01.2016 1,128 Paul Schiodtz Obilinovich 28.01.2016 1,129 Jorge Fierro Andrade 22.03.2012 1,067

Notes: In 2017, Mr. Alejandro Jadresic Marinovic presented his resignation as Director of ENAP. On the other hand, pursuant the enactment of Law 21,025, which establishes a new Corporate Governance for ENAP, on November 30, 2017, the Minister of Energy, Mr. Andrés Rebolledo Smitmans ceased his duties as Chairman of the Board of Directors.

ENAP MEMORIA ANUAL 2017 / 27 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

BOARD OF DIRECTORS

CHAIRMAN OF THE BOARD Director Director Eduardo Bitran Colodro Bernardita Piedrabuena Keymer Alberto Salas Muñoz Industrial Civil Engineer. Economist. Civil Engineer. Executive Vice-Chairman of the Chilean Economic Development Sociedad Nacional de Minería (SON- Chilean Economic Development Agency (CORFO). AMI). Agency (CORFO). Id. #: 10.173.277-0. Id. #: 6.616.223-0 Id. #: 7.950.535-8. Director Director María Isabel González Rodríguez Carlos Carmona Acosta Mining Civil Engineer. Mining Civil Engineer. Chilean Economic Development Instituto de Ingenieros de Minas de Agency (CORFO). Chile. Id. #: 7.201.750-1. Id. #: 9.003.935-0.

Director Director Jorge Fierro Andrade Paul Schiodtz Obilinovich Chemical Plant Technical Operator. Mechanical Civil Engineer. Chilean Economic Development Federation of Chilean Industry (SO- Agency (CORFO). FOFA). Id. #: 9.925.434-3. Id. #: 7.170.719-9.

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BOARDS OF DIRECTORS OF ENAP REFINERÍAS S.A. AND ENAP SIPETROL S.A.

CHAIRMAN OF THE BOARD Director Director ** Eduardo Bitran Colodro María Isabel González Rodríguez Alberto Salas Muñoz Industrial Civil Engineer. Mining Civil Engineer. Civil Engineer. RUT: 7.950.535-8. Chilean Economic Development Sociedad Nacional de Minería (SON- Agency (CORFO). AMI). Id. #: 7.201.750-1. Id. #: 6.616.223-0

Director* Director Bernardita Piedrabuena Keymer Carlos Carmona Acosta Economist. Mining Civil Engineer. Chilean Economic Development Instituto de Ingenieros de Minas de Agency (CORFO). Chile. Id. #: 10.173.277-0. Id. #: 9.003.935-0.

Director Director*** Jorge Fierro Andrade Paul Schiodtz Obilinovich Chemical Plant Technical Operator. Mechanical Civil Engineer. Chilean Economic Development Federation of Chilean Industry (SO- Agency (CORFO). FOFA). Id. #: 9.925.434-3. Id. #: 7.170.719-9.

Notes: *On November 30, 2017, Bernardita Piedrabuena Keymer resigned to the Board of Directors of ERSA and Sipetrol, complying with the provisions of Law 21,025 that establishes a new Corporate Governance for ENAP. **Mr. Alberto Salas Muñoz is a member of the Boards of Directors of ENAP and ERSA, not of Sipetrol. *** Mr. Paul Schiodtz Obilinovich is a member of the Boards of Directors of ENAP and Sipetrol, not of ERSA.

ENAP MEMORIA ANUAL 2017 / 29 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

Remunerations of Senior Executives Severance Payments Variable Remuneration System

The remunerations paid in 2017 In 2017, the company paid sever- ENAP has a Variable Remuneration to the senior executives of ENAP ance payments to senior executives System (SRV) that is applicable to its and its subsidiaries amounted Ch$ amounting to Ch$ 125,513,075. executives. The factors considered in 5,821,571,229. This amount is com- the model for determining the incen- The previous period (2016), the compared with the remuneration paid in tive are the results obtained by the pany paid Ch$ 144,175,732 for this 2016 for the same concept, which company and the level of compliance same concept. was Ch$5,587,245,278. with the individual and area goals. In addition, a discretional adjustment The positions considered in the re- factor is considered, which is applied ferred amount correspond to 42 by the direct supervisor. management positions existing as of December 31, 2017: Chief Execu- tive Officer, Business Line Managers, Managers of ENAP Head Office, Man- agers of ENAP Magallanes and the subsidiaries ENAP Refinerías S.A. and ENAP Sipetrol S.A.

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BOARD MEMBER REMUNERATIONS /COMPARISON 2016 - 2017

Board Member Remunerations 2016

ID. # Name Gross Tax Retention Net 7.201.750-1 González Rodríguez, María Isabel $ 9,564,743 $ 956,475 $ 8,608,268 9.003.935-0 Carmona Acosta, Carlos Jesús $ 9,886,395 $ 988,640 $ 8,897,755 10.173.277-0 Piedrabuena Keymer, Bernardita $ 9,611,559 $ 961,156 $ 8,650,403 7.170.719-9 Schiodtz Obilinovic Paul George $ 8,458,252 $ 845,826 $ 7,612,426 9.925.434-3 Fierro Andrade, Jorge René $ 6,981,856 $ 698,186 $ 6,283,670 7.746.199-K Jadresic Marinovic, Alejandro Daslav $ 4,589,999 $ 459,001 $ 4,130,998 Total $ 49,092,804 $ 4,909,284 $ 44,183,520

Board Member Remunerations 2017

ID. # Name Gross Tax Retention Net 7.201.750-1 González Rodríguez, María Isabel $ 10,602,575 $ 1,060,257 $ 9,542,318 6.616.223-0 Salas Muñoz, Aberto $ 5,651,915 $ 565,191 $ 5,086,724 9.003.935-0 Carmona Acosta, Carlos Jesús $ 10,608,137 $ 1,060,813 $ 9,547,324 10.173.277-0 Piedrabuena Keymer, Bernardita $ 9,441,457 $ 944,145 $ 8,497,312 7.170.719-9 Schiodtz Obilinovic Paul George $ 9,674,555 $ 967,456 $ 8,707,099 9.925.434-3 Fierro Andrade, Jorge René $ 8,913,150 $ 891,314 $ 8,021,836 7.746.199-K Jadresic Marinovic, Alejandro Daslav $ 7,642,816 764,281 $ 6,878,535 Total $ 62,534,605 $ 6,253,457 $ 56,281,148

ENAP MEMORIA ANUAL 2017 / 31 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

PRODUCTS

LIQUEFIED PETROLEUM GAS Propane Butane

GASOLINE Gasoline 97 Oct low RVP/Olefins (RM*) Gasoline 93 Oct low RVP/Olefins (RM*) Gasoline 97 Oct (RC**) Gasoline 93 Oct (RC**) Aviation Gasoline 100 LL DIÉSEL Grade A1 Diesel B Diesel B2 Diesel Antarctic Diesel KEROSENE Marine Diesel Household Kerosene Aviation Kerosene Jet A1

SOLVENTS Turpentine FUEL OILS Xylene White Benzene Fuel Oil N° 6 of 1%S and 3%S Marine Fuel Oil IFO 380 Marine Fuel Oil IFO 180 PETROCHEMICALS Propylene

SULFUR

NATURAL GAS ASPHALTS Industrial and Residential Natural Gas Waterproofing Products Liquefied Natural Gas (LNG) Asphaltic Cement Asphalt CA14 Asphalt CA24

FUELS INDUSTRIAL PRODUCTS PETROCHEMICALS AND NATURAL GAS

*Metropolitan Region (RM) **Rest of the Country (RC) CRUDE OIL NATURAL GAS

32 / ENAP MEMORIA ANUAL 2017 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

INTERNATIONAL PRESENCE

EGYPT · East Ras Qattara Block

ECUADOR

· MCD and PBHI Block · Block 3J

CHILE

· Headquarters (Santiago) · Aconcagua Refinery ARGENTINA · Bío Bío Refinery · Maipú, San Fernando, and Linares Plants · Sipetrol Buenos Aires Office · ENAP in Magallanes · Sipetrol Río Gallegos Office · Easter Island, Vinapú Fuel Storage Terminal. · Sipetrol Comodoro Rivadavia Office · Austral Basin: - Área Magallanes Block - CAM 2-A Sur - E2 (ex CAM 1-CAM 3) · San Jorge Gulf Basin: - Campamento Central - Cañadón Perdido Block - Pampa del Castillo - La Guitarra Block

ENAP MEMORIA ANUAL 2017 / 33 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

OIL PROCESSING

1 / EXPLORATION

DRILLING RIG

GAS

SEISMIC TRUCKS OIL

2 / PRODUCTION 3 / TRANSPORTATION LOGISTICS

BEAM PUMP

OIL PIPELINE OIL TANKERS

4 / REFINING 5 / DISTRIBUTION

CRUDE OIL DEPOSITS DISTILLATION TOWER FURNACE

34 / ENAP MEMORIA ANUAL 2017 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

GAS PROCESSING

QUINTERO LNG CITY GATE QUILLOTA

Gas pipeline logistics Sale to customers

Gas pipeline logistics Colmo

ACONCAGUA REFINERY

Sale to customers

Gas pipeline logistics Gas pipeline logistics

BÍO BÍO REFINERY PEMUCO

Sale to customers Sale to customers

ENAP MEMORIA ANUAL 2017 / 35 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

ELECTRICITY GENERATION PROCESS

CERRO PABELLÓN NATIONAL POWER SYSTEM

ELECTRICITY

SALE TO ACONCAGUA REFINERY ACONCAGUA COGENERATOR CUSTOMERS

Steam ERA Electricity ELECTRICITY SELFPRODUCTOR

Natural Gas

SALE TO REFINE BÍO BÍO REFINERY PETROPOWER GENERATORS

Steam ELECTRICITY ERBB Electricity SELFPRODUCTOR

Petcoke

MAGALLANES FUTURE ELECTRICITY SYSTEM OF WIND FARM * PUNTA ARENAS

ELECTRICITY

* In 2017 concluded the stage of development and approvals for the execution of the project.

36 / ENAP MEMORIA ANUAL 2017 01 / ENAP, EMPRESA PÚBLICA DE ENERGÍA

ENAP MEMORIA ANUAL 2017 / 37 02 / GESTIÓN DE PERSONAS

02 PEOPLE AND ORGANIZATION

38 / ENAP MEMORIA ANUAL 2017 02 / GESTIÓN DE PERSONAS

PEOPLE AND ORGANIZATION

The main focus of the Human Re- In terms of hiring, and in what was a versities of the country. This model sources Management in 2017, con- joint work with other areas, the re- has been successful in its demand sisted of consolidating the approval quirement was established that all to translate the knowledge acquired process of the different fields of man- talent attraction processes must nec- in direct and immediate returns to agement of the area, defining unique essarily go through the Human Re- ENAP, in terms of better operational, management protocols that are valid sources Management and be validat- commercial, logistics, accounting, for the entire organization. This effort ed in a committee that will take into and safety efficiency indexes, gener- initiated the previous year meant, for account, among other considerations, ating significant savings for the com- example, implementing a new com- the existence of potential conflicts of pany. pensation structure that considers interest. A protocol for hiring family On the other hand, in 2017 active in- salary ranges associated with the job members was generated and another clusion policies were outlined. One position. for the Transitory Services Companies area was the preparation to comply (ESTs) that operate with ENAP, along with the regulations on the matter with new procedures for workers at a that will come into force in June 2018, fee. Likewise, the various positions of making a list of workers with disabili- the company were standardized and ties who already work in the compa- a Career Development Policy was de- ny. In addition, decisions were adopt- signed. ed that exceed legal requirements, In the mission to maintain a fully through strategic alliances with non- trained staff to carry out their func- profit organizations that support the tions, continued the investment efforts in this regard, among them, aimed at forming succession plans, stands out the work with Fundación providing opportunities for improve- Descúbreme. ment to high-end professionals, Meanwhile, an agreement was signed through certification programs in Fundación Puente to offer paid work management taught in the best uni-

ENAP MEMORIA ANUAL 2017 / 39 02 / GESTIÓN DE PERSONAS

practices to people from vulnerable Currently, the female staff represents segments, who study different ca- 12% of the total, adding up all the busi- reers at recognized universities and ness units, with notable differences show good academic results. between the head offices of the main office in Santiago (where 26% of the Likewise, internal equity was again women work) and operational areas one of the priorities. In this sense, the such as refineries that have very wide company initiated a certification pro- gaps. This reality is being addressed cess to combat all types of discrimina- in conjunction with the Compliance tion, whether due to gender, religion, Management, through the develop- or economic and social situation. An ment of a policy that introduces the example of the corporate vision in best practices to generate conditions this regard is the implementation in so that more women can work in our the headquarters of a small oratory company. for all creeds, which will be made available to workers in early 2018.

In the same line, ENAP, with the support of Universidad de Chile, conducted a study that showed that the company does not present gaps by gender in the level of income, so that workers receive a remuneration corresponding to the salary range linked to the responsibility they have, regardless of their sex. However, there is the challenge to provide greater opportunities for women to access work.

40 / ENAP MEMORIA ANUAL 2017 02 / GESTIÓN DE PERSONAS

PERSONNEL 2017

DIVERSITY IN THE BOARD OF DIRECTORS

Women 2 Number of people per gender Men 5 Number of people per nationality Chilean 7 41 to 50 years old 1 Number of people per age range 51 to 60 years old 3 61 to 70 years old 3 < 3 years 5 Number of people per seniority > 3 years and < 6 years 2

DIVERSITY IN GENERAL MANAGEMENT AND CORPORATE MANAGEMENTS

Women 2 Number of people per gender Men 10 Chilean 11 Number of people per nationality Argentinean 1 < 30 years old 0 30 to 40 years old 3 41 to 50 years old 5 Number of people per age range 51 to 60 years old 4 61 to 70 years old 0 > 70 years old 0 < 3 years 4 > 3 years and < 6 years 5 Number of people per seniority > 6 years and < 9 years 1 > 9 years and < 12 years 2

ENAP MEMORIA ANUAL 2017 / 41 02 / GESTIÓN DE PERSONAS

DIVERSITY IN THE ORGANIZATION

Number of people per gender Chile Argentina Ecuador Egypt TOTAL Women 409 35 18 7 469 Men 2,920 232 113 27 3,292

Number of people per seniority Chile Argentina Ecuador Egypt TOTAL < 3 years 501 91 30 3 625 > 3 years and < 6 years 765 70 52 5 892 > 6 years and < 9 years 282 12 27 6 327 > 9 years and < 12 years 421 52 16 13 502 Over 12 years 1,360 42 6 7 1,415

42 / ENAP MEMORIA ANUAL 2017 02 / GESTIÓN DE PERSONAS

WORKERS 2017, PER NATIONALITY AND BUSINESS UNIT

ENAP ENAP Sipetrol Sipetrol Sipetrol Sipetrol Nacionalidad ERA* ERBB Total Santiago Magallanes Chile Argentina Ecuador Egypt

Germany 1 0 0 0 0 0 0 0 1

Argentina 8 3 0 0 1 262 0 0 274

Bolivia 1 0 0 0 0 0 0 0 1

Brazil 1 0 0 0 0 0 0 0 1

UK 0 1 0 0 1 0 0 0 2

Egypt 0 0 0 0 0 0 0 34 34

Chile 279 1,237 936 789 60 5 2 0 3,308

China 1 0 0 0 0 0 0 0 1

Colombia 1 0 0 0 0 0 0 0 1

Ecuador 0 0 0 0 0 0 129 0 129

Peru 1 0 0 1 0 0 0 0 2

Uruguay 1 0 0 0 0 0 0 0 1

Venezuela 2 2 2 0 0 0 0 0 6

Total 296 1,243 938 790 62 267 131 34 3,761

* includes the activities of the Storage and Pipelines Division (DAO).

ENAP MEMORIA ANUAL 2017 / 43 02 / GESTIÓN DE PERSONAS

OWN STAFF AND CONTRACTORS 2017, PER BUSINESS UNIT

ENAP ENAP ERSA ERSA ERSA Sipetrol Sipetrol Sipetrol Sipetrol Staff Total Santiago Magallanes Aconcagua DAO Bío Bío Chile Argentina Ecuador Egypt

M F M F M F M F M F M F M F M F M F M F

Own Staff 187 109 1,130 113 737 99 98 4 720 70 48 14 232 35 113 18 27 7 3,292 469

296 1,243 836 102 790 62 267 131 34 3,761

Contractors 225 2,922 3,428 0 1.595 0 8 479 7 8,664

Total Own and 521 4,165 4,264 102 2,385 62 275 610 41 12,425 Contractors

WORKERS 2017, PER BUSINESS UNIT AND JOB POSITION/ROLE

Head of Depart- Skilled Business Unit Manager Worker Total ment. / Director Professional

ENAP Santiago 23 60 30 183 296

ENAP Magallanes 4 18 2 1,219 1,243

ERSA Aconcagua* 5 18 7 908 938

ERSA Bio Bío 2 15 5 768 790

Sipetrol Chile 9 9 1 43 62

Sipetrol Argentina 1 16 0 250 267

Sipetrol Ecuador 1 10 0 120 131

Sipetrol Egypt 1 0 0 33 34

Total ENAP 46 146 45 3,524 3,761

* includes the activities of the Storage and Pipelines Division (DAO).

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WORKERS 2017, BREAKDOWN PER BUSINESS UNIT AND AGE RANGE

ENAP Enap ERSA ERSA ERSA Sipetrol Sipetrol Sipetrol Sipetrol Age Range Total Santiago Magallanes Aconcagua DAO Bío Bío Chile Argentina Ecuador Egypt

M F M F M F M F M F M F M F M F M F M F 18 to 19 years old 17 7 132 14 50 10 4 0 55 3 0 0 3 2 4 2 1 0 266 38

30 to 39 73 36 297 50 193 29 28 2 194 22 5 3 76 18 55 13 17 4 938 177 years old

40 to 49 51 37 170 27 242 38 26 2 251 27 14 7 89 11 35 2 7 1 885 152 years old

50 to 59 38 21 287 18 173 21 33 0 163 18 17 4 42 3 14 1 2 2 769 88 years old

> 60 years 8 8 244 4 79 1 7 0 57 0 12 0 22 1 5 0 0 0 434 14 old

Total 296 1.243 836 102 790 62 267 131 34 3,761

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GENDER PAY GAP

Percentage representing the average gross salary, by type of job position, responsibility and role, of female executives and workers with respect to male executives and workers.

ENAP Local Operations (Chile)

Job Position, Responsibility or Role Men Women Executive 100% 84% General Role 100% 112%

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DIVERSITY AND INCLUSION

In accordance with the new global Based on the Corporate Policy of Di- • Plan of actions for awareness and dynamic that drives companies to versity and Inclusion, a work route dissemination of gender equity and adopt a comprehensive approach has been initiated in all areas around conciliation. to diversity and inclusion, ENAP val- Gender Equity and Gender Equality, • Guide for certification in the Chil- ues, and respects the particularities and the Conciliation of Personal and ean Standard 3,262 in ENAP. of each individual. Gender, ethnicity, Work Life Quality. ENAP Labor Rela- nationality, age, ideology, religious tions Management and the Organi- Based on the document “Guideline formation, and sexual orientation are zational Engineering Center of Uni- on Gender Equality and Work, Family, not obstacles to forming teams of ex- versidad de Chile, prepared in 2017, and Personal Life Balance”, prepared cellence, because each person must a diagnosis of the situation in these as part of the initiative “Incorpora- be respected in their dignity and abil- areas in Enap Magallanes and Bío tion of Gender Equity and Equality in ity to contribute to society, regardless Bío Refinery. In the case of ERA, the People Management”, the ENAP Gen- of the role they play. diagnosis was made by researchers der Equality and Conciliation Policy from the CIELO Center of Universidad proposal was designed and finally ap- Santo Tomás. The initiative was car- proved by the Corporate Committee ried in collaboration with the Man- on Diversity and Inclusion, the Audit agement of Corporate Affairs and Committee of the Board of Directors Sustainability, Human Resources and and, in its last stage, by the full Board Compliance, and in a permanent dia- of Directors in September 2017. logue with the Corporate Committee on Diversity and Inclusion. Throughout this exercise, work was carried out with each Business Unit, The results of the diagnostic phase establishing priorities in terms of led to the following lines of action: Gender, Equity, and Conciliation at the local level, and identifying the • ENAP Guideline on Gender Diversity challenges for 2018. and Conciliation.

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In parallel, in 2017, a collaborative On the other hand, during 2017, Enap work was established and strength- Magallanes participated in the study ened with different institutions and “Diagnose Survey on Gender Equality foundations working on issues of in- and Conciliation in People Manage- clusion and diversity, together with ment”, carried out by Universidad de the León Humberto Seguel Labor Chile, which led to the presentation Training Center, Fundación Descú- of a concrete work proposal for 2018. breme, Fundación Puente, and CI- In addition, among other initiatives, DERE Biobío. the Golden Rules of the Mining Indus- try for the Incorporation of Women Likewise, and with the purpose of and the Conciliation of Work, Family, expanding the age diversity and at- and Personal Life were signed. tracting young talents, the company continued motivating the attraction Meanwhile, in SIPEC the internal poli- of students in practice and students cies were adapted to the Law of Inclu- preparing their final thesis in the dif- sion promulgated by the State of Ec- ferent units and branches. In ERBB, uador, that the company assumes as 160 students made their practice its own challenge, which strengthens and 13 prepared their thesis. They the previous work that has allowed were distributed in different areas, people with disabilities to represent although privileging their integration 4% of the staff in the company. into the operational areas, seeking to acquire knowledge on the refinery’s main work activities. In the case of the students preparing their thesis, they focused on the development of projects that entail improvements to the processes of the assigned areas.

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FEMALE WORKFORCE PARTICIPATION IN ENAP 2017*

ENAP Female Workforce Participation Female Workforce per Business Unit

Indefinite % 12,2 400 409 women Fixed-term Total workforce ENAP Chile: 3.306 9

ENAP Santiago Aconcagua 109 women, 36,8% 4 women, 3,9% DAO 70 women, 8,8% ENAP Sipetrol 14 women, 22,5% ENAP Bío Bío 99 women, 11,8% Female Workforce per Age Range

Between 18 and 29 years old ...... 8,3%

Between 30 and 39 years old ...... 34,7%

Between 40 and 49 years old ...... 33,7%

Between 50 and 59 years old ...... 20%

Over 60 years old ...... 3,1%

ENAP Magallanes 113 women, 9,09% Average “seniority” among ENAP female workers 9,5 años

* Figures updated at the time of the study, so they do not necessarily coincide with the staffing data of the tables, reported as of December 31, 2017. The information in the graphs corresponds only to Chile. The staff tables at the beginning of this chapter include information of foreign subsidiaries.

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CULTURE AND WORK CLIMATE

In culture and work environment, the nation between areas, style of leader- initiatives were oriented to provide a ship and recognition according to the deep and systematic annual monitor- spaces for improvement of the 2016 ing of the teams and supervisors of climate study. the first reporting levels of the company. In this area, it should be high- The foregoing was reinforced with lighted the continuity given to team recognition practices (non-mone- development through workshops to tary), both during and after the com- strengthen workgroups, group coach- pletion of the workshops with the ing, definition and follow-up of action supervisors, peers and other teams, plans established by the same teams, highlighting the individual or collec- which focused their work mainly in tive contribution to the company. the fields of communication, coordi-

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In the case of the Bío Bío Refinery, a was reinforced, including in this pur- ment, which compares with 58% of novel form of public recognition was pose managers and executives. In the previous year. The best-evaluated implemented through the “Outstand- some business units, intermediate aspects were: job security, identifica- ing Team” program, for which the managements were incorporated to tion and commitment, corporate so- outstanding work in different areas this initiative. cial responsibility, benefits and orga- of four interdisciplinary teams was nizational clarity. On the other hand, ASSESSMENT 2017 publicly rewarded. opportunities for improvement were To monitor the progress made with identified in the areas related to rec- A non-monetary recognition was also respect to 2016, verify the effective- ognition (non-monetary), vision of cor- implemented for each team build- ness of the actions carried out in porate managers, and remunerations. ing executed in the Head Office, ac- accordance with the commitments knowledging in a concrete and pub- made, and visualize new improve- lic way some of its members for their ments for 2018, for the third consecu- knowledge and way of conducting tive time the company evaluated the themselves. working environment of all its busi- Additionally, the leadership compe- ness units and subsidiaries in Chile, tencies of the headquarters were Argentina, Ecuador, and Egypt. strengthened by means of a coach that The study on Labor Climate 2017 had strengthened the skills of team man- a high participation rate, reaching agement, conflict management, and 88% of responses, six points more recognition, and the implementation than that registered in 2016, which of a culture of accountability (“render- shows the interest and validation of ing of accounts”), among others. workers in the areas evaluated in the Another relevant initiative was to climate and the welfare of the com- continue with the implementation of pany survey. the executive leadership agenda. In Regarding the results, ENAP reached this context, visible leadership and a global average of 60% of positive communication within the company responses regarding the work environ-

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TRAINING

Learning management is a fundamen- As part of the annual programs of tal tool to promote the development the company in this field, a total of of workers and ensure the correct 351,317 hours of training were com- fulfillment of projects and objectives pleted during 2017, including external of the business, by facilitating the and internal activities in the Business acquisition of knowledge, new tech- Units in Chile and subsidiaries (Argen- nologies and skills training. tina and Ecuador), with an average of 93 hours of training per person, and a coverage corresponding to 88% of the personnel.

Average of Training Hours 2017

Business Unit Total Hours. Hour Average per Training Index. Training Coverage. (Sum of internal and Person. (Training Hours2017/Hours (Number of People external training activities) (Total Hours of Training / Worked 2017) Trained/ Total Staff as of Total Staff as of December December 2017) 2017) Enap Magallanes 61,078 49 4.12 91% ENAP Santiago 23,976 81 4.12 95% Sipetrol Santiago 2,278 37 1.69 56% Bío Bío Refinery* 107,766 136 6.32 87% Aconcagua Refinery 133,129 160 8.16 95% DAO 3,348 32 1.30 75% Sipetrol Argentina 8,319 31 2.31 50% Enap SIPEC 11,423 87 4.61 97% Total 351,317 94 3.89 88%

* In the case of ERBB, the total hours of training are counted, including those for career development and other training activities.

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CORE PROGRAMS

The main core programs carried out of the company by delivering tools re- Ethical Dimension of Leadership” cer- by ENAP’s Organizational Develop- lated to strategy and leadership and tificate, whose objective was to pro- ment Department are mentioned be- in partnership with Pontificia Univer- vide tools and encourage reflection low: sidad Católica de Chile, the third ver- spaces around the values that inspire sion of the Energy Industry Business ENAP. Comprehensive Training Plan for Management Certificate was held People Management Twenty-one managers, supervisors during the year, strengthening the tal- and union leaders of all the busi- During the year, the leaders and del- ents of 47 professionals from the dif- ness units participated. In addition to egates of the trade unions of the Fed- ferent business units in the country. this initiative, Sipetrol carried out an eración Nacional de Trabajadores del Along with attendance at 158 hours Ethical Leadership Program, aimed at Petróleo y Afines de Chile (FENATRA- of classes and the approval of the dif- decision-makers, including managers PECH) and the Federación Nacional ferent subjects of the certification and process managers. de Profesionales, Técnicos y Super- course, the students had to design visores de Enap (FESENAP), were in- Knowledge Platform: CAMPUSENAP and implement an innovative project vited to participate in the Energy and that could be scaled in different ar- During 2017, through CAMPUSENAP, Oil Industry Business Management eas of the business, generating value several core courses on Energy Effi- Certificate. for the company. As a result of this ciency, Code of Ethics, Procurement, The objective was the development of activity, projects were implemented and Safety were conducted, resulting competencies for business manage- in all business lines, with significant in 5,780 participations throughout ment and executive skills. It has an savings and optimizations based on ENAP. extension of 112 hours and is taught minimum cost initiatives. by a recognized team of teachers. A Certificate on Ethical Leadership for total of 80 students participated. ENAP Executives Energy Industry Business Manage- The Compliance Management and ment Certificate the Faculty of Economics and Busi- With the aim of empowering profes- ness of Universidad de Chile carried sionals in the most critical processes out in an unprecedented way “The

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PERFORMANCE MANAGEMENT

The Performance Management Sys- integrated vision of their work. There- As a complement, the technologi- tem (PMS) of ENAP Human Resources fore, a new evaluation instrument was cal platform (Success Factors per- Management, executed through the incorporated and the technological formance module) was once again Directorate of Organizational Develop- platform implemented in 2016, was parameterized, so as to allow perfor- ment, includes an instance of quality improved. In addition, supervisors mance to be evaluated in a downward conversation about the performance were invited to use a Descending Eval- manner, allow an instance for self- and professional development of each uation Guideline for the reports, and evaluation and issue a report that in- worker. This contributes to the task each employee to analyze their per- tegrates both sources of information. of each management in identifying formance through a Self-evaluation As in previous years, the characteris- improvements and recognizing out- Guideline. Subsequently, the creation tics of the instruments and the tech- standing behaviors in their workers. of an instance for feedback was en- nological platform were disseminated couraged, where perspectives can be Throughout 2017, the PMS was in the Business Units with the purpose exchanged regarding the work carried strengthened from different areas, of facilitating the process and having out during the year and clarify expec- with the purpose of giving employ- quality feedback, together with guar- tations and professional development ees and managers a more global and anteeing the applicability of the sys- spaces for the next exercise. tem. In 2017, both the subsidiaries and

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the Head Office offered the supervi- In 2017, 94% of the feasible to evalu- sors a personalized advice, in order to ate staff was submitted to the PMS support the evaluation, self-evaluation process. The following figure shows and feedback processes. the number of evaluated persons per business unit.

ENAP PERFORMANCE EVALUATION 2017 / NUMBER OF EVALUATED PERSONNEL

Business Unit Evaluated Pending Evaluation Overall Total

Enap Magallanes 1,125 106 1,231

ENAP SANTIAGO 245 8 253

ERSA ACONCAGUA 829 43 872

ERSA BíO BíO 728 33 761

SIPETROL 52 52

Overall Total 2,979 190 3,169

ENAP PERFORMANCE EVALUATION 2017 / PERCENTAGE OF EVALUATED PERSONNEL

Business Unit Evaluated Pending Evaluation Overall Total

Enap Magallanes 91.39% 8.61% 100.00%

ENAP SANTIAGO 96.84% 3.16% 100.00%

ERSA ACONCAGUA 95.07% 4.93% 100.00%

ERSA BÍO BÍO 95.66% 4.34% 100.00%

SIPETROL 100.00% 0.00% 100.00%

Overall Total 94.00% 6.00% 100.00%

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TALENT MANAGEMENT

During 2017, the efforts were focused already been translated into adjust- on developing a unique Talent Man- ments of Human Resources process- agement model that allows having in- es, including evaluation processes. In tegrated actions in the development essence, the areas of people manage- cycle of the people who work in the ment in Argentina, Ecuador, and Chile company. This is because in ENAP it worked on a model of generic compe- is of vital importance that its profes- tencies that offer greater clarity and sionals are prepared to assume the transparency to the requirements to responsibilities of a succession posi- access other positions. In turn, this tion, that is, to ensure the continuity model defines the evaluation criteria of the processes and reduce the im- for selection, performance, and devel- pact of a vacancy. opment.

Consequently, there is a need to have Career Development succession plans for each position With the purpose of establishing a defined as critical according to their management tool for the integral de- contribution to the business and velopment of people oriented to oper- vulnerability. In 2017, business units ational excellence, throughout 2017 a and subsidiaries continued with their process of continuous improvement development plans required for this was promoted, which includes the period, working on the validation of best practices for an operation of ex- critical positions, applying potential cellence. assessment tools to define the pool of talents and skills required, along In the case of ERBB, according to with defining the key personnel. the training plans, 186 career development activities were carried out, In a complementary way, in the Ex- including 306 workers. In turn, 112 ploration and Production business Development Competency Certifica- line, core competencies were raised, tions were achieved, with a total of which in the case of some units has

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61,879 hours of training and 98 Ac- tivities for 118 workers. In general, these programs represent on average of 78% of the total training hours.

At Enap Magallanes, a career development design was created for the operational and professional positions of the E&P Magallanes Production Management, besides of some areas of the Operations Directorate of R&C Magallanes. It should be noted that the knowledge curricula are built by position levels and range from the development of technical skills to management, incorporating security pass- ports and certifications necessary to comply with current regulations.

A career development design work was also initiated for the Drilling En- gineering area of the Well Drilling and Completion Management.

In the case of ERA, the work was aimed at developing a career development protocol that was approved and incorporated into the company’s quality system in November 2017. This protocol incorporates a training and

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behavioral evaluation model to the and strengthening internal leader- ganization. Similarly, their training current plans all other existing posi- ship capacities. actions led to the strengthening of tions, along with the measurement of critical skills for the business in the ENAP Magallanes turned to training productivity by defining indicators as- areas of operations and 75% of the activities aimed at improving behav- sociated with each position. staff was trained with a risk preven- iors related to the internal climate, tion course. Customer Service New Model including recognition, effective com- Program munication, and coordination. This Likewise, the Mentoring Program work focused on 50 leaders to re- focused on management was main- In order to support the Commercial inforce the orientation to results, tained for the second consecutive Policy of ENAP and strengthen a cul- strategic vision, leadership, and de- year, to promote the development of ture oriented to the quality of cus- velopment of people, teamwork, inno- leadership and support the compa- tomer service, a training program was vation, effective communication, and ny’s succession plan. designed and implemented to align change management. the people who work in the loading In turn, ERBB materialized workshops yards. DAO also held workshops for supervi- to strengthen leadership and skills to sors and middle managers (shift man- listen and communicate effectively, Throughout 2017, workshops were agers and heads of area or division), lead teams and optimize interper- held for all workers who work in the seeking to strengthen their leader- sonal relationships. These programs loading yards of San Fernando, Lin- ship skills. benefited workers who have a su- ares, and Maipú, to incorporate ser- pervisory role, including heads of di- vice orientation competencies. This SIPEC focused on generating provision, operation supervisors, chief program will continue in 2018 for the grams linked to the development operators and maintenance supervi- loading yards of Enap Magallanes, cycle of people, with the purpose of sors. Meanwhile, the courses aimed ERBB, and ERA. giving attention to the most relevant at strengthening self-care and occu- points considered in the climate sur- Local Programs pational health and safety behaviors vey. This led to team building actions led to 9,021 hours of training, with 49 for middle managers and reinforce- The subsidiaries continued to pro- activities and the assistance of 364 ment of soft skills for the entire or- mote initiatives aimed at developing workers.

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During 2017, ERA carried out a pilot Meeting with Leaders Likewise, in Argentina, in Santiago program in the Engineering Depart- Head Office, Sipetrol, ERBB, and ERA With the presence of more than 120 ment that assumed task of forming breakfasts were held with the general representatives from all the subsid- high-performance teams, with the manager during which, after a person- iaries and business units, including main objective of promoting best al presentation, the attendees delved Ecuador and Argentina, the “ Lead- communication and collaboration into the initiatives of each strategic ers Meeting 2017” was held again practices in this area. The pilot pro- axis and their impressions and feel- in December. The event took place gram considered team days designed ings regarding how they live them in Santiago and on this occasion its to favor the alignment, feedback, in their daily work. In addition, a dia- objective was for the executives to and integration of each division as a logue was held on how each one can define the purposes that will guide whole, as well as leadership sessions contribute in this stage of transforma- the company, that is, Unlimited Excel- that included the head of the depart- tion experienced by the company. lence, Step by Step Safety, People at ment, heads of division and area. the Center, Sustainability, and Radi- cal Collaboration.

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QUALITY OF LIFE

Given the relevance that strengthening the quality of In the area of quality of life, during the whole year life and well-being of the people who work in ENAP there were weekly gymnastics activities at the Head has for the Human Resources Management, in 2017 Office and DAO, pause gymnastics and chair massage, it continued carrying out various actions aimed at the covering all the shifts so that each worker could ac- acknowledgment and celebration of those who work in cess. With the aim of integrating their loved ones, nu- the organization. tritional, family and individual counseling talks were also organized in all the business units. In this regard, the traditional Fiestas Patrias (Inde- pendence Day) and Christmas festivities stand out, in Finally, at the Aconcagua and Bío Bío refineries, and in which more than 5,000 people participated. The Inter- Sipetrol, visits were organized for the workers’ children, national Women’s Day, Mother’s Day, Father’s Day and hoping to strengthen the family’s approach to opera- Secretary’s Day were also commemorated, and celebrations and for children to understand the importance tions were organized for years without fatal accidents and complexity of the work their parents do in ENAP. and years of service. In addition, games were available in ERA and a talk was given on the effects of alcohol and drug abuse. At the same time, the winter and summer camps were again organized, and in Magallanes, the First Cerro Sombrero Family Run was carried out.

At the cross-sectional level, the capital was the setting for the XII ENAP Olympics 2017, in charge of an orga- nizing committee made up of the directors of ENAP Santiago Sports Club and professionals from the Main Office Human Resources Management.

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CORPORATE POLICY OF THIRD PARTIES MANAGEMENT

Since 2016, the Third Party Manage- allowed to have a clearer vision of The Policy was presented to ENAP’s ment Directorate worked together where are the opportunities for im- Board of Directors on September 29, with the International Labor Organi- provement, from which its scope, 2017, by the Director of the South zation (ILO) in the preparation of a postulates, ethical standards, prin- American Cone of the International La- Corporate Third Party Management ciples, objectives, and areas of work bor Organization, Mr. Fabio Bertranou. Policy, in order to establish the mini- has been established. mum standards understood as the The Third Party Management Policy requirements imposed by the current is the roadmap that will allow ENAP regulations and all those additional to move forward with certainty in actions that can be executed in favor those areas in which opportunities of the improvement of labor relations, are recognized, thus enhancing its welfare conditions, health and safety business units. of work, together with environmental conditions in the workplace. It should be noted that this process is the result of the work led by the In order to prepare this policy, ENAP Technical Committee, composed referred to internationally recognized of representatives of various areas standards, established in the Univer- and strategic management of ENAP, sal Declaration of Human Rights of widely discussed and agreed upon the UN and in the Conventions of from their business units in different the International Labor Organization instances, in which representatives (ILO). of the different unions and federa- For more than a year, the ILO has tions, contractors, and executives of technically accompanied the pro- ENAP participated and contributed cess of designing this Policy, which with their ideas, experiences, and solutions.

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MILESTONES IN LABOR RELATIONS

Dialogue Roundtables Collective Bargaining 2017

During 2017, Dialogue Roundtables During 2017, ENAP successfully were developed at local and national completed eight collective bargain- level, whose objective is to generate ing negotiations for five trade union an approach through formal com- organizations belonging to the Fed- munication channels between the eración Nacional de Trabajadores company and the workers, the latter del Petróleo y Afines de Chile (FE- represented by their trade union orga- NATRAPECH) and three with unions nizations, in which issues of common members of the Federación Nacional interest are addressed, strengthen- de Profesionales, Técnicos y Supervi- ing also the labor relations between sores de Enap (FESENAP). them.

Below, the detail of the number of Di- alogue Roundtables developed in the period May - December 2017:

ROUNDTABLES ON SOCIAL DIALOGUE: MAY TO DECEMBER 2017

Level / Business Unit N° Sessions National 3 Santiago – Sipetrol 4 DAO 5 Aconcagua Refinery 7 Bío Bío Refinery 3 ENAP Magallanes 1

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Federación Nacional de Federación Nacional de Development and implementation of Trabajadores del Petróleo y Afines Profesionales, Técnicos y the Labor Relations Model de Chile (FENATRAPECH) Supervisores de ENAP (FESENAP) During 2017 we worked together with 6. Sindicato de Profesionales Enap the International Labor Organization 1. Sindicato de Trabajadores Enap Re- Refinería Aconcagua (ILO) in the construction of a Labor finerías Aconcagua 89 members Relations Model with respect to the 583 members Effective date of Collective Bar- ENAP own workers, as was done with Effective date of Collective Bar- gaining: 12/01/17 –11/30/2020 the subcontractor workers, who al- 7. Sindicato de Profesionales y Su- gaining: 07/01/17 – 06/30/2020 ready have a model. 2. Sindicato de Trabajadores ENAP pervisores de ENAP Refinerías S.A. PETROX (Bío Bío) In the first stage, a characterization 682 members 88 members of the labor relations in ENAP was Effective date of Collective Bar- Effective date of Collective Bar- made from the review of documents, gaining: 07/01/17 –06/30/2020 gaining: 10/01/17 –09/30/2020 the conduction of a focus group and 8. Sindicato de Trabajadores Profe- 3. Sindicato de Trabajadores ENAP interviews with different actors who EMALCO sionales de Enap Magallanes work both at the corporate level and 95 members 237 members in the business units. Effective date of Collective Bar- Effective date of Collective Bar- gaining: 07/01/17 –06/30/2020 gaining: 11/01/17 –10/31/2020 This characterization made it possible 4. Sindicato de Trabajadores ENAP to identify which aspects should be Santiago strengthened from the management, 177 members whose background was the basis for Effective date of Collective Bar- the design of a Differentiated Plan of gaining: 07/01/17 –06/30/2020 Labor Relations that will be present- 5. Sindicato de Sipetrol S.A. ed as a proposal to the Trade Union 47 members Effective date of Collective Bar- Leadership in 2018, which among gaining: 07/01/17 –06/30/2020 its main suggestions includes the restructuring of the Social Dialogue Roundtables based on the principles

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of the Social Dialogue approach of Specialist of the International Labor the International Labor Organization Organization (ILO), Lorenzo Peláez. (ILO). Code of Good Labor Practices – AC- Work Group ODS 8 – Global Compact CIÓN Empresas Network Chile Permanent collaboration and active ENAP headed the group of SDG 8 participation in the first stage of the (Sustainable Development Goal 8) on Labor Relations Roundtable under- Decent Work and Economic Growth taken by the Fundación ACCIÓN Em- of the Global Compact Chile, also presas. There were three sessions composed of the Mutual de Seguri- that resulted in the construction of dad, Parque Arauco, and Grupo EU- the Code of Good Labor Practices, an LEN. input that sought to become a guide for the Management of Labor Rela- Five training sessions on “Trade Union tions within the organizations and a Relations” were scheduled, and were contribution for the country. presented by the Employers’ Activities

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2nd Work Climate Study for Contrac- the improvement of the results of an were able to present their organi- tor Companies organization and is key in the deter- zation to the general manager of mination of the organizational cul- ERA and their department heads. In October 2017, the application of the ture. questionnaire for the 2nd Work Cli- • Workshop of the General Services mate Survey was initiated. Its objec- Social Dialogue Seminars area of the Head Office and con- tive was to describe and characterize tractors: In order to foster a posi- In order to encourage social dialogue the different ENAP contractor com- tive work climate among workers with the Contractor Federations, sev- panies of all business units, through who provide services under the eral workshops were held in 2017 in a census sweep survey, based on the reference contract and the tech- the different ENAP business units: model and instrument used in the in- nical area, a workshop was devel- ternal climate survey adapted to the • FENATRASUB/FESES Training oped by professors of Universidad reality of the contractor. Seminar, held in May 2017 in con- Adolfo Ibáñez, where different junction with the ILO at its head- concepts and topics were inter- The total sample was 2,579 respon- quarters in Santiago, with the nalized in favor of the proposed dents. The results indicated 62% of participation of 20 trade union objective. positive responses, surpassing in 5.5% leaders of the Federation and the data of the first study (56.5%), go- Program for the Development of Trade Unions Bases, where vari- ing from a classification of work cli- Contractors in Labor Relations ous topics of social dialogue, de- mate that is regularly bad to regularly cent work, certification were ad- In order to increase, develop, and good. dressed, among others. enhance the level of productivity, Based on this, it is possible to observe competitiveness, and innovation of • Workshop for a Participatory and that the perceptions of the contrac- ENAP’s contractor companies, during Constructive Dialogue addressed tor workers show improvements in re- 2017 the “Development Program of to leaders of FETRACON and held lation to their work environment and Contractors in Labor Relations” was in July in dependencies of the CICE the interpersonal relationships they executed, together with Fundación of ENAP Aconcagua Refinery. In develop on a daily basis. This is very Chile, in which a diagnosis was made this activity, in addition to train- important for ENAP because the work of the management capabilities of ing talks on dialogue and regula- climate is a factor that contributes to the companies, to then detect oppor- tory issues, the FETRACON leaders

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tunities for improvement and deliver panies from other national and inter- The workshops brought together 22 new skills and specific tools that al- national industries was sought. contractor companies from all the low them to advance in this area. business units and a total of 40 peo- After the study, in the third and final ple participated. To carry out the diagnosis, a question- stage, a total of eight workshops were naire designed by Fundación Chile held, four of People Management and Labor Audits was applied. Its main focus was the four of Labor Relations, with contrac- During the year, a total of 87 labor au- characterization and diagnosis of the tor companies selected by ENAP. For dits (preventive and follow-up) were management capabilities of the com- these activities, a manual was pre- carried out on the current contracts panies. In this phase, 81 companies pared and delivered to the compa- of the contractor companies that pro- were invited, of which 54% answered nies. At the end of this process, the vide services in the different ENAP the questionnaire in its entirety. companies took as a challenge the business units. The audits carried out elaboration of an action plan, which Once the companies were character- increased by 14.4%. was in direct relation with the con- ized and diagnosed, a comparison of tents exposed in the workshop and The observations thus raised were the results between them and with the manuals delivered. formally submitted to the contrac- respect to best practices with com- tor with the purpose of being able

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to manage and correct the detected mination of the commercial contract. panies, and principal company. The non-compliances. As a result of this above, in addition to addressing strat- In Enap Magallanes, collaborative management, results have increased egies, inform and coordinate with the work roundtables were held between by 7.67% in relation to the previous related areas the actions to follow. the areas of Supply, Legal, Expendi- year and by 25% compared to 2015. ture Control, and Third-Party Man- Labor Annexes Certification of Work Obligations agement, in order to optimize and The standardization of the Labor An- improve the information feedback 2017 was the second year of opera- nexes between the business units of that exists between the participating tion of the labor certification contract ENAP started in 2016, continued in areas. under the technical management of 2017. In addition to the above, these the Third Party Management Direc- In addition, in September 2017 a new documents were adapted to changes torate. During this period, Land Logis- training was carried out for the con- or modifications of current labor reg- tics contracts were incorporated into tractor companies in Bío Bío Refinery, ulations (Law 20,984 on Heavy Work, the certification process. analyzing the main deficiencies in the scope for the introduction of the new delivery of information and reinforc- Labor Reform and others). In order to control this process, bi- ing the labor certification process. monthly coordination meetings were In the last quarter, these instruments held between the technical manag- Anticipation and Monitoring of Union have been updated according to the ers of the contract, both ENAP and Conflict new Framework Agreements signed the supplier, obtaining feedback of with the Federations of Contractor Through Conflict Reports and the the processes, observations, analysis Workers. periodic and permanent fortnightly of deviations, etc. meetings of the Third Party Director- Land Logistic Services Roundtable In Aconcagua Refinery, the labor clo- ate team, analyzes and procedures This Roundtable, created in 2016, sures pilot was implemented in the are developed to safeguard the op- deepened its scope during 2017, car- different contracts that ended their erational continuity of ENAP, antici- rying out several work days with new operations during 2017. This is a tool pating and mitigating conflicting fo- union actors, addressing and facilitat- that supports the full compliance cuses of the dynamics and relations ing issues such as rest days, quality of with labor obligations prior to the ter- between unions, contractor com- life, habitability, etc.

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In addition, in a joint work with the the good labor practices for contract technical area, Labor Appendices workers, year-end festivity celebra- were developed for the new tenders tion milestones were carried out in that better safeguard the responsibil- ENAP business units. ities of ENAP as the principal compa- For those who provide services in the ny in the execution of these services. Head Office, a gathering was pre- Celebration of Year-End Festivities pared that allowed sharing with the for Contractors workers, who also received a Christ- mas gift. This seeks to generate an As in previous years, within the ini- instance for recognition and interac- tiatives of the Third-Party Manage- tion that helps to make visible the im- ment Directorate and framed within portance of our contractor world.

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03 BUSINESS ENVIRONMENT

70 / ENAP MEMORIA ANUAL 2017 03 / ENTORNO DEL NEGOCIO OIL INTERNATIONAL MARKET

PRICE OF CRUDE OIL

In 2017, the price of Brent crude oil began in 2014 and lasted throughout global benchmark recorded an aver- 2016 and the first half of 2017, had age of US$54.8 per barrel in the In- brought the price of Brent to levels of tercontinental Exchange in London, US$ 27.5 per barrel. 22 % higher than the average in 2016 Specifically, according to preliminary (US$45.1 per barrel). estimates from the U.S. Department This important price recovery is mainly of Energy (Short-Term Energy Out- explained as the positive result of the look, January 2018) global oil con- strategy adopted by OPEC (Organiza- sumption reached 998.4 million bar- tion of Petroleum Exporting Coun- rels per day (MMbpd) in 2017, while tries) and other producing countries global offer was 979 MMbpd, there- such as Russia, at the end of 2016, in fore generating a stock reduction, order to reduce the global oversupply globally, of 0.7 MMbpd compared to that prevailed. This oversupply, which 2016.

Oil Global Market 2017 (Figures in Million Barrels per Day - MMbpd)

Jan-Dec 2017 Jan-Dec 2016 Variation

DEMAND 98.39 96.95 1.44 OCDE 47.11 46.75 0.36 NON-OCDE 51.28 50.20 1.07 SUPPLY 97.97 97.21 0.75 North America 22.69 21.94 0.75 Others Non-OPEC 35.97 36.04 -0.07 LNG and Condensates OPEC 6.84 6.55 0.29 Crude Oil OPEC 32.47 32.68 -0.21 Source: U.S. Department of Energy, “Short-Term INVENTORIES -0.4 0.3 -0.7 Energy Outlook January 2018”

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At the beginning of 2017, the price panied by a lower compliance with of crude oil fluctuated around US$ the committed cuts and a productive 55 per barrel, after OPEC and Russia recovery that began to exhibit Libya, gave signs of compliance with the a country belonging to OPEC and ex- production cuts agreed in November empted from the cuts. of the previous year for the whole of At the end of May, OPEC and Russia 2017. During the first quarter of the tried to stop this pressure on prices year, prices remained around this through the extension of cuts un- level. Already in March, the market til March 2018. However, this finally begins to show pessimism for the in- ended up depressing prices by rais- creasing number of shale oil rigs in ing doubts about their compliance the US, which generated a threat to and keeping in general terms the the long-awaited decrease in global same conditions of the agreement oversupply. signed for the first half of this year. In early April, the United States car- Although Saudi Arabia compromised ried out a missile attack in Syria in its credibility by saying that the new response to the chemical weapons cuts would be reflected in exports to attack perpetrated by the Syrian gov- the United States, the lack of signals, ernment against its own civilians. such as increasing quotas for cuts, Although Syria’s crude production is did not reverse the trend. lower, its position close to Iraq and In this context, in early July, OPEC Turkey led the market to take this and Russia gave an important signal event into account. Subsequently, in St. Petersburg. They agreed to rec- this price impulse began to reverse, ommend an extension of the policy once concerns began to arise regard- of cuts in case the market could not ing market equilibrium, the product be stabilized and Saudi Arabia under- of continued growth of the shale oil took to continue limiting its exports industry in the United States, accom-

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to 6.6 MMbpd, its lowest level since at around 4.25 MMbpd, which was October 2014 and 1 MMbpd less than equivalent to 22% of its total capacity. what has been done a year ago. At the end of September, a separatist referendum in northern Iraq generat- At the end of August, and until the ed disputes between Arabs and Kurds end of the year, relevant disruptions in areas with large oil reserves. began to appear in the international market. The United States imposed At the beginning of November, there important economic sanctions on was a mass arrest in Saudi Arabia Venezuela, which -among other as- led by Crown Prince Mohammed Bin pects- prohibited U.S. companies and Salman against high Saudi authori- individuals from trading bonds with ties. Eleven princes and various gov- the sovereign government and PD- ernment officials were arrested by VSA. Bin Salman, a well-known defender of the extension of production cuts for On the other hand, the arrival of Hur- the whole year 2018. ricane Harvey to the Gulf Coast had significant effects on the prices of In December 2017, a leak halted oper- crude oil and its derivatives. Floods ations at the Forties pipeline through and power failures caused by the hur- which about 40% of British North ricane reduced U.S. refining capacity Sea production is transported. Simi-

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larly, an explosion in a major pipeline oil in the month of December and in Libya reduced its production by that allowed it to exceed US$ 65 100,000 bpd. per barrel. In a meeting held on No- vember 30, they not only agreed to Although the disruptions were a rel- extend but also decided to limit the evant factor in the evolution of pric- combined production of Nigeria and es, the decision of OPEC and Russia Libya, which had been exempt from to extend the cuts throughout 2018 cuts due to riots that had affected was the main factor that explained their production. the sustained rise exhibited by crude

Precio Diario Crudo Brent ICE 2017 Libya’s oil pipeline explosion reduces its production by 100,000 bpd 70 Princes of approx. Saudi Arabia are arrested for corruption. 65 Rigs in the US Kurdish stand at 631 US referendum units (+102 executed OPEC and external in northern Forties Pipeline 60 compared to attack countries agree Iraq. the beginning on Syrian OPEC and (450,000 bpd) to extend cuts The US of the year) military external closed due to by March 2018. imposes base. countries leak. Agreement below sanctions on extend cuts 55 expectations. Venezuela. throughout Hurricane US$/bbl 2018 OPEC and Harvey external 50 countries Libya show signs of restores compliance production Meeting of OPEC and external with cuts. of oil Libia countries. It is agreed to 45 fields. resuelve recommend extensions if the conflicto con market is not balanced and Wintershall Saudi Arabia agrees to limit (+160 Mbd) its exports to 6.6 MMbpd. 40

03-01-2017 03-02-2017 03-03-2017 03-04-2017 03-05-2017 03-06-2017 03-07-2017 03-08-2017 03-09-2017 03-10-2017 03-11-2017 03-12-2017

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PRODUCT PRICES ON THE GULF COAST

In the international market of the The price of gasoline averaged US$ US coast of the Gulf of Mexico (Gulf 67.7 per barrel in 2017, increasing by Coast, hereinafter), the prices of the 19% compared to 2016. The price of different fuels increased during 2017 gasoline increased in line with the price compared to 2016, roughly follow- of crude oil. During this year the inven- ing the path of the price of Brent ICE tories of finished gasoline in the USA. crude oil. decreased by 2.3 MMbls, standing at average levels for the last five years.

International Price of Products 2017

60 US$/bbl 55

FEB-2017 DIC-2017 ENE-2017 MAR-2017 ABR-2017 MAY-2017 JUN-2017 JUL-2017 AGO-2017 SEP-2017 OCT-2017 NOV-2017

Gasolina Diesel Kerosene BRENT ICE FuelOil 6

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On the other hand, the demand in the connects Texas and Louisiana with United States increased by 185,000 bpd. the east coast of the United States. In this context, characterized by the clo- In the case of the diesel price, the sure of refineries throughout Texas, average for 2017 was US$ 68.6 per including those with greater capaci- barrel, that is, 23% higher than the av- ty, the products became more scarce, erage for 2016. The price of diesel in- boosting their prices. creased in line with the price of crude oil, and during this year U.S. diesel For its part, the price of fuel oil No. 6 inventories decreased by 22.9 MMbls, registered an average of US$ 46.1 per reaching the average levels of the last barrel during 2017, with an increase five years. Also, the demand in the of 44% compared to 2016. The price United States increased by 185,000 of fuel oil No. 6 increased more than bpd. the crude oil, due to a rebound in demand in Asian markets for marine It is important to highlight the ef- fuels, coupled with lower production fect that Hurricane Harvey had on in Russian refineries for unscheduled the prices of these products. In par- maintenance, a factor that mobilized ticular, the production of derivatives exports from the North American was weakened, as well as their supply market to Asia and Europe. through the Colonial pipeline, which

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In 2017, domestic consumption of The slight increase in consumption Total consumption of diesel increased refined oil products reached 19.78 compared to previous years is ex- by 0.8%, to 9.76 MMm3 (168,253 bpd); MMm3, equal to 340,784 bpd, increas- plained by the increase in prices to the maintaining its status of the product ing by 1.7% over the previous year. end user and by lower national eco- most consumed among oil-based fu- nomic activity. Thus, according to pre- els. The decrease in diesel consump- liminary estimates by the Central Bank tion was mainly due to the contraction of Chile in its Monetary Policy Report in the mining activity, an important (IPOM Informe de Política Monetaria), consumer of this product in its opera- Chile’s GDP expanded by 1.5% in 2017, tions. The price increased by 13.3% maintaining the trend shown since to the end user, in real terms, that 2016, when the growth reached 1.5%. is, discounted the effect of inflation During 2017, the production of the 2016/2017. copper mining sector continued with Domestic consumption of vehicle gas- low rates, as well as a decrease in in- oline was the second largest by vol- vestments and lower activity in the ume, with 4.67 MMm3 (80,510 bpd), construction sector. growing 2.4% over the level in 2016. By analyzing the change in consump- Gasoline grew due to the increase in tion per product compared to 2016, the vehicle fleet. The price to the end very different behaviors are appreci- user had an increase in real terms of ated, stands out the declines in the 3.5%. consumption of fuel oil and industrial Liquefied Petroleum Gas (LPG) be- products, contrasting with the in- came the third most important prod- creased consumption of Liquefied Pe- uct in terms of consumption, with 2.37 troleum Gas (LPG), vehicular gasoline, MMm3 (40,886 bpd), registering an in- and kerosene.

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crease of 5.7% over the previous year. Finally, consumption of industrial In this case, the higher consumption products -solvents, olefins (basic raw is explained by a higher growth of the materials for the petrochemical in- bottled LPG segment. The price of liq- dustry) and asphalts-, totaled 0.384 uefied gas grew by 16.5% in real terms. MMm3 (6,612 bpd), 6.2% lower compared to 2016. Kerosene consumption increased by 13,6% to 1.67 MMm3 (28,736 bpd). Within the total, aviation kerosene, Domestic Consumption which represents 89% of the consumption, increased by 11.4%, while 2017 2016 Variation 3 3 household kerosene increased 36.5%. Mm Mm 2017/2016 The price of this fuel to the end user increased 14.0% in real terms. Liquefied Gas 2,373 2,244 5.7%

Fuel oil consumption increased 0.8% Vehicular Gasoline 4,672 4,562 2.4% and reached 0,92 MMm3 (15,787 bpd). The consumption of fuel oil in indus- Kerosene 1,668 1,467 13.6% trial applications increased by 1.9% (11,400 m3), while the sales of fuel oil Diesel 9,764 9,846 -0.8% as marine fuel in the country’s ports fell by 1.2% (3,912 m3). The price of this Fuel Oil 916 909 0.8% fuel to the end user increased 37.5% in real terms. Industrial Products/Others* 384 409 -6.2%

TOTAL 19,776 19,438 1.7%

* Includes propylene, ethylene, Naphtha, solvents, and asphalt, among others.

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SALES AND MARKET SHARE - 2017 (Figures in Mm3)

Domestic Domestic Sales Domestic Variations ENAP Exports Import Sales ENAP Consumption ENAP Market Share 2017 / 2016 Products

Domestic Domestic 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 Consump- 3 3 3 3 3 3 3 3 3 3 Sales ENAP Mm Mm Mm Mm Mm Mm Mm Mm Mm Mm tion

Liquefied Gas 2.373 2.244 375 323 15,8% 14,4% 131 22 7 11 5.7% 16.1%

Vehicular 4.672 4.562 4.447 4.531 95,2% 99,3% 0 15 403 568 2.4% -1.9% Gasoline

Kerosene 1.668 1.467 1.032 947 61,9% 64,5% 0 0 142 119 13.6% 9.0%

Diesel 9.764 9.846 4.956 4.357 50,8% 44,2% 9 10 1,385 904 -0.8% 13.8%

Fuel Oil 916 909 906 904 98,9% 99,5% 305 343 2 19 0.8% 0.2%

Industrial Prod- 384 409 264 312 68,9% 76,3% 36 28 1 3 -6.2% -15.4% ucts/Others*

TOTAL 19.776 19.438 11.980 11.374 60,6% 58,5% 481 419 1,940 1,625 1.7% 5.3%

* Includes propylene, ethylene, Naphtha, solvents, and asphalt, among others

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SALES DOMESTIC MARKET

Total sales reached 12.46 MMm3 Sales to the domestic market were ket share of 15.8%. Finally, industrial (214,733 bpd), slightly higher than the 11.98 MMm3 (206,438 bpd), with a products, with 0.26 MMm3 (4,553 previous year. This increase is mainly market share of 60.6%, which is 1.7 bpd) and a market share of 68.9%. explained by the higher level of sales percentage points higher than in to the domestic market, which in- 2016. EXPORTS 3 creased from 11.37 MMm in 2016 to 3 The largest market share was largely ENAP’s exports reached 0.48 MMm 11.98 MMm3 in 2017 and an increase due to the increase in diesel sales, of oil-based products, equivalent to in the level of export sales of 0.42 with a positive variation of 13.7% com- 4.5% of the total production of its re- MMm3 in 2016 to 0.48 MMm3 in 2017. pared to the 2016 sales. fineries. The products with the largest share Among domestic sales, the most sold of ENAP sales corresponded to gaso- product was diesel, with 4.96 MMm3 line and diesel, with 36% and 40%, re- (85,405 bpd), achieving a market spectively. share of 50.8%. Of the total sales volume, 10.43 The second best-selling product was MMm3 (179,699 bpd) corresponded vehicular gasoline, with 4.45 MMm3 to own production, which represents (76.631 bpd) and a market share of 83.7% of the total sold. The remaining 95.2%. 16.3%, 2.03 MMm3 (35,034 bpd), was supplied mainly by imports and also, In order of magnitude of sales, the to a lesser extent, by purchases from following volumes correspond to ker- domestic third parties. osene, with 1.03 MMm3 (17,781 bpd) and a market share of 61.9%; Fuel oil, with 0.91 MMm3 (15,609 bpd) and a market share of 98.9%; LPG, with 0.38 MMm3 (6,460 bpd) and a mar-

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04 CORPORATE GOVERNANCE

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SUSTAINABLE DEVELOPMENT / SAFETY AND OCCUPATIONAL HEALTH

CORPORATE SAFETY STRATEGY

The implementation of the safety day, without having to regret fatal • Identify and manage the risk strategy established as part of accidents caused by or at work. factors with potential to cause ENAP’s Strategic Plan 2014-2025 occupational diseases in case of The main axes supporting corporate continued in 2017. This plan sets as exposure to agents of different management in health and safety one of its core objectives for ENAP nature present in the tasks. are: to become a model state-owned Consistent with this strategy, in 2017 company in Occupational Safety and • Identify, understand and manage a series of initiatives and programs Health. the main risks of fatality in each aimed at fulfilling the objectives of the operations. In particular, progress was made set was promoted throughout with the implementation of the new • Implement and verify critical all national and international Health and Safety Risk Management controls for each of these fatality operations. Corporate Model, based on the best risks. practices of the industry and focused on the prevention of incidents with • Capture learning derived from the potential to cause fatalities or accidents, including near- severe disability of those involved, accidents, through reporting, as well as in the prevention of research and generation occupational diseases. of control actions to avoid recurrence. In 2017, as a main result of this joint effort, one of the main objectives • Establish a safety culture in which was met: that all workers and the practices of leadership in collaborators return safely with their the field are assumed as their families after finishing their working own by executives, supervisors, contractors, and operators.

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GESTIÓN DE RIESGO DE FATALIDADES

The initiative called Structural Safety tion of said tasks. One of the main Program (PES, Programa Estructural objectives is the homologation of the de Seguridad) continued In 2017, existing best practices, in order to in- which is a project that started in corporate them in the processes of 2014, and its objective is to eradicate review and continuous improvement accidents with fatal consequences in that are in permanent development in ENAP. ENAP operations.

Through a process of diagnosis and review of the best practices of the industry carried out in 2015, the Oper- ating Standards of the Rules for Life were defined, which establish the minimum necessary controls in the areas of facilities, equipment, and management for those tasks identified as high-risk with fatal consequences.

All the business units and international subsidiaries, through in-house monitors trained and accredited in 2016, began the instruction and training process for their own employees and collaborators in said standards.

Likewise, collaborative workshops were held with the PES Technical Roundtables created in 2016, with the purpose of adapting the internal procedures that regulate the execu-

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Implementation of the Critical Con- pliance, effectiveness, and improve- trols Verification Model ment of the process.

A key line of action undertaken in In practice, the verification model 2017 was the incorporation of the was taken to a format of simple and critical controls verification model to precise questions for each of the the PES, in order to promote the cul- roles: performers of the tasks, before tural transformation required to en- the start of the task; for supervisors, sure the effectiveness and operability before and during their execution; of this initiative. and for the heads and managers on a regular and permanent basis, as part Through a participatory process, the of their leadership in safety. controls defined as critical were established, this due to their level of Verification focused on the risks of relevance and relative importance to fatality was defined and established prevent the occurrence of accidents as one of the safety leadership prac- with fatal consequences, in the ab- tices required for representatives of sence or failure. Understanding that senior management (managers, di- one of the keys of this model is the rectors, and supervisors), as part of level of involvement and mobiliza- the expected behavior of their lead- tion of the entire organization, the ership, with the objective of modeling Critical Controls Verification Guides the behavior of people through such were developed in three main roles verification. This leadership practice of the process: Executor of the task, was measured and evaluated through Supervision of the task and Heads the goals established for all ENAP ex- or Managers of ENAP. Each of them ecutives. provides a particular and complementary perspective to achieve a holistic vision that allows verification of com-

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OCCUPATIONAL HEALTH AND INDUSTRIAL HYGIENE MANAGEMENT

In the field of Occupational Health, in Work Epidemiological Surveillance which the Implementation Commit- 2017 progress was made in the defini- tees (CDA, in Spanish) were set up in In the field of Work Epidemiological tions of the management and assess- each business unit nationwide, and Surveillance, indicators and goals ment of risks present in workplaces, are integrated by representatives were generated with a preventive which has made it possible to control of the Unions, Hygiene and Safety approach to evaluate the impact of possible exposures of people to harm- Joint Committees, and the Human risk agents on the health of exposed ful agents and, consequently, to pre- Resources and the Health and Safety workers. It should be noted that in vent agents from physical, chemical, Managements. biological, ergonomic or psychosocial 2017 a 96% compliance of the medi- be the cause of possible occupational cal exam program was achieved, With the support of the Mutual de diseases within ENAP. In this context, equivalent to the evaluation of 1,418 Seguridad, full compliance was given the ENAP Corporate Occupational workers nationwide. to the application of the analysis tool that the protocol requires to compa- Health Standard was validated. Likewise, although not required by nies in Chile, determining the main the same regulation, international On the other hand, a thorough review factors that may trigger a pathology subsidiaries joined this program, be- of the processes of industrial hy- of mental order. Based on the prelimi- ing actors of change in the applica- giene, ergonomics, and occupational nary results, attention focuses were tion of preventive criteria and con- health was carried out in each of the established for double presence di- cepts that transcend borders. operations. From this work an updat- mensions and social support of the ed baseline was obtained, identifying Surveillance of Psychosocial Risk at company and quality of leadership. the gaps and opportunities, which led Work to an occupational health program to It should be noted that, although the be implemented in 2018. Another important action front was protocol is not a regulatory require- the application of the protocols of ment for international subsidiaries, the Ministry of Labor and Health, in- the application of the tool also cov- cluding the psychosocial risk protocol ered SIPEC, whose results are being called ISTAS21, in compliance with processed as of the closing date of this document.

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IMPROVEMENT OF REPORTABILITY

In 2017, the efforts of the of this was to guide the organization of incidents. In addition, indicators Reportability and Improvement regarding the risks, the causes of will be generated to encourage teams focused on reinforcing the accidents, as well as to identify the practice of critical controls operational discipline of high- absent or failed critical controls, to associated with the Rules for Life potential accidents and incidents manage them proactively, generating control standards and the preventing (reporting, investigation, and closure control plans and actions to reduce report of findings, to identify of control actions), achieving 92% of the probability of their occurrence or and control the risks before they compliance and exceeding the goal mitigate their effects. materialize into accidents. established (90%). This work will continue during Strengthening of Research In addition, special emphasis was 2018, through the updating and Capabilities given to the analysis of the history, dissemination of a new incident As part of the improvement of the both of the causes identified management standard and support research process, which is essential from the accident investigations material for the research process, to capture organizational learning, and the findings derived from the thus reinforcing organizational the instruction and training in verifications in the field. The purpose learning and prevent the repetition

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the application of the TapRoot © Improvement of Management Tools in other ENAP ERP modules, Incident Investigation Methodology (SAP EHSM) which will significantly improve continued, reinforcing both the the timeliness of information and ENAP is in a process of capacity and organizational decision making. transformation and improvement of competencies in the matter. Thus, its business processes, among others, In 2017, the project focused on on the one hand, six monitors were by making available collaborative the design of process maps and trained in the methodology, whose and integrated computer tools in functional specifications in which mission is to train, reinforce and the organization. In this context, the implementation of the tool ensure understanding, as well as the Occupational Health and Safety is expected to have the greatest to deepen the knowledge of the Corporate Management, together impact, these are: TapRoot references that ENAP with the Environment Management currently has. On the other hand, 14 - Incident Management and the Information, Communication, new research leaders were formed - Occupational Health and and Automation Technology from the different business units Industrial Hygiene Management (ICAT) Management, is leading the and subsidiaries of ENAP, in order to - Waste Management implementation of a set of integrated provide the organization with more - Environmental Compliance technological solutions, with the capacity in this research technique. Management objective of strengthening and Thus, today there are 84 leaders centralize management in a single and specialists in ENAP, who ensure The design stage represented an platform and across the organization, an adequate compliance with the important effort of a multidisciplinary thus enhancing the reliability, research methodology and facilitate team with representatives of standardization and simplification of the continuous improvement of different processes and operations, processes and practices. processes. resulting in the design of 20 macro- processes and more than 180 The SAP EHSM platform associated functional requirements. (Environment, Health and Safety The tool will be installed and Management) will also allow the deployed in 2018, in all operations integration of information managed controlled by ENAP.

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STRENGTHENING THE SAFETY CULTURE

The revision of ENAP’s safety strat- the investigation of high potential plication of identification techniques egy, initiated at the end of 2016, incidents (HPI) is captured in the for emotional states that can result identified the need to develop, over area. in critical errors and, consequently, in any other axis of action, a Leadership accidents. On the other hand, more This has allowed, on the one hand, to Model for Safety aimed at strength- than 2,400 workers from collaborat- focus on those tasks with greater risk ening the Safety Culture of all the ing companies were trained in self- to improve and ensure the implemen- organization and the effectiveness of care practices. tation of controls and, on the other, the initiatives established in this area. to identify opportunities for improve- Thus, in 2017, new safety leadership ment in research processes. practices were defined for ENAP Strengthening of Self-Care Behaviors managers, supervisors, and executives, focusing on three central objec- SafeStart© is one of the core and em- tives of the strategy: blematic programs established in the organization in terms of self-care and • Manage the fatality risks, in order development of the Safety Culture. to develop a fatality risk manage- Currently, there are more than five ment capacity in the respective thousand workers trained in the five areas. base modules of the program, which • Verify in the field the critical con- have the support of 214 active certi- trols associated with high-risk fied monitors, distributed in all the tasks, with the aim of modeling ENAP subsidiaries. the behavior of people through In addition, ENAP has developed the verification of fatality risks complementary training modules, de- management in the field. signed to bring to practice the knowl- • Install the learning from accidents edge acquired with didactic material and near misses, in order to verify developed internally. Thus, in 2017, that the learning obtained from 857 workers were trained in the ap-

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IMPORTANT ACHIEVEMENTS IN AC- CIDENTABILITY RATES AND CLAIMS

The main objective was met 2017: to result obtained in Aconcagua Refin- erations and the consequence of a have zero fatalities in ENAP. Another ery for own personnel. It is also worth job well done. important result is that the proposed highlighting the results obtained in There was also an 84% reduction in accident rate goals have been met, the DAO operations, which achieved the Severity Index, measured in the reaching a Frequency Index (FI) of 2.0 at their plants in San Fernando and days of workers’ medical leave, in- (23% less than that obtained in 2016 Linares, 11 and 10 years, respectively, house staff and collaborators, and the and 11% less than the goal established without incapacitating accidents. days off due to fatalities. In this way, for this year). In the Exploration and Production op- it went from 330 days lost per million In addition, in 2017 the number of erations, both Sipetrol Argentina and hours worked in 2016, to 52. disabling accidents reduced by 10% SIPEC achieved an improvement in (54 in 2017 versus 60 in 2016), con- their accident rates by 43% and 30%, sidering the increase in exposure respectively, with both subsidiaries hours of 17% (equivalent to 4.1 mil- achieving values below 1 LTA per million additional hours compared to lion man-hours worked. the previous year), mainly associated As a result of the management of the with scheduled major maintenance initiatives, the sustained effort and in ERBB, ERA, major pond mainte- the commitment of the entire work- nance and projects such as the San force managed to reduce the acci- Fernando terminal, PIAM, and the Co- dent rate, which has meant a reduc- Generation Power Plant. Considering tion in the additional contribution that the aforementioned activities rates by the managing body of ENAP, involve high-risk tasks, these results from 0.68% to 0.34%, with a direct represent a great achievement. saving estimated in US$ 370,000. This is how the Co-Generation proj- Likewise, both ERSA and Sipetrol ect exceeded one million man-hours have managed to keep the additional without incapacitating accidents rate at 0%, with concrete evidence during its construction, as well as the that safety is embedded in ENAP op-

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RECOGNITIONS AND SPECIALIZED MEETINGS

As previously mentioned in this chap- 54/69 and No. 76/06) and the adop- ter, this year, and for the third time in tion of effective risk control methods, a row, the area of occupational safety highlighting: has been the area best evaluated in • Gold Level: 2 certifications (Cen- the labor climate survey, which re- tral Magallanes and ERBB) inforces the commitment assumed as an organization to make ENAP a • Silver Level: 2 certifications (Ma- Safety model state-owned company. gallanes Cerro Sombrero and Pos- session) On the other hand, in May 2017, and as a closure of the international cel- A group of workers was also recog- ebration of Safety and Occupational nized for their trajectory and commit- Health Day, ENAP held its third Safety ment, and for dedicating their profes- Plenary. The day, which was attended sional lives to fostering, collaborating by representatives of the Business and participating actively in the dif- Units in Chile and subsidiaries in Ec- ferent occupational health and safety uador and Argentina, was led by Mar- management bodies that they have celo Tokman, ENAP CEO. The central developed in their subsidiaries. axes of the plenary were the concepts “Safety and health at work are a priority for our company” and “The challenge of establishing and strengthening a Safety Culture in ENAP”.

During the plenary session, the work of the Hygiene and Safety Joint Com- mittees of ENAP was distinguished in terms of compliance with current regulations (Supreme Decrees No.

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CPHS Annual Meeting Expert Course in Risk Prevention

In December 2017, the third Congress In November 2017, an unprecedented of Hygiene and Safety Joint Commit- Expert Risk Prevention Course was tees (CPHS in Spanish) was held. Rep- launched in Punta Arenas by the resentatives of all the CPHS of ENAP National Geology and Mining Ser- and the collaborating companies at- vice (Sernageomin in Spanish). The tended the event that was hosted by course, which will last 11 months, is ad- Aconcagua Refinery in Concón. dressed exclusively to the oil industry and is aimed at 26 Enap Magallanes In the opportunity, attendees could in- professionals, including workers from ternalize the Psychosocial Risks Pro- collaborating companies. Its purpose tocol, as well as learn about ENAP’s is to train professionals in the min- new corporate safety guidelines, in- ing and oil safety regulations of the cluding new tools for risk manage- industry, thus contributing not only ment, updating national regulations, to the professional growth of the par- and the good practices implemented ticipants but also to the development in the different subsidiaries of ENAP of the region in terms of safety. by the respective Joint Committees.

These practices include the preventive campaigns deployed in 2017, such as “Mano a Mano”, “Ojo con tus Ojos”, and “Paso a Paso”, whose development and implementation were awarded by the Mutual de Seguridad.

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SUSTAINABLE DEVELOPMENT / ENVIRONMENTAL MANAGEMENT

One of the main milestones of the En- focused on improving environmental vironment Management was the adap- performance, considering, among oth- tation of its organizational structure to ers, environmental commitments, as provide support to the objectives and well as strategic decisions of the com- challenges in this area, consistent with pany. the Strategic Plan of ENAP and in line This new structure considered the with the need to implement a manage- creation of two new Directorates that ment model for the Business Lines and complement the Environmental Man- its subsidiaries, as well as for projects agement area. The directorates created and initiatives. In this way, efforts are and their functions are:

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Directorate of Environmental Studies: Directorate of Compliance:

• Implement and execute a process • Identify the permits and rules of compliance with environmental that ensures the quality control, an operational nature that allow commitments. scope, and processing of Perti- maintaining the continuity of the • Generate reports on the progress nence for Applying Consultations, subsidiaries, as well as those re- of the action plans for compliance Environmental Impact Statements quired by future projects and ini- with environmental commitments (EIS’s) and Environmental Impact tiatives. It must also administer and permits of each subsidiary, Studies (EIA’s). the custody system of these perfor the Business Line and General mits. • Verify that the projects and opera- Management managers. tions consider the scope, opportu- • Design procedures/processes that nity and adequate resources for ensure a correct interaction, in ac- their development, as well as the cordance with current regulations, processing times to obtain their with the supervising authority on environmental approvals. sectoral permits.

• Review and approve documents • Provide the organization with a submitted to the Environmental clear definition of roles and re- Assessment Service. sponsibility in the management and compliance of operational • Maintain updated a schedule that permits (environmental and sec- monitors the preparation and pro- toral) for all operations and sub- cessing of Environmental Impact sidiaries. Statements and Studies. • Audit operations regarding envi- • Identify and implement, together ronmental compliance and per- with the subsidiaries in Chile, key/ mits, as well as follow up on the strategic environmental studies findings. for the development and continuity of operations. • Validate and approve action plans in terms of obtaining permits and

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Environmental management:

• Follow up on the environmental organization according to their re- A similar structure in roles, distribu- management indicators of the sponsibilities. tion of functions and responsibilities company in an integrated manner. exists in each local operation (Chile), • Coordinate the interaction in en- regarding environmental areas. In the • Coordinate and monitor the imple- vironmental regulatory processes case of international subsidiaries, the mentation and evaluation of envi- within the company. original structure was maintained, ronmental procedures. • Participate in the classification of in- but ensuring that the same functions • Verify the correct management of cidents, investigation, and closure of described above are carried out. risks with environmental conse- the processes of the incidents with quences in the company. environmental consequences, and keep the general statistics of the in- • Follow up and validate verifiers of cidents updated. compliance with environmental goals.

• Design, implement and execute the technical training plan on environmental issues and permits, addressed to the members of the

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MILESTONES 2017

One of the milestones of the reported A key step was also the reportability 11 RCAs were obtained for the proj- period was the participation of the made to the Superintendency of the ects submitted to the Environmental various operations and corporate en- Environment about the emissions af- Impact Assessment System (SEIA), vironment teams in the process as- fected to the green tax of Enap’s op- 10 of which were obtained by ENAP sociated with the implementation of erations in Aconcagua Refinery, Bío Magallanes (including the Cabo Ne- ENAP Risk Management methodolo- Bío Refinery, and the PetroPower co- gro Wind Farm) and one in the Acon- gy, specifically, in the role of first and generation power plant. cagua Refinery. second line of defense, when evalu- Although these advances are signifi- Below is a list of the milestones in en- ating, validating and challenging the cant, we can not fail to mention the vironmental management for each of environmental consequence of each environmental incident that occurred the ENAP operations in 2017. of the identified risks. on April 11, due to work with heavy Another important issue was the machinery that a third party (unre- training of ENAP environmental area lated to ENAP) carried out in a private in the TapRoot® methodology, to be lot in the municipality of Molina. The able to participate in the investiga- machinery hit the Hualpén - San Fer- tions of high-potential incidents de- nando Pipeline, producing a rupture tected in the operations. that caused a diesel spill at the site. Thanks to ENAP’s prompt and effec- Also noteworthy is the process of tive response in the containment, analysis carried out by the different cleaning and repair work, there were environmental areas to the Opera- no major consequences to the envi- tional Integrity Management System ronment and to the supply of fuels in (OIMS), in order to incorporate the the country. environmental aspect in the compliance with the twelve elements, ex- Regarding Environmental Qualifica- pectations and requirements con- tion Resolutions (RCA), it should be templated by the OIMS. noted that in the reporting period

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ENAP ACONCAGUA REFINERY (ERA)

The following is the progress status • On October 30, 2017, the Resolu- and approved by the authority on of the main projects, EIA’s, EIS’s and tion of Environmental Qualifica- February 1, 2018. compliance programs associated tion (RCA) No. 379/2017, of the • Updating of the Airviro platform, with this Business Unit: Environmental Impact Statement which allows to have graphical in- (EIS) “Storage of Hazardous Sub- • The Addendum to the Environ- formation online, more friendly to stances” was obtained. Its objec- mental Impact Study (EIS) of the the internal user (Control Room) of tive is to comply with the new Nueva ERA Plant was submitted the air quality monitoring of ENAP regulations for the storage of dan- in December 2016 and the envi- in Concón. The Airviro platform gerous substances (DS 43/2015 ronmental assessment is currently supports the Nueva ERA commu- MinSal). suspended until June 28, 2018. nity website (http://nuevaerainfor- This project consists of a 510 MW • On December 21, 2017, the Envi- ma.enap.cl). combined cycle plant. generated ronmental Impact Statement of • Installation of equipment for con- exclusively with Natural Gas and the “Aconcagua Co-generation tinuous monitoring of emissions a 16 km High Voltage Line, which Power Plant Operational Adjust- in five boilers in the Supplies area, passes through Concón, Quintero, ments” project is accepted for en- called CEMs, in order to respond and Quillota. vironmental processing. to the commitment established • An update was made to the scope • Compliance Program: Through Ex- in the Cogeneration Power Plant of the Coker Industrial Complex, empt Resolution No. 1/ROL D-004- Project Agreement. to adapt the plant to the current 2017, the Superintendency of En- • In terms of solid waste manage- reality of the crude oil market, in vironment (SMA) filed charges ment, the final disposal to an au- addition to incorporating more against ERSA (ERA) for 16 infrac- thorized recipient of 10,000 tons advanced technology for a more tions. In order to respond to this of bulk FCCU catalyst from the stable operation and with lower requirement of the SMA, ERA pre- Rinconada sector stands out. generation of emissions. On Oc- pared and presented a Compliance tober 6, 2017, the project “Coker Program whose amount amounts Industrial Complex Update” was to 36.1 million dollars. On Decem- accepted for processing in the En- ber 19, 2017, the final version of vironmental Assessment System. the plan was delivered to the SMA

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STORAGE AND PIPELINE DIVISION (DAO)

• In order to improve the disposal of hazardous waste in the Storage Plants, in the last quarter of the year the “Linares Plant Hazard Residue Manage- ment Plan” was developed, which was submitted for approval to the Health SEREMI of Talca.

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ENAP BÍO BÍO REFINERY (ERBB)

• Based on the analysis of accred- ing were carried out, considered order to incorporate adjustments ited laboratories, the declassifica- in the Environmental Surveillance to the ammonia treatment system tion of PetroPower ash as hazard- Programs in the Bío Bío River, San coming from the acid water plants. ous waste was achieved. Vicente Bay and Air Quality in Hualpén. • The initiative to recycle or reuse industrial waste (lubrication oil, • On November 30, a EIS was en- empty drums, and wood) began, tered into the Environmental As- which contributed to a 5% reduc- sessment System for the new tion in the shipment of waste to isomerization plant in ERBB. Pre- final disposal. viously, in October a letter of per- tinence was added for the modifi- • Actions related to environmental cation of the RCA N ° 187/2005, in protection, control and monitor-

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ENAP MAGALLANES

• Agreement with Universidad San- • Convention for the Protection of ence of the Rudy-Headed Goose, to Tomas and Bahía Lomas Center: Rudy-Headed Goose (Canquén in order to strengthen the regis- During the year, activities were Colorado): As part of the Rudy- ters held by the Ministry. carried out to disseminate the im- Headed Goose Recovery, Con- In compliance with this agreement, portance of the Ramsar site within servation and Management Plan, a census was conducted in March the company and participated in whose objective is to facilitate ac- 2017, and a second survey is expect- a joint activity with the Bahía Lo- tions to prevent this species from ed to take place in January 2018, mas Center in the Plaza de Armas being affected, ENAP Magallanes from which a final report will be pre- of Punta Arenas. In December, ac- signed a collaboration agreement pared to be sent to the environmental commodation, meals, and transfer with the Ministry of Environment, authority. by helicopter were arranged for represented by the Undersecre- five scientists who will participate tary of the Environment that es- in the work campaign in Bahía Lo- tablishes a commitment to carry mas, during the summer season. out annual monitoring of the pres-

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ENAP SIPETROL ARGENTINA

Austral Basin:

• Annual validation of the Emer- • Registration certificates were ob- Reserve continued. It included the gency Plan for spill at sea (PLANA- tained as a generator of hazardous participation of wildlife officers CON) was carried out. This work waste and oil residues before the for the protection and attention of included the performance of drills Province of Santa Cruz. penguins that could access to the and exercises with the simultane- project areas. • Work was carried out to monitor ous participation of the crisis com- environmental legal compliance, • Another activity developed jointly mittees of the Austral Basin and through self-assessments of per- with the Provincial Agrarian Coun- Buenos Aires business units. mits compliance, which ended in cil was the removal of “green bush- The process was audited by the an external audit. es” in the areas of the land pipe- Argentine Naval Prefecture, ob- lines for subsequent replanting. PIAM: taining its approval. This instance • Reseeding activities were carried was used to hold meetings with • The environmental management out with autochthonous species the contractors involved in the po- of the PIAM Project focused on in the areas that were intervened tential response to the emergency, the implementation of the preven- during the laying of the terrestrial during which the capabilities of tive and environmental monitoring pipelines. their personnel and the state of measures established in the Envi- the elements for spill management ronmental Protection Plan, which • It was verified that the land works were evaluated. was committed to the authorities of the PIAM concluded without en- in the Environmental Impact Study vironmental incidents and, espe- • The Initial Environmental Assess- approved by Disp. Nº478-SMA-15. cially, without affecting the pen- ment Audit (EIAA) of the Ma- guin colony of the Faro Vírgenes gallanes Area was carried out in • The application of the framework Reserve, in the seasonal peak of compliance with the Environmen- agreement of reciprocal assis- their population. tal Impact Assessment Law of the tance and collaboration with the Province of Santa Cruz. Provincial Agrarian Council held in • The Provincial Agrarian Council 2016, for the sustainable manage- made the certification and accep- ment of fauna in the Faro Vírgenes tance of the areas that were re-

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leased after the demobilization of • In parallel, a communication plan study and the realization of field the equipment and construction was drawn up with other stake- surveys for the preparation of the facilities. holders of the project and meet- environmental baseline. ings were held with environmental Octans-Pegaso: Pampa del Castillo: NGOs to raise awareness and re- • The environmental impact assess- ceive feedback. • A survey of potential environmen- ment process of the “Octans-Pega- tal liabilities in the deposit was El Turbio Este: so Offshore 3D Seismic Registry” carried out. project started. This included the • In the Province of Santa Cruz, near • The tanks opening and cleaning initiation of administrative proce- the Austral Basin, the manage- was carried out, prior to the envi- dure, an information meeting for ment of the Environmental Impact ronmental audits required by Res- the authorities of the Province of Assessment process of El Turbio olution 785/05. Santa Cruz, the development of 3D seismic project (new area ac- the environmental impact techni- quired by Enap Sipetrol Argentina • Activities for the environmental cal study and its formal applica- S.A.) was started. This included improvement of field facilities tion to the Secretariat of State for the preparation of the specifica- were carried out, according to the Environment of the said prov- tions for the development of the Resolution 105/92. ince. environmental impact technical

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SIPEC

Follow-up to the Environmental Man- 3,381 species sown between trees Environmental Permits: agement Plans of PBHI and MDC and fruit trees typical of the area. • In relation to Block 46 MDC, dur- Blocks: • In January 2018, SIPEC became ing 2017, the Environmental Re- • In 2017, environmental monitoring the first oil operator in Ecuador evaluation was carried out for the was carried out in the PBHI and to obtain Neutral Carbon Certifi- drilling of three development wells MDC Blocks, determining compli- cation for all its operations. This and an injection well in the exist- ance to 100% of the maximum al- great achievement was obtained ing block platforms, a report that lowable limits in the parameters after complying with the process was approved by the Ministry of monitored for liquid discharges of of estimating the carbon footprint, the Environment in February 2017. platforms. proposing the reduction of green- This permit approved the drilling of house gas emissions (GHG) and wells MDC-28 and MDC-29, in the • Likewise, with respect to the compensating them. existing location MDC-02; MDC-27 monitoring of emissions to the at- in the existing MDC-20 location, mosphere from fixed combustion Management of Environmental Li- and the MDC-30 well, in the exist- sources, monitoring reports deter- abilities: ing MDC-12 location. mine compliance with 100% of the • In 2017, SIPEC intervened the li- permissible limits specified in the abilities located in PSO-08 (preex- current environmental legislation. isting environmental liabilities of Such monitoring was carried out other operations), according to the by an environmental laboratory plurennial Environmental Remedi- accredited to the Ecuadorian Ac- ation Program. On the other hand, creditation Service (SAE). technical studies to characterize • Reforestation processes were car- the sources of interest concluded ried out in buffer areas of the dif- and, based on this information, a ferent platforms that mainly con- report was issued that is part of the stitute the PBHI Block, by 67%, and Environmental Audit 2013-2015 by MDC, by 33%, obtaining a total presented to the environmental reforested area of 7.30 Ha with control authority for approval.

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In January 2018, SIPEC became the first oil operator in Ecuador to obtain Neutral Carbon Certification for all its operations. This great achievement was obtained after complying with the process of estimating the carbon footprint, proposing the reduction of greenhouse gas emissions (GHG) and compensating them.

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SUSTAINABLE DEVELOPMENT / COMMITMENT TO COMMUNITIES

Among the management milestones represents today, in order to address related to commitments, social ac- of 2017, stand out the socialization the updating of its principles, the tors, actions, and projects, under the of the Corporate Sustainability Pol- strategic purpose and translate these same standard and according to a icy in each of ENAP Business Units concepts into the work of branding. traceability cycle. of in Chile, as well as in the subsid- and a Value Offer according to the These and other advances in the ar- iaries of Argentina and Ecuador, and new challenges. eas of Strategic Social Responsibility the beginning of a baseline in Human The valuable aspect of this process, and Community Management, driven Rights, with the aim of developing ini- among other aspects, is that the sus- by the Corporate Affairs and Sustain- tiatives in this area, which is one of tainability criteria are formally incor- ability Management of ENAP, are de- the four aspects of the Sustainabil- porated into the core business and tailed below. The total amount of so- ity Policy, together with the Environ- the corporate culture of ENAP, align- cial investment for operations in Chile ment, Integrated Management and ing with the best practices worldwide. in 2017 amounts to US$ 5,151,190. Consideration to Stakeholders. Other achievements of 2017 con- Also, during this period, the Com- sisted in the standardization and munications Department worked to implementation of the Community strengthen the brand identity and Management Strategy in the differ- strengthen the strategic vision that ent business units and universal ac- has been built for the organization: cess to the “ENAP Responds” chan- a modern and efficient state-owned nel, allowing anyone to send queries, company, which strengthens its stra- requests, complaints and claims of a tegic role and articulates energy solu- socio-environmental nature, through tions, thinking on the welfare of cur- a direct channel. These requirements rent and future generations. In this are integrated into a new platform context, a series of workshops were with which the Directorate of Com- held to obtain, in a participatory man- munity Relations operates and which ner, relevant inputs about what ENAP allows managing all the information

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STRATEGIC SOCIAL RESPONSIBILITY (SCSR)

The following are the main manage- Socialization of the Corporate ment milestones of the CSR Director- Sustainability Policy ate in 2017. ENAP Corporate Sustainability Policy ity, and the adoption of commitments address the challenge of “Being a in this regard, both in the personal model company in safety, efficiency, and work aspects. About 290 people and relationship with communities, from the Head Office, Aconcagua Re- which plays a strategic role in sus- finery (ERA), Bío Bío Refinery (ERBB), tainably promoting the energy mar- Enap Magallanes, Storage and Pipe- ket in Chile.” This statement includes line Directorate (DAO), Enap Sipetrol the general approach and purpose in Argentina and SIPEC participated in terms of relationship with stakehold- the workshops. ers, as well as its scope: providing Each assistant to the workshops was guidelines for the sustainable devel- given a report with the results of the opment of ENAP, being part of the meetings, in order to record the expe- business strategy, whose metrics are rience and have a background as in- communicated through the Sustain- put for the following stages. The next ability Report. step will be to identify gaps and make Thus, after the in-depth work of up- commitments to frame the manage- dating ENAP Corporate Sustainability ment within the compliance with the Policy executed in 2016, and based Policy. on the Sustainable Development criteria recognized in the company’s 2014-2025 Strategic Plan, this year a socialization process of this guideline was carried out. The dissemination was made in a workshop mode, considering a work of motivation, reflection and awareness about sustainabil-

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CSR Committees Corporate Volunteering

Created at the end of 2015, this com- Corporate volunteering provides a mittee became operational in 2016, reliable space to channel the socio- operating periodically in 2017, in environmental concerns of those who all Business Units. It is an instance work in the company and sensitizes where all local actions of social re- and engages in the different matters sponsibility are analyzed, opportunity included in the aspects of the Sus- in which new initiatives and programs tainability Policy. are proposed, validated and reviewed. Together with the contribution to The committee is composed of the local development, it also provides managers of both refineries and a real opportunity to generate and Enap Magallanes. In addition, the HR strengthen ties with social organiza- managers, the CSR, Communities, tions and open other possibilities for Communications, and Environment cooperation with new interest groups directorates participate. The repre- in the different business units. sentatives of the Workers and Profes- With this frame of reference, in 2017 sionals Union are also invited to each a total of 245 people took part in the session. various volunteer activities, who con- During the reporting period, the ERA, tributed with more than a hundred ERBB, and Magallanes CSR Commit- hours of their time. The following tee sessions were held. table details the activities developed in 2017.

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VOLUNTEERING ACTIVITIES ENAP 2017 / DIRECTORATE OF CSR

Activities 2017 Description Business Unit

Launch of the Corporate Volunteer Pro- Description of the program and its objectives. Presentation of the gram. Ñamku Foundation on Bird Rescue and Basic Advice.

Head Office Presentation on the state of conservation of wetlands in Chile and the world, and on ENAP Wise Use of Wetlands Program. Training of Volunteering Monitors. Presentation of 2016 results and Program 2017, Objectives, Activities, Coordination and Logistics.

Participation in the volunteer project of the National Monuments Removal of blackberry in Las Petras Forest Council, which seeks to eradicate introduced and invasive Nature Sanctuary. vegetation in the Las Petras Forest Nature Sanctuary, in Quintero.

International Beach Cleanup Day, support Cleaning of La Boca beach in Concón, convened by the Valparaíso Enap at La Boca beach. Harbormaster. Aconcagua Refinery

International Day of Beach Cleaning, sup- Cleaning of the beaches of Loncura, in Quintero, convened by the port at beaches in Loncura. Quintero Harbormaster.

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Activities 2017 Description Business Unit

Incorporation of ENAP workers as volunteers, in the sector 2017 Census. surrounding Bío Bío Refinery.

Collaboration in cultural activity implemented by ENAP, in which Da Vinci Exhibition. workers support the development of the sample. Enap Bío Bío International Beach Cleaning Day, support Cleaning of Lenga beach, with the Chilean Navy and students of Refinery at Lenga Beach. the municipal schools of Hualpén.

Accompaniment to the robotics teams of the schools of San Educational Robotics Vicente in Talcahuano and the school República del Perú, helping to improve the students performance.

Celebration of the National and Regional Heritage Day, an opportunity in which around 500 people toured the facilities of the Central Building of Enap Magallanes. The visitors knew the history, the present and the new productive processes that the National and Regional Heritage Day. company is putting into practice to supply gas to the XII Region, while the smallest were internalized of the industrial activity carried out by ENAP, through a book where they painted the facilities of the company and the protected wildlife of this area of the country. Enap Participation in the cleaning of Tres Puentes Wetland, an activity Magallanes developed by the Patagonia Group and the Regional Government. Cleaning of Wetland Tres Puentes, visit of Presentation and visit to the wetland for a hundred children of children to Summer Center. the Summer Center "Temporary Main Caregivers", organized by the Seremi of Social Development.

Activity organized by the Regional Secretariat of the Environment and the Harbormaster of Punta Arenas, in which ENAP International Day of Beach Cleanup, sup- collaborated with the delivery of hygiene and safety equipment port at coastal edge of Punta Arenas. to the 300 people who attended, mainly students, participating in the cleaning of Punta Arena's coastal border.

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“Cool Place to Bike” Program The score obtained by each team Participation in the Diversity and defines an internal ranking and a Inclusion Committee For the second year in a row, ENAP is national ranking, which rewards the part of Cool Place to Bike, an initia- During 2017, the Diversity&Inclusion companies or institutions that en- tive that promotes the use of bicycles Committee met on six occasions. This courage the most the use of bicycles as a means of transport. In return, the year, the Committee focused its work among their workers, reflecting their relations of the participating teams on two issues of relevance to the or- commitment to sustainability. are strengthened, contributing in the ganization and created two anchor reduction of the Carbon Footprint, Among the participating companies commissions: the Women’s Commis- healthier, more productive, and moti- in the Corporations category, ENAP sion and the Disability Commission. vated workers in a daily basis, promot- obtained the second place in the In addition, work was done with the ing a cultural change in the mobility event of April and the fourth place HR Management, raising information of our cities. in November, despite having doubled to develop standards on the new Chil- the score in this final phase, which ean Inclusion Law, an instrument that Under the coordination of the Strate- accounts for the enthusiasm that this requires companies to hire 1% of their gic Social Responsibility Department initiative causes in the cyclists. workers with some type of disability. and the support of the Main Office This Law will come into force during Sports Clubs and the Bío Bío Refinery, Roundtable with the Chamber of 2018. two competitions were held in 2017, Commerce of Quintero the first in April and the last one in Representatives of the workers and The work of the Roundtable with the November. The competitors recorded the Administration, corresponding to Chamber of Commerce of Quintero, their performance through the smart- the Ethics and Compliance, Human the municipality, and the Aconcagua phone application “Kappo”, adding Resources, and Corporate Affairs, and Refinery team continued during 2017. the highest possible score, obtained Sustainability managements partici- As part of this work, tourist signage from measurable parameters such as pate in this instance. The Directors of was given to them within the frame- time, maximum and average speeds, CSR and Communications participate work of the development plan of the distance traveled, elevation, weather, on behalf of this last management. commune. among others.

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SUSTAINABLE DEVELOPMENT / COMMUNITY MANAGEMENT

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DIRECTORATE OF COMMUNITY RELATIONS

Since 2015, the Directorate of Com- Open Dialogue: Mutually Beneficial Relationship: munity Relations guides its actions Establish a relationship with the Develop social investment initiatives and that of the different Business communities based on permanent that aim to improve the quality of Units based on the institutionaliza- dialogue, which allows for the life of the communities surrounding tion of the Community Engagement generation and maintenance of a the operations, considering their Corporate Model, which was creat- mutual relationship of trust. problems, interests, and concerns. ed to provide specific strategic and methodological guidelines for the for- In this area, the organization The initiatives that were developed mulation and development of plans, maintains face-to-face instances during the year in this area are projects and initiatives that seek the of permanent dialogue with the categorized in the following areas: construction of shared value among communities (see Instances of Education and Culture; Training and the communities neighboring the op- Dialogue Roundtable), in addition Economic Development; Health and erations, framed within a social and to non-contact communication Sports, and Infrastructure. environmental respect. channels, such as the Reception of Requests, Queries, Complaints, This model works towards the materi- Social-environmental Complaints alization of the commitment assumed System, through the institutional by ENAP in its Strategic Plan 2014 - website (link “ENAP Responds”). 2025 to become an environmentally and socially responsible company with its communities, through four guiding Pillars:

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Transparency and Environmental Collective Responsibility: Responsibility: Promote the commitment of Promote respectful behavior and ENAP workers and collaborators care for the environment, in addition to sustainable development, social to the delivery of clear and timely and environmental respect in the information about operations, their territories in which the company is socio-environmental impacts and present. their mitigation measures. Under this objective, training and In this area, initiatives and activities induction processes were carried are considered such as anticipated out in the various business units for community socialization regarding workers in the different areas about investment plans of the operations the importance of the relationship and their project portfolios; talks between the company and the about safety, environment, and communities, and the community emergency management; joint work engagement plans that are currently agreement with unions of artisanal being developed. This year stands fishermen, among others. out the inclusion of the Community Relations module in the induction program for new workers at Aconcagua Refinery.

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STAGES OF THE CORPORATE STRATEGY ON COMMUNITY ENGAGEMENT

This strategy considers the fulfillment the design and execution of social in- pany, the expectations of the com- of 3 Stages and the development of vestment initiatives that comply with munities and with international and specific sequential components for the strategic guidelines of the com- national standards in this matter.

Stages and Components of the Corporate Strategy on Community Engagement:

APA PA PA ET 1 ETA 2 ETA 3

Design and Diagnose Analysis Community Management

Components Components Components

Measurement of community Definition of programs, initiatives perception regarding issues of Social, community, environmental and community activities to be interest, problems, the image of and institutional risks. developed. ENAP and environmental impacts.

Stakeholders identification and Social and environmental impacts Monitoring of indicators, processes characterization. of operations. and management systems.

Demographic, socioeconomic, Areas and themes of development/ Evaluation and measurement of anthropological, and social welfare opportunities. initiatives' impacts. baseline.

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During 2017, progress was made in STAGE 1: DIAGNOSE each of these stages and components Study of community perception in community initiatives within both through the following initiatives: the urban and rural areas of Concón communes. and Quintero.1 Update of Stakeholders Mapping. Questions were asked about ENAP’s In all the business units, the process environmental and community ac- of updating the identification and tions, specifically the Nueva ERA characterization of the stakeholders Comprehensive Program and Acon- was carried out, understanding them cagua Refinery, as well as the prob- as those social actors and groups that lems of the commune, the issues of are directly or indirectly related to the interest to residents and their visions operations of the company. At the of the future. A total sample of 300 same time, the georeferentiation of cases was considered, representa- these was carried out in the Commu- tive according to sociodemographic nity Relations Management Platform, characteristics: sex and zone (urban- implemented during 2017. rural). The questionnaire was applied face-to-face in homes and had a total of 40 questions, both open and closed. This study provided valuable information for the redefinition of

1 The study was carried out by EKHOS, an agency of strategic communications, studies and research, during March and April, 2017.

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STAGE 2: ANALYSIS

Study of Economic and Social in the region was analyzed, based Impact of ENAP in the Magallanes on the analysis of the social impacts Region2. generated by its most relevant initiatives in this area, as well as the articu- The purpose of this study was to sys- lations with public and private institu- tematize and value the contribution tions that have contributed to create of ENAP in the economic and social synergies for the benefit of regional spheres of the Magallanes Region, in interest groups. order to have a valid background to determine how investments and op- Identification and Evaluation of erations of ENAP have contributed to Risks in Community Relations. the regional development from its be- As part of the implementation of ginnings to this date. the Risk Management Methodology The study evaluated the incidence of of ENAP, the Corporate Direction of ENAP in the regional macroeconomic Community Relations carried out the variables, based on quantitative as- analysis of its associated risks, ad- pects that allowed establishing the justed to the indicated methodology, positive externalities that the com- carrying out the stages of Identifica- pany has generated in terms of con- tion, Evaluation, and Preparation of tribution to the region’s GDP, creation Mitigation Plans. The identified risks of new jobs, income for families that correspond to the following: loss of work directly and indirectly in ENAP social license to operate current and/ and the fiscal contribution, among or new projects, and non-compliance other macroeconomic indicators. with the commitments assumed with non-profit organizations that benefit At the same time, the creation of from the collaboration agreements. shared value that ENAP has fostered

2 The study was carried out by EKHOS, an agency of strategic communications, studies and research, during March and April, 2017.

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STAGE 3: DEFINITION AND COMMUNITY ENGAGEMENT MANAGEMENT by part of an organization, supervi- Procedures Manual for the sion and control of the execution of Execution of Investment in the approved resources and respon- Community Engagement and CSR sibility of community relations units in contingencies, extraordinary man- The purpose of this manual was to agement of activities, resources, and formalize and standardize the regula- budgets. tions and procedural framework that governs the mechanisms and actions Community Engagement through which ENAP materializes its Management Platform actions of Community Engagement in During 2017, the Directorate for Com- the territories in which it carries out munity Relations of ENAP decided to its activity. For the preparation of this implement a technological solution manual, we proceeded in a first stage for the management of the processes to identify the operational model and carried out by the area. This platform the processes currently underway in has made it possible to convert data each of the Business Units, identify- into a management tool for timely de- ing business cycles and support cy- cision making. In its first year of imple- cles, mega-processes, and the activi- mentation, the system has favored the ties, tasks and the person responsible management of the life cycle of the for each identified process. initiatives that are carried out in each Among the subjects formalized in this Business Unit, standardizing the plan- manual are: definition of beneficiary ning, reporting and traceability process- entities and geographical area of in- es of each line of action. The above has fluence in which it is possible to carry been fundamental to optimize, monitor out collaboration agreements, types and evaluate the work done. The ele- of contributions, methodology for the ments that this management system planning of initiatives, definition cri- has correspond to the following: teria before request of collaboration

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- Descriptor of initiatives: strategic Community Investment Social destined for the execution of these pillar, objectives, key activities, Return Analysis (SROI methodology) (both through financial contributions goals, indicators, verifiers, tar- of ENAP and the use of man-hour In order to evaluate and measure the get audience, alliances, budget, resources and associated physical impact of the initiatives on commu- achievements. resources, without necessarily being nity engagement and the most ef- financial resources). The SROI set of - Planning, monitoring and evalua- ficient use of resources, a total of 12 these twelve investment initiatives is tion of compliance indicators. initiatives from Aconcagua Refinery, 2.35. This number indicates that, in Biobío Refinery, and Enap Magallanes - Financial monitoring, linkage with general, the initiatives studied are ef- were analyzed based on the use of the SAP (cost order, effective expense, ficient as a whole to generate social Social Return on Investment (SROI) percentage used of the budget). benefits, since the SROI turns out to methodology. It is a quantitative ap- - Monitoring of compliance with be greater than one (135% more). proach that allows measuring the activities associated with each change in aspects that are relevant System for Receiving Queries, Re- initiative. for the people or organizations that quests, Complaints and Social and - Audiovisual library to support ac- experience or contribute to it, giving Environmental Complaints tivities. an account of how this change is gen- The Directorate of Community Rela- erated by measuring social, environ- - Stakeholder management: allows tions made available to its neighbor- mental and economic outcomes, with to monitor the relationship with ing communities and general citizen- the application of monetary terms to them and georeferentiation of ship an open communication channel represent said outcomes. This allows their location. that allows receiving complaints, re- us to calculate how much total social ports, requests for information and/ - Monitoring of the commitments and community value in pesos is cre- or consultations related to the socio- assumed with different stakehold- ated for each peso invested in each environmental actions of the opera- ers. initiative developed. tions. The purpose of this channel is - Management of communications Altogether, the twelve projects stud- to know, anticipate and mitigate in from the System of Receiving Que- ied contribute to generate a total the community the adverse effects ries, Requests, Complaints and of about Ch$ 8,200 million pesos in caused by the operations or projects Social Environmental Complaints, benefits, through the contribution of of the company; improve dialogue, “ENAP Responds”. Ch$ 3,500 million pesos in resources trust and mutual respect between

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ENAP and its stakeholders, as well as ment, such as: IFC Standard (Interna- ness units is consolidated after the contribute to the socialization of en- tional Financial Corporation), Nation- actions deployed for the Mutual Ben- vironmental information in a timely al Action Plan for Human Rights and efit Relationship, Collective Responsi- and transparent manner. Companies of Chile, among others. bility and Transparency, and Environ- mental Responsibility axes. This system is created based on in- The main initiatives implemented in ternational and national standards 2017 by each Business Unit are de- regarding the consideration by com- scribed below, framed within the four panies of their communities and/or pillars of the Community Engagement stakeholders around the dissemina- Corporate Mode. It should be noted tion of information, consultations that the data corresponding to the of social actors and claims manage- Open Dialogue Axis of all local busi-

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ACONCAGUA REFINERY (ERA)

AXIS OF MUTUALLY BENEFICIAL Robotics Education Program Scholarships of the CFT Universidad RELATIONSHIP Católica de Valparaíso (UCV) In August 2017, a total of 14 educa- EDUCATION AND CULTURE AREA tional establishments in the Fifth In November 2017, the first continu- Region participated in the School Ro- ous training process of 36 contractor botics Meeting “Energy that Moves to workers ended, who had access to Chile”, organized by the SparkTalents the degrees of High-Level Technician Foundation and ERA. The theme of in Electricity, High-Level Technician the game was inspired by Chile’s en- in Construction and High-Level Tech- ergy agenda and it was useful for the nician in Industrial Maintenance. The motivation of students to learn the program, financed by Aconcagua important world of energy production Refinery, complied with all legal and and distribution. academic requirements.

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Academic Excellence Scholarship and cultural events. And in sports, in and Quintero, thanks to the alliance initiatives related to the improvement with the Construction Training Cor- As part of the current collaboration of sports spaces, acquisition of equip- poration and the use of SENCE’s tax agreement between ENAP Aconcagua ment and implementation, workshops exemption. During the period four Refinery and the Universidad Técnica and promotion of championships and courses were taught, benefiting 93 Federico Santa María (UTFSM), a total events, sports infrastructure for dis- residents of these communes. of eleven university students from dif- abled and athletes with regional or ferent careers of this house of studies, “My Energy your Energy” Contest national ranking. belonging to the communes of Con- Between July and September, Acon- cón, Quintero, and Puchuncaví, were In 2017, the first year of the benefit, cagua Refinery, together with the benefited with the “Academic Excel- fifteen scholarships were awarded in Ministerial Regional Secretariat for lence Scholarship 2017”. It is a ben- the sports field and five in the cultural Energy of the Valparaíso Region, car- efit granted to outstanding students field, with a total of 33 applications. ried out the audiovisual contest “Mi in a socio-economic deficit situation, School Leveling Energía tu Energía” (My energy your which covers the needs of career or energy), seeking to support the dis- tuition fees and that ENAP has been Through this initiative, contractors semination of goals of the Nation- delivering to the communities for four and their families, who for various al Energy Policy. To this end, high consecutive years. reasons did not complete their stud- school students were invited to know, ies, are offered the possibility of com- Sports and Cultural Scholarship investigate, analyze and disseminate pleting their schooling. During 2017, the energy future of Chile and the re- It offers to finance the implementa- twenty-five people obtained their gion. Participants were teams made tion of various community projects re- High School Certificate thanks to this up of students from private and semi- lated to sports and cultural activities, project promoted by the Aconcagua private schools, among whom the link aimed at organizations in Concón, Refinery Workers Union and support- with the educational community was Quintero, Puchuncaví, and Quillota. ed by this subsidiary of ENAP. strengthened, contributing to their In the cultural field, it focuses on SENCE Social Scholarships environmental commitments. projects related to the promotion During 2017 these grants were con- of traditional culture, local culture, tinued to be awarded in Concón strengthening of cultural heritage

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Entrepreneurial Challenge During the 2017 administration seven manent exhibitions were implement- exhibitions of visual arts, four theater ed in the Open House showcase. For the second consecutive year, this plays, with an attendance average of project was co-financed by Corfo, The 9th Concón Jazz Festival was 150 spectators, about 100 films and a which seeks to promote innova- also held, with 2,000 spectators, special cycle for the most moviegoers tion and entrepreneurship in high and in July the International Winter were carried out, which included the school students of Concón, in addi- Jazz Encounter took place, with six presence of directors, producers, and tion to promoting training in skills in concerts on the last Friday of each actors of Chilean films, once a month. these areas, through the application month. Likewise, the initiative Música In 2017, the workshop area benefited of tools that allow them to generate en tu Barrio (Music in your Neigh- 1,720 residents, through 43 courses. concrete solutions to real problems in borhood) was developed, presenting the industry. It is worth mentioning the develop- three concerts in towns of Concón ment of the 5th Concón Emerging and Quintero, with an audience of ap- Christmas party Film Festival, FECEM, in which 32 proximately 2,500 people. Seven hundred children from eight short films and feature films com- Meanwhile, the Rural Traditional Fair kindergartens of Junji and Integra in peting were shown. For the award of Santa Rosa de Colmo incorporated Concón, Quintero, and Puchuncaví, ceremony, more than 100 people at- six base organizations of the area enjoyed in December the traditional tended the ENAP Open House Cul- in its structure, developing artisan Christmas Party. Each year, ENAP tural Center to be part of that event. and patrimonial samples, traditional Aconcagua Refinery entrusts the or- The sample included a period of digi- games, and a grill of musicians to re- ganization of this event to the Refin- tal exhibition where more than 6,000 ceive 9,000 assistants. ery Sports Club in Concón, the Work- reproductions and 2,400 online votes ers’ Union, and the Shifts Union. were recorded. On the other hand, the territorial extension program Open House in your Open House Activities In addition, during 2017 the manage- Neighborhood implemented in four- ment of handicrafts was emphasized, teen territories developed 31 work- ENAP Open House cultural center of- which allowed for the creation of the shops benefiting 514 children and fers the community various programs Concón Artisans’ Roundtable to boost adults of Concón and Quintero. To that seek to encourage participation, local production. Three fairs and per- training, and access to cultural assets. this is added an important work of

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urday, and the rehabilitation of the record reaches 30,000 reproduc- first stage of the Plaza Carlos Pezoa tions per month through its differ- Véliz , with 1,300 m2 of green areas ent broadcast platforms: via the web, for recreation and cultural use, space streaming through Facebook and that will also have Wi-Fi. podcast.

Open House Radio To date, the community radio station has only worked on the Internet, but The Open House Radio is a collective air broadcasts are expected by 2018, construction community radio sta- from 106.7 FM, covering all of Concón tion that operates from ENAP Open and nearby rural areas. House Cultural Center, with an edito- rial guide that seeks to represent the socio-cultural diversity of Concón and promotes active participation.

In this space, the residents of the advice to the leaders of grassroots commune voluntarily develop live organizations for training in social programs, from Monday to Friday projects. and for one hour a week, including among their guidelines, sports topics, It should be noted that during 2017 interviews and conversation, musical the workshop area benefited a total of spaces and information on the cultur- 1,720 residents, through 43 courses. al field. The realization of these pro- Another aspect developed by the grams is supported and supervised by cultural center was the services pro- the journalist team of the station. vided to the community through the With three years of operation, Open Digital Classroom, which meets the House Radio maintains an average of demand for connectivity with 400 20 programs a week, made by more monthly services from Monday to Sat- than 40 volunteers. Its audience

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TRAINING AND ECONOMIC DEVELOPMENT AREA

Program for the Promotion of Sus- commission. The thematic axes were materializing the commitment as a tainable Tourism: the environment, education, culture, company to promote energy efficien- sport and social and productive de- cy and improve the quality of life of In 2017, this initiative was developed velopment. the communities. This, through the in conjunction with the Tourism Asso- delivery of labor skills in a technique ciation of Concón. Its main activities The competitive funds are part of that will have an increasing impor- during the period were: the Strategic Social Responsibility tance in the world, added to the con- Program of the Aconcagua Refinery, - Beginning and closing seminar. tribution for the beneficiary house- an initiative in which territorial and holds’ economies. - Cycle of workshops “Concón Sus- functional organizations from the tainable Destination”. communes of Quintero, Concón, and In this way, this initiative that started Quillota participate. in 2016, reached already more than - Personalized advice. 83 families. Energy Efficiency Training Program A total of 34 Concón companies were Roundtable with the Chamber of A total of 50 residents of three neigh- captured and registered: 18 for gas- Commerce of Quintero tronomy, 15 for lodging and one for borhood associations of Concón and services, thus reaching the necessary one of Quintero received their certifi- During 2017, Aconcagua Refinery volumes to guarantee the continuity cate after passing the course “Assem- continued working with the Chamber of the project. bly and Maintenance of Photovoltaic of Commerce and the Municipality Solar Installations”, funded by ENAP of Quintero. Thanks to this alliance Competitive funds Aconcagua Refinery and taught by signage was delivered as part of the During 2017, 81 projects were evalu- the ASIVA Labor Training Foundation. Tourism Development Plan of the Commune. ated positively, of which 31 were from At the end of the course, the neigh- Quintero, 21 from Concón and 29 from bors installed a solar panel with a ca- Quillota, all approved by an evaluating pacity of 250 watts in their homes,

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There is a second inclusive surf pro- October 1. The event gathered more gram, aimed at children with disabili- than 10,000 spectators. ties, generating spaces for integra- School Olympics tion and promotion of healthy living. The assistants have been able to par- The thirty-fifth version of the School ticipate in national tournaments; one Olympics, organized by ERA and Con- of them is a Chilean champion, and in cón Refinery Sports Club took place November represented the country in between Tuesday, October 24 and a competition held in California, USA, Thursday, October 26. more than 500 where he was distinguished with the students from educational establish- fourth place at world-wide level. ments of Quintero, Limache, Puchun- caví, and Concón participated in the ENAP Third Half Marathon HEALTH AND SPORTS AREA School Olympics developed in the re- in Quintero finery’s sports field. Surf Schools For the third time, it was decided to sponsor the “Quintero Half Mara- The initiative is addressed to vulner- thon”, which was sponsored by the able children and young people be- Municipality of Quintero and the Re- tween 9 and 17 years old in Concón gional Sports Secretariat. and aims to develop their talents and skills in this sport. Currently, more Viña del Mar International Marathon than a hundred participants attend ERA was one of the sponsors of the the free courses developed by ERA, in International Marathon of Viña del conjunction with four surf schools in Mar, version 2017, held on Sunday, the area.

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TRANSPARENCY AND ENVIRONMENTAL RESPONSIBILITY COLLECTIVE RESPONSIBILITY AXIS AXIS tive meetings, and clarifications that Community Ambassadors Agreement with fishermen were necessary for that purpose. The purpose of the Community Am- “Bomberos del Mar” Observatory of the Biodiversity of bassadors program is to strengthen During 2017, the “Bomberos Del Mar” Parque la Isla Wetland the relationship with the contractor (Firefighters of the Sea) program workers and own workers, making The Observatory of the Biodiver- was maintained, focused on train- them aware of the community work sity of Parque la Isla Wetland is an ing, through tactical exercises, the and inviting them to be ENAP ambas- initiative based on an agreement fishing communities of Quintero Bay sadors before the neighbors, dissemi- with the Faculty of Marine Sciences and Concón in basic techniques to re- nating advances of the Community and Natural Resources of Universi- spond -as an external support- to hy- Engagement Strategy so that they dad de Valparaíso. Its objective is to drocarbon spills into the sea, and also become the protagonists of the com- raise up-to-date information on the to the fishermen of Caleta San Pedro pany’s sustainable development. environmental value and ecosystem in Concón, to respond to a similar services of the place, to train school- contingency in the Aconcagua River children and university students in Estuary. the area of influence of ERA re- In this context, work resumed with garding the environmental value of the artisanal fishermen’s unions of Parque La Isla. Caleta Horcón, Ventanas, Papagayo, In 2017, an undergraduate thesis El Manzano, El Embarcadero, Caleta and four professional practices were Loncura, Cooperativa de Pescadores developed within the framework of Alcatraz, Caleta Maitencillo and Cale- the Observatory, in addition to eight ta San Pedro de Concón. guided visits to schoolchildren, six In addition, ERA established a Control guided visits to the general public System that verifies the fulfillment of and twelve visits of university del- the activities and services committed egations. by the coves as part of the contracts, which includes field visits, informa-

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STORAGE AND PIPELINES DIVISION (DAO)

MUTUAL BENEFIT RELATIONSHIP AXIS

INFRASTRUCTURE AREA Playground Projects: destined to Identity Square Construction Proj- the refurbishment and construction ect: design of a plaza next to the Lo- Active Squares Projects: initiatives of recreation areas for the children cal Health Development Council of that consisted of the design for the of the following territorial organiza- the Oriente Sector of San Fernando, refurbishment of green areas and tions: with the aim of recovering an area installation of exercise machines, · Neighborhood Council San Gabriel, that is a meeting point between resi- planned to be executed in: next to the Parent Center of the dents of La Emergencia, Santa Elena, · Neighborhood Council Los Llanos 1 Kindergarten Creciendo Feliz, Lon- and Cardenal Caro Neighborhoods. and 2, Maipú. gaví. · Neighborhood Council El Cantar, · Neighborhood Council Diguillín de Maipú. San Miguel Alto, Pemuco. · Neighborhood Council San Miguel · Neighborhood Council San Miguel Alto, Pemuco. Bajo, Pemuco.

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Installation of Photovoltaic Lighting: Headquarters, in Longaví: Improve- EDUCATION AND CULTURE AREA consisted of the assembly of 25 pho- ment and construction of facilities Teatro a Mil Festival Extension in tovoltaic solar LED lights that directly for the construction of a new roof, Easter Island: In January, ENAP col- benefited the residents of the San perimeter fence and access gate for laborated with the realization of this Gabriel sector in the Longaví district. the Neighborhood Council. unprecedented cultural activity dedi- Installation of multi-purpose lumi- Project for the implementation of cated to music, dance and theater naires Project: it consisted of the equipment for the headquarters of made by local, national and interna- assembly of LED spotlights and im- the San Miguel de Diguillín Rural tional artistic exponents. Its inaugu- provement of the electrical installa- Drinking Water Committee, Pemuco. ration was marked by the presence of tion system inside the premises of the the Chief Executive Officer, Mr. Mar- headquarters of the Neighborhood celo Tokman. Council Camino Real, in San Fernando. Cultural Festival Tapati Rapa Nui: Refurbishment of Preschoolers’ Yard the company maintained its commit- Project: Comprehensive improvement ment to support this traditional fes- of existing facilities at the Guissepe tival in which the different manifes- Bortoluzzi School in San Fernando, tations and traditions of this culture which consisted of the recovery and are revalued, materializing through refurbishment of a recreational area the interaction of their communities, for children of that institution. ancestral sports competitions, music, gastronomy, and art. Project design and construction of new units in the neighborhood head- Collaboration agreement with the quarters of Villa El Sol Neighborhood School of Music and Arts TOKI: Council, Pemuco. ENAP supported the free classes of piano, cello, violin, trumpet, auditory Project for the Improvement of the training, ukulele (instrument of the Neighborhood Council San Gabriel Rapanui tradition), hoko (Rapanui ancestral dance), takona ( body painting

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with ancestral technique), ancestral vides care to 27 children belonging to song and Rapanui dance developed the San Gabriel sector. by NGO Toki. This project directly benefited more than 80 children and young people of Rapa Nui who attend regularly to develop their artistic-musical talents, and, at the same time, support the work of preservation of this culture, its ancestral traditions and especially the Rescue work of the original language (Rapanui), in danger of extinction.

Classical Music Concert Cycle “Ac- tive Musicians Joining Traditions”: ENAP collaborated with the development of this Classical Music Concert Series that consisted of 9 concerts in different stages and institutions of Easter Island, 6 of them open to all the community and 3 carried out in educational establishments.

Contribution of educational material for the “Creciendo Feliz” Kinder- garten: acquisition of educational material for the “Creciendo Feliz” Kindergarten, with the purpose of supporting the educational community of Longaví. The kindergarten pro-

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TRAINING AND ECONOMIC TRANSPARENCY AND DEVELOPMENT AREA ENVIRONMENTAL RESPONSIBILITY AXIS Agreements with Fire Departments: in the context of stakeholder engage- Information supports for emergency ment, work was carried out to formal- management: the 2017 DAO Calendar HEALTH AND SPORTS AREA ize collaboration agreements with was delivered and distributed to the Colchagua Sports Club Agreement: eight Fire Departments, institutions approximately 1,000 owners of the acquisition of sportswear as part of a that provide coverage at the commu- properties through which the pipe- collaboration agreement signed with nity level, based on the logic of the line route crosses. The distribution this sports club of San Fernando. In Fire Departments next to the Maipú, and dissemination of information re- addition, this initiative is directly re- San Fernando, Linares, and Pemuco lated to infrastructure interventions lated with the creation of the ENAP- Plants with which they work in a co- is part of the relationship plan with Colchagua Sports Football Schools, a ordinated action of emergency plans. communities, allowing for a closer work aimed at the training of children relationship and the creation of com- SENCE Work Scholarship Training and youth in football. munication channels known to report Program: Training provided to the in case of emergency. Seven A Side Rugby Tournament - communities near the Maipú, San ENAP Cup 2017: Official contributor Fernando, and Pemuco Plants. Four Clean Water for Colchagua Round- to this international Rugby event held courses were developed under the table: ENAP is part of this roundtable for the third consecutive year on Eas- Social Scholarship modality, which which aims to contribute to the re- ter Island. Around the competition, a benefited 60 people; having as train- search and monitoring of the water series of cultural activities were held ing lines those of Installation and quality of the Tinguiririca River sub- that brought together a total of 10 Maintenance of Photovoltaic Pan- basin of the O’Higgins Region. clubs belonging to Tahiti, Rapa Nui, els, Welding, Pastry and Loom Tech- and Continental Chile. niques.

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BÍO BÍO REFINERY (ERBB)

MUTUALLY BENEFICIAL RELATIONSHIP AXIS

INFRASTRUCTURE AREA and a set of Integral Development the formalization of this task. This Programs designed with and for the implies the delivery of a direct sub- During 2015, the Hualpén Suma Plan neighbors. sidy to the owners, through an indi- was launched, whose objective is vidual relocation process, based on During 2017, ENAP Board of Direc- to improve the quality of life of the the purchase of housing in projects tors, in the absence of land availabil- neighbors of ERBB, considering three through the granting of said subsidy, ity in the district of Hualpén and with axes of action: Relocation of the fam- in accordance with the provisions of the strong commitment to conclude ilies of Nueva El Triángulo and Villa El Supreme Decree No. 1, both in Great the relocation of the 289 families, Triángulo; Master Plan of the nearby Concepcion and outside of this sec- approves the consolidation of this neighborhoods that will continue to tor, based on the contribution made commitment, based on a model dif- be neighbors of ERBB operations, by SERVIU, the Regional Government ferent to which we worked since

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of Biobío and ENAP to each owner. In ects, which -in turn- were validated · Improvement of the Healthy this way, ENAP is authorized to con- by each territory through assemblies. Square of the Patricio Aylwin tribute with UF 600 per owner. The Through this process, the projects neighborhood, with the implemen- total contribution of these three insti- were determined and the works that tation of green areas, rest area tutions makes a final amount for each will be executed from 2018 onwards for older adults and playground family of UF 1,400. were prioritized. modules for children, as well as enabling pavements and urban It is worth mentioning that, in order The following works were executed in furniture, including seats, garbage to support the search for housing al- 2017: cans, shading and photovoltaic ternatives, real estate fairs were held · Works to improve the multi-pur- lighting. in which various entities that develop pose courts and square of the social and territorial integration proj- · Construction of the Healthy Plaza neighborhood Solar de Hualpén. ects, as well as private projects, were of the El Triángulo neighborhood, The works in the sports facility presented. These activities had an av- with the creation of green areas, were mainly in metallic structure erage attendance of 200 people. pavements defined as areas for to improve the existing enclosure, pedestrian circulation and enter- Regarding the Master Plan for the along with the construction of a tainment, which will include inclu- improvement of the environment, covered grandstand, painting of sive modular playgrounds, exercise with the aim of expanding its cover- the floor cover and its demarca- machines, benches, garbage cans age, a review was made, through the tions for the various sports, the and photovoltaic lighting, as well realization of new forums and work- construction of new baby-soccer as bushes and ornamental trees, shops with the territorial organiza- goals and a contention wall in the leaving all their surroundings with tions (Neighborhood Councils) that back part of the court, since it was segregators to prevent the parking are part of the Hualpén Suma Plan, confined with an embankment. In of vehicles on the new plaza. in order to collect the concerns and addition, the construction of green problems of the residents. Subse- areas, an inclusive children’s play- · Thanks to the work to improve the quently, meetings were held with all grounds and the incorporation of environment of the social head- the territory functional community different types of pavements and quarters of the Osvaldo Muñoz organizations that analyzed the infor- photovoltaic lighting for the sec- neighborhood, it was possible to mation, to transform it into new proj- tor and the multi-purpose court create a meeting space for the were projected.

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neighborhood, incorporating play- their respective demarcations, to grounds for children, exercise facilitate the practice of sports. machines, green areas and orna- As an integral part of the project, mental trees. Also, the concrete areas of permanence and rest will floor was replaced, which allowed be built with green areas and pave- to configure a new illuminated ments of different types, incorpo- multi-purpose court, helping with rating trees and bushes as part of the lighting of the neighborhood the landscaping. In this area there and increasing the sense of safety. will be inclusive modular play- Another advance was the improve- grounds, exercise machines, street ment of the metallic structure of furniture and photovoltaic lighting. the existing perimeter fence, re- · The paving engineering design inforcing its joints and painting project for the streets Polonia and to extend its useful life. Likewise, Hungría was associated with the the main access was recovered application made in conjunction and improved and a new one was with the Municipality of Hualpén built with access ramps for the dis- to the Participatory Pavement abled and a multi-purpose covered Fund of the Ministry of Housing space with radier-type pavement. and Urban Development (MINVU). · To improve Bélgica street, the con- In the selection of projects, car- struction of a multi-purpose court ried out in November, the MINVU with a new perimeter fence with confirmed the obtaining of the reinforced ends was included, as resources, thus allowing the con- well as a concrete grandstand and struction of these new streets dur- low-level containment wall. In the ing 2018. same way, a maintenance will be made to the concrete floor and an improved one will be installed, with

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AGREEMENTS WITH INSTITUTIONS

Firefighters scheduled for Children’s Day, Nation- ENAP provided resources to finance al Holidays and Christmas. During the teachers, monitors, and supplies. Ad- As a way to maintain the work in con- summer the First Voice Festival was ditionally, in two of them, it promoted junction with the Fire Departments of developed, in addition to the contest entrepreneurship workshops, gener- Hualpén and Talcahuano, during the for the best dress made with recycled ating activities that allowed raising year they were supported with fuel materials. In the same way, training financing for various activities of the for the fire trucks of various compa- workshops were held: Batucadas, elderly. nies and materials for their operation. Baloon art, Cueca chora, Aromather- To this, we must add the joint exercis- Solar Car apy, and Drawing. es to keep the volunteers updated re- ENAP participated in the challenge garding the work inside the refinery. In these workshops, held in the head- of linking Patagonia with Santiago in quarters of various neighborhood In 2017, the Fire Department of Talca- a solar car, supporting the project of councils, involved about 200 people, huano awarded ERBB for being the students of Universidad de Concep- the installation of water games in El company that collaborated the most ción. Starting the journey in Punta Triángulo neighborhood, the main with the institution. Arenas, the objective was to dem- activity of the summer: for a week onstrate that solar energy not only Police brought together more than 3,000 works in northern Chile but also in the children. To collaborate in the safety of resi- south there is the possibility of diver- dents of Caleta Lenga, the company Self-care and personal development sifying the energy matrix. delivered four bicycles to the police workshops for seniors that allowed patrolling the entire sec- This initiative benefited more than tor of the beach permanently during 400 older adults, who have orga- the summer. nized themselves into 21 groups or Activities with Neighborhood Councils clubs, one of them made up of people with disabilities. In these workshops, As every year, and in addition to the activities such as brain gymnastics, monthly meetings held with the bio dance, meditation, yoga, litera- twelve neighborhood councils of the ture, among others are carried out. intervention areas, celebrations were

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EDUCATION AND CULTURE AREA

Support continued to the Technical tenance and Energy Efficiency. This Training Center of Energy CEDUC- will provide teacher improvement, UCN and, from the agreement signed better equipment and implementa- at the end of 2015 with Universidad tion and professional practices in Católica del Norte, in 2017 six careers ENGIE plants in France for the best began their classes: students.

School Leveling - Administration-Bilingual (Evening - Special Program) Based on a request from the neigh- - Business Administration (Day/Eve- bors, funds were managed with the ning) Ministry of Education to carry out a - Nursery Education (Day/Evening) program of school leveling (middle - General Education (Afternoon - and high school), contributing in 2017 Special Program) the diffusion for the incorporation - Electricity and Energy Efficiency of new students and the organiza- (Day/Evening) tion of the graduation ceremony at - Instrumentation and Industrial the Community Center of Hualpén. In Control (Day/Evening) this activity, the Seremi de Educación committed the openings for the con- In a joint effort, and thanks to the tinuity of the program. incorporation of the Free Trade Law for CFT, effective since 2017, 397 stu- Educational Robotics Workshop dents were able to study for free. This CSR core program takes place in In addition, a cooperation agreement the schools República del Perú and was initiated with the French Minis- San Vicente de Talcahuano, in Hual- try of National Education, CEDUC- pén. The latter stands out for the lev- UCN and the ENGIE company, which el achieved, being able to participate will transform the institution into a for three consecutive years in the na- Franco-Chilean center of excellence, tional tournament in Santiago, with aimed at careers on Electrical Main- the support of ENAP.

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Anniversary of Bío Bío Refinery College Prep School

On the occasion of the anniversary During the second semester, and in of the company and as a way to con- agreement with the Municipality of tribute to the cultural development Hualpén, a prep college course was of the region, the exhibition “Da Vinci, carried out for senior students of the the Exhibition” was moved to Con- various high schools of the commune. cepción, in a joint effort of the munic- This support process contemplated ipalities of Concepción, Hualpén, and four subjects and four trials were Talcahuano, as well as the University added. 120 students participated. of Concepción. It was open to the “Read First” Program public between July 28 and August Lambe-Lambe Theater Workshop 20, being visited by more than 35,000 Together with the municipality of people. Hualpén and the Crecer con Todos Lambe-Lambe is an individual theater Educational Foundation, the “Read that tells small stories. In 2017 it was Collaboration with Ciudad del Niño First” program was set up, aimed at taken to the students of the school Foundation first-grade children in eight munici- República del Perú, holding a work- Located in Hualpén, this benefactor palized establishments in the district. shop throughout the year. Its result institution conducts an annual activ- The project works with teachers, was the exhibition of the final play ity to raise funds in which ENAP ac- children and parents, and guardians, in various scenarios, one of them at tively collaborates. seeking to improve children’s reading the Living Library in Mall del Trébol in comprehension upon reaching the Concepción. fourth grade.

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REC Book “From Earthquake to Earth- quake” “Rock en Conce” is the name of the largest free festival in Chile, held at As a way to contribute to the collec- Parque Bicentenario de Concepción tive history, ERBB published a book during March. ENAP collaborated with the compilation of testimonies with the development of this activity. from the 10 towns surrounding the company regarding their experienc- Christmas Concerts es in the earthquake of February 27, There were two Christmas concerts 2010. For this project, a researcher by the singer Cecilia Echeñique and and a journalist, who interviewed a choir of 30 children. The first was about 200 neighbors, collected pho- presented in Hualpén and attended tographs and graphic documents by more than a thousand neighbors, of the area. The effort resulted in a while the second, in agreement with document that recovers the historical the municipality, took place in the memory and heritage of the sectors. Plaza de Armas of Concepción, with Five thousand copies were printed, more than 1,500 attendees. which were distributed in the homes of the neighbors and the various li- braries in the area.

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HEALTH AND SPORTS AREA ENAP Football Cup

Hualpén Suma Football School From April and for eight months, every Saturday morning the ENAP Cup This formative and recreational in- was developed, with the participation stance continued, which runs from of 60 schools throughout Concep- January to December, with 120 chil- ción. The championship covered four dren from 5 to 14 years old divided categories and more than 600 chil- into four categories. ENAP makes an dren participated. annual contribution to fund teachers, monitors, transfers, implements, par- Swimming Course ticipation in championships, among This summer activity is carried out in others. partnership with the Local Council Cheerleaders workshop, Black Oil of Sports and Recreation of Talca- team huano, institution that manages the public pool of the commune. With a A Sports activity that ENAP sup- duration of four weeks, the course in- ports by financing teachers, moni- volved about 600 children, from 6 to tors, transfers, and implements. They 14 years old, belonging to the territory train 50 children from 4 to 14 years of intervention. ENAP provided the old, divided into two categories. In necessary resources to finance the 2017 they obtained a regional victory teachers/lifeguards, monitors, trans- in the championship of this discipline, portation and snacks, among others. developed in Concepción.

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TRANSPARENCY AND TRAINING AND ECONOMIC ENVIRONMENTAL RESPONSIBILITY DEVELOPMENT AREA AXIS

During this year, ENAP organized the Pre-Contract Modality: Talks on Safety and the III Christmas Fair of Hualpén Suma, in Environment: - Basic techniques in the adminis- which 25 entrepreneurs of the sector tration area. These are activities agreed with the participated, who during a week ex- - Hygiene and food handling tech- neighbors to train them on preven- hibited and sold their products to the niques. tion and safety issues, mainly related workers of the company. - Civil works maintenance tech- to the operation of the plant and on In this line, a registry was also pro- niques. possible environmental impacts, in- moted for the residents who carry out - Techniques to prepare bakery cluding the measures adopted by entrepreneurship activities, register- products. ENAP to minimize and mitigate the ing more than 400 cases in various risks. Work Grants Modality: areas, to then classify them and make During 2017, eight talks were held business plans and provide the guide- - Waiter in different social headquarters of lines for applying to various public - Creation, elaboration and presen- the sector, with the participation of funds available to entrepreneurs. At tation of pastries. more than 30 neighbors at each op- this level, meetings were held with - Care and aesthetic treatments of portunity. For its execution, it had the Fosis, Sercotec, Corfo and the Munic- hands and feet. collaboration of the Departments of ipal Office of Entrepreneurship, with - Design and manufacture of woven Environment and Hygiene and Safety, the idea of giving joint support to the fabrics, typical of the area. and ENAP provided the resources for projects. - Forklift operator (with Class D Li- the production of each meeting. cense delivery). Another area addressed was job train- - Installation and maintenance of Talks were also given to the Com- ing through courses financed with photovoltaic solar panels. munal Council of Civil Organization the ENAP franchise, reaching in 2017 - Assembly of industrial pipes. of Hualpén, to the Vida Chile Com- more than 200 residents in the fol- - Industrial mechanical assembly. mittee, to the La Foresta Clinic of lowing areas: - Arc welding MIG/MAG system Hualpén and to all the workers of the (with rating granted by ASW d1.1 school República del Perú. certified agent).

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COLLECTIVE RESPONSIBILITY AXIS

ERBB Directorate of Communities ENAP Contigo application and social periodically holds meetings with the networks leaders of Sindicato 1 and its organized centers, as well as the Profes- • APP sionals Union and their delegates, to The ENAP Contigo application, as inform them of the progress made in the official information channel the implementation of the Commu- of the company, has proved to be nity Management Strategy. very useful in the dissemination In addition, the Directorate partici- of messages related to the opera- pates in the Active Guards of the Re- tions of the refinery. The stake- finery, which consists of attending holders expect this input at the every weekend with a team-officer to moment of observing any situa- people. That is, it is a relatively the Guard meeting and being avail- tion that generates concern, from small population with topics of in- able to move to the plant if necessary. the point of view of the productive terest that are not massive. process. Likewise, the Management partici- ERBB Facebook of has 6,409 fol- pates of the induction process for It also has text messages that are lowers and achieved 6,349 likes. In new employees, delivering a broad vi- sent to neighbors who do not have this platform, it interacts with the sion of community work from the first smartphones. Every month, an av- residents of the towns surround- day of duties at the refinery. erage of 2,500 messages are sent, ing the company that participate which in periods of scheduled in the Hualpén Suma Program, who maintenance have reached 5,000. can learn about the activities that ERBB carries out with the commu- • RRSS nity or make inquiries. It is updated In this area, it is important to con- several times a day with photo- sider that the Hualpén program graphs, videos, and relevant data, works with around 15 thousand with the neighbors as protagonists.

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ENAP MAGALLANES

MUTUAL BENEFIT RELATIONSHIP EDUCATION AND CULTURE AREA AXIS UMAG Scholarship 2017 Mobile educational bus

For the fourth consecutive year, and Enap Magallanes was part of the with the aim of strengthening the companies that supported the Eco- training of future professionals, Enap science Foundation in the launching Magallanes awarded scholarships of the first Mobile Lab Conciencia Ma- to students of Universidad de Ma- gallanes. This traveling vehicle, with gallanes, benefiting four-degree proj- capacity for 25 children, will benefit ects related to the energy-productive more than 16 thousand school chil- development of the XII Region. dren in the XII Region, including visits

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to rural and isolated facilities (such Training, Scholarships and Pre- Talk on Hydraulic Fracture as Puerto Williams), who will be able contracts 2017 Within the framework of community to enrich their scientific learning in a During 2017, Enap Magallanes, through engagement activities, and as a way unique space. The vehicle has in its the surpluses of the tax exemptions, to strengthen ties with institutions interior a sample of what hydraulic financed the specialization and train- present in the XII Region, Enap Ma- fracture is, a system that ENAP cur- ing of more than 500 residents of gallanes gave a talk on the produc- rently uses to extract gas in the XII Punta Arenas, Puerto Williams and tive processes that it carries out in Region. Porvenir, in order to provide them with the southern part of the country. The Photographic Exhibition About the knowledge and tools that would allow meeting was attended by twelve of- Oil Camps in Magallanes them to exercise a new trade or entre- ficers from the IV Air Brigade, who preneurship, thus contributing to the met the new challenges of ENAP in During December, a part of the suc- social mobility of people. the region, in addition to the hydrau- cessful exhibition “Oil Camps at the lic fracturing process currently used End of the World” was exhibited at Between January and December, by the company for the extraction of the Punta Arenas Regional Museum. training in automotive mechanics, in- unconventional gas. Organized in conjunction with the stallation of ceramics, international National Historical Museum, the Insti- cuisine, basic accounting, customer Robotics Workshop in Magallanes tute for Heritage Studies and the sup- service, care and attention of the el- In September, ENAP carried out port of the Illustrious Municipality of derly, among others, were developed. the “SparkMaker Day”, activity that Primavera, the exhibition highlights Stand out the courses given to one brought together more than 70 chil- the heritage value of the five camps hundred students and professors at dren between 6 and 14 years old built by ENAP in Tierra del Fuego: the Armando Quezada Acharán In- from different districts of Magallanes, Manantiales, Puerto Percy, Clarencia, dustrial School, who were trained in whose creativity and curiosity were Cerro Sombrero and Cullen, for the photovoltaic electricity, advanced encouraged with workshops on robot- extraction of oil in the area. machinery operation, educational ro- ics and the launching of compressed botics with Lego, and driving class B air rockets. The initiative, organized vehicles, receiving tools that add val- by Enap Magallanes and executed ue to their academic training. through the SparkTalents Founda-

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tion, is structured around different processes. Gas processing plants, workstations in which participants workshops, and maintenance shops rotate. In each of them, a workshop were the main places of interest for is developed, where groups of chil- these students from Universidad dren accompanied by their parents de Magallanes, Universidad Santo are guided by a monitor and meet the Tomás, Universidad de Talca, Liceo learning challenge. Industrial, Liceo María Behety, Liceo Sara Braun and Colegio Adventista de Muralist Workshop Concepción. Through the technique of mosaic, Cultural Heritage Day about 30 residents of different neighborhoods participated in a commu- In addition to the national celebration nity workshop for the remodeling of of the Cultural Heritage Day in its re- the viewpoint and the steps of the gional version, the company opened main staircase of the Rio de la Mano the doors of its Central Building in sector, in Punta Arenas, a traditional Punta Arenas for the third consecu- district of the region. tive year. In this occasion, the facilities received about 500 visitors who The initiative, which was carried out wanted to know this emblematic con- between January and April 2017, was struction of the ‘50s, and which is lo- conducted by the Taller Milenart, led cated in the heart of the city. by Professor Marcelo Letelier, and supported by ENAP Magallanes. Patagonia Festival 2017

Visits to Enap Magallanes Facilities Enap Magallanes signed an agreement with the Municipality of Punta Arenas Nearly 200 high school and univer- to finance part of the presentations sity students, from Magallanes, Con- of the regional artists who participat- cepción, and Talca, visited facilities ed in the Patagonia Folkloric Festival and learned about ENAP’s production 2017, held on August 24, 25 and 26.

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Likewise, the company collaborated professionals and exhibitors from to raise awareness of the present and by making possible the arrival in Ma- Chile and Argentina, with the aim future of the company in the region, gallanes of the folk group Maucó, of of promoting this activity in Tierra as well as to explore activities that the Aconcagua Refinery. They pre- del Fuego. can be carried out together. sented music from Violeta Parra and - Delivery of 30 costumes for the SAFESTART 2017 the other performance was Ethnic. presentation at the Winter Carni- Since 2013, ENAP has carried out Literary contest Magallanes in 100 val of that town. workshops of the SafeStart program Words - Donation of a container in con- to different groups of neighbors in More than 2,000 stories, coming from junction with Ultramar, which al- the Magallanes region to promote all the communes of the region, were lows to safeguard the didactic prevention and self-care in the popu- received in the second version of the material of the children of the Pa- lation. To reinforce this relation, this literary contest “Magallanes in 100 pelucho kindergarten, of Porvenir, tool -which promotes self-care- was words”, initiative promoted by ENAP whose enrollment reaches 104 disseminated in educational estab- and organized by Fundación Plagio. children. lishments, technical-professional ly- This year, it was highlighted the great ceums, neighborhood associations - Contribution to the Christmas participation of children and young and social organizations, covering celebration of the children of the people. 309 people. Papelucho kindergarten, with the Community contributions delivery of educational toys.

A series of activities were sponsored Meetings with Neighborhood Coun- by Enap Magallanes in Porvenir, cils and Community Unions among others: During the year, a series of meetings - Logistical support for the devel- was held by the Enap Magallanes opment of the Binational Tourism Communities team, with neighbor- Meeting, which brought together hood councils and community unions,

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HEALTH AND SPORTS AREA TRAINING AND ECONOMIC DEVELOPMENT AREA Support for sports activities Support to Inclusion Among the support that ENAP delivered to the sport during 2017 in Ma- As part of the company’s Inclusion gallanes, stood out those destined to and Diversity Policy, Enap Magallanes the female futsal team that traveled signed a practice agreement with the to Brazil in March, to represent Chile Labor Training Center of the Punta in the South American championship Arenas Municipal Corporation. The of that sport; the national champion- initiative will benefit young people ships of female basketball sub 14 and with disabilities, who seek to do work the national sub 17 male team, in ad- practices during the year. dition to the athletic test “Maratón This initiative is added to a series of del Estrecho”, which in this oppor- activities aimed at making inclusion tunity that in this opportunity near an important part of the activities 1.000 sportsmen participated. of the Communities Unit. Highlights, Dental Campaign for example, the presentation at the Winter Carnival 2017, with the partici- A total of 81 people from Magallanes, pation of ten young people from the between 15 and 59 years, solved their Labor Training Center; support for dental health problem thanks to the Asperger and autistic children’s ini- dental campaign performed in Punta tiatives; and training for indigenous Arenas. The initiative was developed groups, among others. thanks to the alliance between Enap Magallanes, the Fundación Endodon- cia, the Magallanes Health Service, and the local Clinical Hospital.

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Golden Rules of Good Labor TRANSPARENCY AND Practices ENVIRONMENTAL RESPONSIBILITY AXIS To promote greater female participation in the industry, with equal oppor- Participation in the National Day of tunities and working conditions, the the Environment company signed the Golden Rules As part of the activities organized in of Good Labor Practices, promoted October to commemorate the Na- by the Gender and Mining Bureau of tional Day of the Environment and the XII Region, an instance led by the the International Day of Beach Clean- National Service of the Women and ing, Enap Magallanes collaborated in Gender Equity (Sernameg) and the delivering hygiene and safety imple- Seremi of Mining. ments (sunscreen, gloves, plastic The document promotes non-dis- bags and alcohol gel) at 300 people, crimination in the selection process, mainly students, who participated in the conciliation of work, family and the cleaning of the coastal edge of Meeting on Safety and Environment personal life, the insertion of women Punta Arenas. in Magallanes in union leadership and in decision- In addition, to reinforce the work that With the assistance of national and making positions, adequate infra- ENAP is permanently carrying out foreign experts, ENAP held -on Au- structure for a mixed workforce, re- with the Tres Puentes Wetland As- gust 17, in Punta Arenas- the first turn to work of men and women after sociation, during the same day the Meeting on Safety and Environment the exercise of their parental rights in company donated two sets of primary in the Hydrocarbons Industry, Ma- an environment of integration, in ad- containment for environmental emer- gallanes 2017. On the occasion, im- dition to an inclusive organizational gencies, derived from leaks or spills of portant topics were discussed, such culture and prone to diversity, among hydrocarbons, and undertook to carry as community relations, safety, the other aspects. out training for the members of the environmental challenges of the in- group, in order to be prepared to re- dustry, the development of uncon- spond quickly in case of environmen- ventional gas and the new mining tal emergency in this urban nature safety regulations, among others. reserve.

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OPEN DIALOGUE AXIS

As a result of the process of updating the Ministries of Finance, Energy, and tranet and social networks. Regard- and socializing the Corporate Sustain- the Environment, there is an agenda ing the latter, in addition to those ability Policy of ENAP, a re-prioritiza- of committees and meetings, among that have a corporate scope, each tion of the company’s key stakehold- other instances of sectoral analysis. business unit has profiles in the main ers at a macro level was carried out. social networks, such as Twitter and In addition to this, there are internal In this identification, they appear Facebook, as well as the ERBB “Enap and external communication chan- Community (Local Communities); Contigo” application, and the ERA nels, massive and segmented at cor- Suppliers, Contractors, and Business website http: //nuevaerainforma. porate level and in the Business Units, partners; Customers; Workers and enap.cl, allowing a direct interaction which are managed by ENAP’s Com- Collaborators, Authorities, and Owner with the neighbors of the operations. munications Department. Some of (the State of Chile, represented by the these media are press releases, public In addition, during 2017 ENAP TV President of the Republic, directly, or statements, and spokespersons; the continued an internal medium that through a delegation of his Ministers Stakeholders Newsletter (which is informs the news related to invest- of Finance and Energy). sent to local and regional authorities, ments, relevant projects and good The organization maintains transpar- as well as public services and neigh- practices of the company. ent and permanent dialogue chan- borhood groups); the daily news, the nels with these stakeholders as well Intranet and the monthly Newsletter as those linked to specific relation- that is sent e-mail to all ENAP workers. ship actions. In the case of the au- At a massive level, there are digital thorities at the national level, such as platforms, among them, website, in-

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The following table breaks down the main ENAP dialogue instances with local communities. Most of them are permanent and others are articulated by specific situations in 2017.

Main Instances of Dialogue with Local Communities ENAP 2017

Name of the Dialogue Situation that justified Number of Activities/ Objective/Goal Participants Instance the instance Frequency ERA Citizen Council. Relevant information Establish an entity 20 neighbors of In 2017, 8 meetings of ENAP Aconcagua made up of Concón Concón. were held. Refinery to neighbors, which serves neighborhood to verify the compliance stakeholders. with the commitments. "Bomberos del Mar" Work agreement with To train fishing Nine fishermen In 2017, training was (Firefighters of the Sea) nine artisanal fishermen communities in basic unions: Caleta Horcón, carried out with these Program. Training of unions as part of the techniques to respond, Ventanas, Papagayo, associations according fishing communities "Bomberos del Mar" as external support, El Manzano, El to the following in Quintero Bay project (valid since to a hydrocarbon spill Embarcadero, Caleta breakdown: and Estuary of the September 2014). into the sea or in the Loncura, Cooperativa • 35.5 hours of theory Aconcagua River. Aconcagua Estuary. de Pescadores Alcatraz, • 24 hours of practice Caleta Maitencillo and • 8 hours of workshop Caleta San Pedro de • 21 theory sessions Concón. • 4 practice sessions Program of Efficient Relate with the Contribute to the In Concón: There were 10 4-hours Lighting and Energy community of development of Neighborhood Councils sessions in each Saving for communities. Concón, through the the capacity of El Carmen, Los Troncos, neighborhood council. accomplishment of the surrounding and Villa Concón. In environmental activities communities to the Quintero: Neighborhood (energy saving). installations of ERA in Council Unión y the matter of efficient Progreso (32 people in lighting. total). Council for the Social lawsuit against Preparation and Social leaders, There were five Environmental and the State for reparation execution of the representatives of extended sessions and Social Recovery and compensation "Program for the the municipalities two subcommittee of Quintero and due to environmental Environmental and of Quintero and sessions convened Puchuncaví. externalities in the area. Social Recovery of Puchuncaví and guests, by the Ministerial Quintero - Puchuncaví", and representatives Secretariat for the to improve the quality of companies of the Environment, Valparaíso of life of the residents sector. Region. of these areas.

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Name of the Dialogue Situation that justified Number of Activities/ Objective/Goal Participants Instance the instance Frequency Roundtable for the Signing of usufruct with Build agreements for Permanent Four meetings were effective conservation Municipality of Concón, the management and participation of held convened by the of the Aconcagua River for the administration effective conservation representatives of Ministerial Environment Mouth. of Parque La Isla. of the wetland. SEREMI of Environment Secretariat of the of ValParaíso, ERA, Region of ValParaíso. the municipality, and environmental NGOs.

Quintero Bay Social demand to the Implement an Representatives of the ENAP participated Governance Regional Government to environmental industrial sector, public in eight sessions Roundtable, coordinate, norm, and remediation project services, municipalities of the roundtable, Remediation Axis mitigate environmental in the bay with the and the community convened by the externalities in Quintero active participation of of Quintero and Regional Intendancy of Bay. artisanal fishermen and Puchuncaví. Valparaíso. the industrial sector.

Hub project for the Implementation and Establish links with Comité Turístico de A series of workshop- Competitiveness of the development of the Hub the gastronomic and Concón, Consultora meetings were held. hotel and gastronomic Project, co-financed hotel sector of Concón, Innovativa, Empresa sector of Concón. with CORFO. in order to enhance Operadora FEDEFRUTA, competitiveness and gastronomic and establish cooperation hotel entrepreneurs of networks among them, Concón and Quintero in addition to linking and contractors of them with the demand ENAP and, especially, of ENAP contractors. ERA

DAO Instances of permanent Establish a relationship Develop projects and Neighborhood Definition of the dialogue with and communication instances of training Council El Cantar, projects portfolio (2) communities of Maipú. with the communities for the benefit of the Neighborhood Council to be carried out and close to the Maipú communities. Los Llanos 1 y 2. instance of training Plant (one), that are carried out according to the coordination need for their implementation.

Working Group Local Establish a relationship Develop projects Management of such Definition and work Development Council and communication and instances for organization and on the constitution Sector Oriente, San with the communities the benefit of the associated bodies of the portfolio of the Fernando. close to the San communities. (neighborhood councils projects to carry out Fernando Plant and educational (3). Three meetings are entities). held according to need and progress status of project management.

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Name of the Dialogue Situation that justified Number of Activities/ Objective/Goal Participants Instance the instance Frequency Work Group with Establish a relationship Develop projects and Attendees to Definition of the Neighborhood Council and communication instances of training assemblies: 20 to 30 projects portfolio to San Gabriel of Longaví. with the communities for the benefit of the people per session. be carried out (4) and close to the Linares communities. instance of training Plant (one), that are carried out according to the coordination need for their implementation. Monthly participation in neighborhood council meetings.

Instances of Establish a relationship Develop projects and Neighborhood Council Definition of the permanent dialogue and communication instances of training Diguillín, San Miguel projects portfolio to with communities of with the communities for the benefit of the Alto. be carried out (7) and Pemuco. close to the Pemuco communities. Neighborhood Council instance of training Plant La Unión, San Miguel (one), that are carried Alto out according to the Neighborhood Council coordination need for San Miguel Bajo their implementation. Neighborhood Council Villa El Sol, San Miguel Sports Club La Estrella, Pemuco Rural Drinking Water Committee San Miguel Firefighters General Cruz

ERBB

Talks on Safety and Provide training to the Have trained and Neighbors of the local Eight talks were held Environment. community neighboring informed neighbors community. with the neighbors, the Bío Bío Refinery on about safety and the one with all the staff topics of interest. environment. of República del Perú school and another with COSOC of Hualpén.

Inform the refinery A monthly meeting was That the neighbors Two representatives community about the held and during plant Coordination know what is the work of each neighborhood general operating maintenance stoppage roundtable with ENAP done in the refinery and council, 24 people on conditions of the plant the meetings were held appreciate it. average. and the work plans. twice a month.

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Name of the Dialogue Situation that justified Number of Activities/ Objective/Goal Participants Instance the instance Frequency Dialogue roundtable Inform the refinery Build trust with the Three representatives The scheduled bi- with the ERBB Manager community about the community. from each monthly frequency and main events of the neighborhood council, one per month during operation. 36 people on average. the months of plant maintenance stoppage was met.

"Door-to-Door" with Inform the community That the neighbors Visit all the dwellings The objective of visiting information about the about the maintenance know the impact of the ten surrounding all the dwellings of the scheduled maintenance work. generated by these neighborhoods, leaving ten neighborhoods work. works. a calendar with all the close to Bío Bío information referring Refinery was met. to the maintenance stoppage work.

Enap Magallanes

Informative talks National and Regional To publicize the work of General public, about A semi-annual talk was Heritage Day, at Enap Magallanes 400 people. held. the invitation of the Regional Council of Culture

Talk about hydraulic Workshop to Introduce the hydraulic Airforce. An annual talk was held. fracture stakeholders. fracture process and clear doubts.

Women in Mining Upon request of the Preparation of the General public with Four talks were carried Roundtable Magallanes SEREMI of Golden Rules emphasis in children out in different schools Energy and teenagers. of the region. Mining companies.

SERNAMEG Roundtable Upon request of the Education to women Union and community Training during four SEREMI of Women in different subjects to leaders. months. Monthly avoid gender violence. meetings. Work related to Regulation 3262.

Citizen meetings with Upon request and in Answer consultations Neighborhood Council Three meetings were Neighborhood Councils conjunction with the of neighbors regarding Santos Mardones. held. SEREMI of Energy Enap, gas supply and Community Union inform about the Porvenir. process of hydraulic fracture.

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INTERNATIONAL SUBSIDIARIES / SIPETROL ARGENTINA

During 2017, the amount of social of the United States joined Sipetrol, in Spanish), as a sponsor. The con- investment of Sipetrol Argentina between June and August of 2017. At ferences, held on August 16 and 17, amounted to US$ 150,200. The fol- the end of their internships, the final were aimed at optimizing production lowing are the milestones in Commu- presentation of the students projects through the development of innova- nity Engagement during this year: was made. tive ideas and technologies that may be applicable in this type of deposits, Delivery of Material for Reuse Culture informing on the advances and new As every year, Sipetrol Argentina col- Regarding cultural initiatives, Sipetrol experiences in the oil and gas indus- laborated in delivering waste materi- sponsored the exhibition “Archaeo- try, as well as its relation to produc- als for reuse to organizations in the logical and Anthropological Manifes- tion costs. Province of Chubut, one of the areas tations of the Province of Santa Cruz”, Contribution to vulnerable of influence in which the company exhibition held in the rooms of the communities develops its operations. For this con- Cultural Complex of the Padre Jesús cept, the Boy Scout Institutions of Molina Regional Museum, in Río Gal- Ratifying its policy of inclusion, Sipet- Rada Tilly and the Police of the Prov- legos, with pieces that illustrated the rol was once again committed to the ince of Chubut, detachment Garay- cultural and natural heritage of the initiative of La Usina (non-profit as- alde, were given the following mate- region. sociation), which promotes the social rials: 945 tubing, 685 pumping rods, and economic autonomy of workers Meeting on Efficiency and and 30 wooden poles. with disabilities, giving their employ- Sustainability ees a box with Christmas products Professional Practice It also participated in the 20th Tech- prepared by the members of RedAc- In terms of education and training, nical Conference to Increase Effi- tivos Asociación Civil. By incorporat- the participation in the International ciency and Sustainability in Mature ing this group into the value chain, Program of Professional Practices Reservoirs, carried out in Comodoro the company seeks to promote social stands out, according to which eight Rivadavia, accompanying the Argen- interaction and the employment of students from different universities tine Institute of Oil and Gas (IAPG people with disabilities, so that they

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can fully exercise their status as ac- ity campaign carried out by the com- tive citizens. pany’s collaborators, both in Buenos Aires and in the Austral Basin. In ad- For the year-end festivities, the com- dition, an additional contribution was pany joined the IAPG to share and made that consisted of more than encourage the spirit of solidarity, 5,000 cleaning items, 6,000 personal through the initiative “Shared Christ- hygiene products, about 13,000 non- mas 2017”, in order to generate meet- perishable foods and hundreds of ings with families in vulnerable areas school kits for all those affected. of Río Gallegos. From the operation in Área Magallanes, the members of The company was in permanent con- Sipetrol Argentina collaborated with tact with its operation in the San the sale of solidarity bonds, and then Jorge Gulf and with the local authori- changed them into food contribu- ties and made available to the prov- tions, which were given to the mem- ince equipment and personnel to help bers of the community. with the reconditioning of the city: a forklift, a 4x4 backhoe loader and a Support in catastrophes Mobile for laying lines were used to On the other hand, Comodoro Rivada- perform remediation tasks in place. via, in the province of Chubut, suf- Also, as a result of the disappearance fered the worst escalation of rainfall in November of the submarine of the in recent years, with more than 220 Navy of the Argentine Republic, ARA mm of water falling in 72 hours, which San Juan, with 44 crew members on is why it was decreed “catastrophe board, Sipetrol made contact with zone”, 7,600 people must be evacu- that institution and placed at its dis- ated. To help mitigate the effects posal the ship of the company “So- of the floods, Sipetrol collaborated phie Siem”, to be used in search and with the government by sending food rescue operations. The ship served collected in a voluntary and solidar- from Sunday, November 19, when it

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arrived in Comodoro Rivadavia, until Operational integrity Thursday, December 28, the date on An important initiative of 2017, was which it returned to the Magallanes the launch of the Operational Integri- Area, to continue fulfilling its usual ty Management System (OIMS) of Sip- tasks. etrol, as an instrument to achieve the Cooperation agreements strategic objectives and demonstrate a solid performance in the reliability Regarding the care of the environ- of operations, care for the environment, Sipetrol signed a cooperation ment, safety and health of personnel, agreement with the Secretariat of the contractors and the neighboring the Environment of the Province of communities. Through the OIMS, the ing the perception of the different Santa Cruz, to carry out a comprehen- different processes of the organiza- stakeholders with which the compa- sive study of climate change in the tion are continuously designed, mod- ny is related, as a relevant actor in the area. The agreement stipulates that eled, organized, documented and im- development of practices and actions the company will provide specialized proved. which mean concrete benefits for the equipment and specific training to communities. scholars so that the aforementioned Perception Study division, together with other institu- The results of this study will be a di- In another area, the company hired tions, such as the National Institute agnostic tool that will allow the com- Isonomía Consultores to conduct a of Agricultural Technology, delve on pany to design actions responding quantitative and qualitative study of the effects of global warming on the to the expectations of the different the level of knowledge, perception, water regime of the province. The stakeholders, creating value and en- and expectations of the community results of this analysis will be a valu- suring the sustainability of their ac- regarding the industry and, in particu- able source of information to which tivities over time. lar, Enap Sipetrol. This initiative stems Sipetrol will have access to use as a from the company’s growing roots in resource during the development of Argentine territory, projecting greater its new projects in Santa Cruz. investments, which requires measur-

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ENAP SIPEC

During 2017, the total investment COMMUNITY MANAGEMENT PLAN HEALTH AREA in health, education, community 2017 Medical and dental care was devel- strengthening and compensation Through the three axes of the Commu- oped through the company “Misión projects amounted to US$ 1,430,696. nity Management Plan, SIPEC seeks to Salud”, including an approach aimed Below, a summary of the main ad- maintain good relations with its stake- at periodic training under the crite- vances of the Community Manage- holders, supporting all the communi- rion that it is better to “prevent rather ment Plan in the period reported. ties of the areas of direct influence than cure”. This has motivated the (AID in Spanish). On this basis, daily ac- people of the communities to look tivities are carried out, which contrib- for alternatives to prevent diseases, utes significantly to the development promoting self-care and breaking the of the people of the community and to paradigm that medicine is only cura- the normal performance of operations tive. This activity was conceived as a in the MDC and PBHI Blocks. complement to medical and dental care, which, with due coordination

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and notification, has been provided in EDUCATION AREA each of the communities in the areas During the year, a total of 42 students Community, Gabriel Tanguila of the of direct influence of SIPEC. benefited from the Student Scholar- Corazón de Oriente Commune, and Thirty-five volunteers on health were ship Program, 23 from the MDC Block Yaguachi of the Las Minas Commu- trained in a joint activity as represen- and 19 from the PBHI Block. The con- nity. tatives of the surrounding communi- tribution consists of a monthly sup- Through the School Backpack proj- ties, both from the MDC Block and the port for their tuition and mobiliza- ect, we collaborate with the delivery PBHI Block, and health care coverage tion, and an annual contribution for of a kit for the beginning of the year reached 26 communities and 17 edu- the purchase of uniforms, and school in the AID communities. In 2017, 2,700 cational centers (medical and dental supplies. The two best students of backpacks were delivered, which care are recorded in daily reports). the program (one for each block) re- were made by a community associa- ceived an acknowledgment and a The oral health campaign was also tion recognized under the Superin- computer. carried out, focused on the AID Edu- tendency of Popular and Solidarity cational Centers, seeking to strength- The University Scholarship Program Economy - ASOTEXSHUAR-. en the importance of oral hygiene has four beneficiaries: two in the Throughout the year, the children of and proper brushing. Also, a kit that MDC Block and two in the PBHI Block. the Kichwa Corazón del Oriente Com- included toothpaste, toothbrush, and The support consists of an economic mune, in the PBHI Block, were also a glass was delivered. In addition, contribution so that they can cover supported with the payment of a bus talks were given on the adequate their expenses of pension, registra- for their school transfers. The trans- management of food, prevention of tion, transportation, lodging (if appli- portation service in the MDC Block is venereal diseases, responsible use of cable) and supplies. Through the staff permanent. medicines and water. of Community Relations, students of both programs are permanently fol- In addition, a survey was made of the lowed up. needs of school infrastructure in the institutions within the areas of di- The School Food Garden project sup- rect influence. Based on this, differ- ported the activities of the schools ent contributions were made: paint- Luis Urdaneta of the 10 de Agosto

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ing, refurbishment in the educational agreements include the delivery of centers and didactic materials for the construction materials for housing school year. improvements, water wells, delivery of cocoa plants, livestock, agricultural In terms of community development tools, among others. and strengthening, hiring of local labor was carried out. SIPEC maintains The delivery of construction materials service contracts with some AID com- for housing and other improvements munities, associations, and compa- was also fulfilled, according to the nies, along with civil contracts with agreement signed with the Yanayacu groups of independent property own- community, for the construction of ers, to clean the right of way of the roads, flow lines, and Inchi B platform. flow lines and pipeline. Likewise, the delivery of construc- Social Compensation tion materials for the improvement of housing to the community of La Mag- The SIPEC community management dalena was fulfilled, due to the en- guidelines consider, among other as- abling of the access road, flow lines, pects, signing social compensation and Inchi C platform. agreements for possible impacts on AID communities, in accordance with Project Socialization local regulations. Re-evaluation of the MDC Block: the In 2017, the MDC Block Reevaluation information tables were installed, and agreements signed with the Nueva public hearings were held within the Esmeralda, Virgen del Carmen, Santa process of social participation in the Rosa, Huamayacu 2, and 10 de Agos- Nueva Esmeraldas, 10 de Agosto, and to communities were fulfilled. These Huamayacu 2 communities.

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SIPETROL EGYPT

Visit of Marcelo Tokman to Egypt CSR activities

ENAP Chief Executive Officer, Mar- Continuing with the initiatives of Cor- celo Tokman, traveled to Egypt from porate Social Responsibility of Sipet- February 24 to 27. During the visit, he rol Egypt, students of the Faculty of met with the Minister of Petroleum of Petroleum Engineering of the Uni- the local government to have a close versity of Suez were invited to par- commercial vision and strengthen ticipate in a workshop given by ENAP the presence of the company in said specialists on production technolo- country. The executive also visited gies. the ERQ field and attended the inauguration of the new facilities of Sip- etrol Egypt.

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Anniversary of Sipetrol Egypt Sipetrol unites Egypt and Chile

In 2017, Sipetrol Egypt celebrated its The main executives of Sipetrol Egypt 15th anniversary. The festivities in- were invited by the ambassador of cluded the invitation to outstanding Chile in that country, Fernando Zala- workers to a three-day cruise along quett, to participate in the laying of a the Nile with children and relatives, floral tribute in honor of the Libera- during which awards were distribut- tor General Bernardo O’Higgins, in a ed to employees with fifteen, ten and ceremony held on August 20, 2017 five years of service in the company. and that also had the presence of the In this way, the objective of promot- General Governor of Cairo, Mohamed ing internal tourism and strengthen- Ayman. On September 17, also, the ing the sense of belonging in collabo- executive staff of the company at- rators who have grown together with tended the celebration of the Inde- the company was achieved. pendence Day, in a joint effort with the Embassy of Chile in Egypt. Family day Additionally, Sipetrol Egypt received For two nights, from September 21 to recognition from the local govern- September 23, and under the slogan ment for more than 15 years contrib- the improvements and challenges in “Commitment”, Sipetrol Egypt cele- uting to the exploration and exploi- this area, an activity that was orga- brated the Family Day. The occasion tation of energy resources in that nized by the Embassy of Chile and served to organize various activities country. to which attended by Chilean diplo- and games. These initiatives of a play- matic authorities, the former Minister ful nature allow improving relations On the other hand, the company was of Women and Gender Equality, Car- between workers, creating a climate part of a conference program on the men Andrade, and Dr. Maya Morsy, of collaboration and greater commit- Chilean and Egyptian experience in President of the National Council of ment. the defense of women’s rights, and Women in Egypt.

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AWARDS AND RECOGNITION 2017

CORPORATE ENAP

ENAP: EMPLOYER BRAND its five production units (ERA, ERBB, lighted in the country for their la- DAO, Magallanes E&P and Magallanes bor relations and processes of Hu- The XV version of the Human Capi- R&C). Delivered by the Ministry of man Resources of excellence, their tal Expo, organized by Trabajando. Energy, this seal is a recognition for innovative practices in this matter com and the Chamber of Commerce those companies that demonstrate a and the valuation of the contribu- of Santiago, awarded the winners of high commitment of the Board of Di- tion of the people in their busi- the fourth version of the “Employer rectors and/or Management, in terms nesses. Brand” study, a survey that shows of energy efficiency, achieving an or- • ERA obtained the first place in the the perception of the labor market in ganizational culture of good use of field of Cultural Innovation in the Chile. In this context, ENAP was dis- energy resources. second version of the Impulsa Tal- tinguished as one of the best com- ento Femenino Award, organized panies to work for in Chile under the by the Fundación ChileMujeres, category “Technicians”. The survey ERA PwC Chile and newspaper Pulso, was conducted on a sample of 5,236 for its accompaniment program • As part of the 64th Annual Meet- Trabajando.com users between 20 for women and men with children ing and Business Confraternity and 55 years of age, with professional, in condition of disability. Dinner of the Association of Com- technical and postgraduate studies. panies of the V Region (ASIVA), the • For the fourth consecutive year, In addition, the results of the study trade association awarded ENAP the National Safety Council recog- placed the state-owned energy com- Aconcagua Refinery with the “Dis- nized ERA for achieving the lowest pany in sixth place at the global level tinguished Contribution to Society rate of accident frequency index in among the best brands to work in in Society Vision” Award, for his im- its group-category 17 Oil Industries. Chile, being the only representative portant work to train neighbors of • As part of the traditional “Cambio of the Energy sector. Concón for the installation of photovoltaic panels. de Folio” (Decennial) ceremony LEADING COMPANY IN ENERGY and anniversary dinner for the 47 • ENAP Aconcagua Refinery was EFFICIENCY years of the Journalistic Company also one of the eight finalist com- “El Observador” of Quillota, ENAP In November, ENAP was recognized as panies in the “Carlos Vial Espanto- Open House received recognition a Leader in Energy Efficiency by win- so 2017 Foundation” Award, which for its permanent contribution to ning the seal in its Gold category for distinguishes the companies high- culture.

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ERBB

• In 2017, the Fire Department of cally were performed by men and cial Commitment in Employment Talcahuano awarded Bío Bío Re- are also committed to their com- Fairs”. The objective of this award finery as “Outstanding Collaborat- pany. is to highlight those companies ing Company” of the institution. that use SENCE’s programmatic • SERNAMEG recognized with the offer to improve their productivity • ERBB also received recognition “Pioneering Woman 2017” award through training courses for their for its “Valuable Contribution to two workers of the subsidiary of workers through the Program Im- Sports Development in the Com- ENAP in the XII Region. The elec- pulsa Personas or Labor Interme- mune”, a distinction that was de- tion and presentation of both diation programs to insert profes- livered by the Local Sports Council workers was carried out jointly by sionals into the world of work. of Talcahuano. the Human Resources Manage- ment and both unions of ENAP SIPEC • The subsidiary was also awarded Magallanes. the “Triangular Medal” by El Trián- • ENAP SIPEC became the first oil gulo Neighborhood Council, distin- • SERNAMEG certified 60 women operator in Ecuador to obtain Car- guishing ENAP as an outstanding and men as monitors against vio- bon Neutral Certification in all its company in respect to their com- lence against women, after a six- operations, after complying with munities. month training that included the the process of estimating the car- ENAP representative at the Gen- bon footprint, proposing the reduc- ENAP MAGALLANES der Roundtable. This action is part tion of greenhouse gas emissions • The SEREMIs of Labor and Min- of the activities aimed at strength- (GHG) ) and compensate them. ing, and the National Service for ening women and making them For this achievement, several for- Women and Gender Equity (SER- aware of their rights and the pro- est sponsorship agreements were NAMEG) presented the Outstand- tection systems to which they can signed in the Ecuadorian Amazon, ing Women in Mining Award 2017 turn. prioritizing areas close to the operation in the Kichwa communes. to Marlén Hidalgo, who is an op- • The +Empresas Award, organized erator in the Fuel Loading Yard of by the National Training and Em- Cabo Negro and, in parallel, chairs ployment Service (SENCE), Ma- the Women’s Center. This recogni- gallanes Region, recognized ENAP tion is given to women who have Magallanes in the categories “More been inserted in tasks that histori- Pre-Training Contract” and “So-

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COMPLIANCE MANAGEMENT

The mission of this management fo- MANAGEMENT HIGHLIGHTS 2017 cuses on promoting the values of Crime Prevention Model: ENAP through the adoption of good ogy, identifies the risks related to the Law, establishing mitigation plans. practices in all areas of work between ENAP has a Crime Prevention Model the company and its stakeholders, as (MPD in Spanish) implemented and The Compliance Management has well as mitigate the materialization of certified since 2015. sought to go beyond what the law certain risks that expose the assets or says, aiming to establish an ethical This model consists of a system of reputation, contributing in this way to and regulatory framework that com- organization, administration, supervi- the sustainability of the organization. plements the existing Crime Preven- sion, and control of the risks of com- tion Model, therefore two initiatives The Compliance Management reports mission of the crimes established in were developed in 2017: to ENAP Board of Directors, through Law N ° 20,393 of Criminal Liability of its Audit, Risk and Compliance Com- the Legal Entity, which are bribery, as- • For Chile, the project to identify mittee. set laundering, financing of the terror- fraud risks, which will complement ism and reception of stolen property. the MPD risk matrix with the identification of the fraud risks and It has four elements: a Prevention Of- frauds, and - at the same time - op- ficer appointed by the Board of Direc- portunities for continuous improve- tors, which is the Compliance Manag- ment in the design of mitigants. er; a normative body composed of the Code of Ethics, policies, regulations • For Argentina, the implementation and procedures that complement the of an “Integrity Model” is established Manual of Crime Prevention and reg- in the new Law No. 20,401 on Crimi- ulates, for example, conflicts of internal Responsibility of the Argentine est; a Line of Queries and Complaints Legal Entity, which similarly to the (“ENAP Responds”), and a MPD Risks Chilean Crime Prevention Model, Matrix, which specifically and accord- consists of the establishment of a ing to the corporate risk methodol- preventive and supervisory system

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to prevent the commission of cor- and improvement of several ruption offenses. This model also aspects related to probity, which considers the internal regulations were measured through indicators of ENAP on the matter. reported periodically. Four dimensions were evaluated: In addition, in 2017, the company ob- a) Management of anti-corruption. tained the re-certification of its MPD in Chile by the BH Compliance certi- b) Prevention of conflicts of interest. fication agency, an achievement that c) Promotion and protection of free recognizes the efforts of the com- competition. pany to have an effective and effi- d) Consequences management. cient system, which accounts for the culture of ethics and probity that the The result was positive for ENAP Board of Directors and the Adminis- since the proposed indicators were tration have promoted. met, exceeding the baseline and the established projections. In addition, Finally, in 2017 began the training the Management participated in nu- plan focused on risk areas as estab- merous presentations to show the lished in the MPD risk matrix, a plan compliance program of ENAP, which that will be addressed in greater de- was very well received by the partici- tail and massively throughout the pating companies, among which were company during 2018. Arauco, BancoEstado, BUPA, CAP, Cristal Chile, Equifax, Essbio, Eulen, Participation in the “Program + Ferrada&Nehme, Gerdau Aza, GNL Probity” of Acción Empresas: Quintero, Komatsu, Melón, Nestlé, The objective of the program, PwC, Sodimac, Sura and VTR, among which began in 2015 and whose others. first cycle ended in 2017, is related to the company’s commitment to advance in the implementation

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Preventive Program in Free Strengthening the Ethical Culture: Competition Project: For ENAP, the way of doing business is Under ENAP’s commitment to act the fundamental pillar of sustainabil- according to the highest ethical ity, which must be conducted from standards, another priority was to the point of view of ethics. In this line, comply with the regulations of free during 2017 the Compliance Manage- competition. For this reason, dur- ment participated for the first time in ing 2017 Management focused its a survey of perceptions, “Barometer efforts on carrying out a survey of of Values and Business Ethics”, of relevant and necessary information Fundación Generación Empresarial, to prepare a Preventive Program of with the purpose of obtaining learn- Free Competition. ing and generating improvement actions. With these antecedents, added This survey was aimed at identifying to the permanent listening of the the current and possible risks faced line of consultations and complaints, by workers and directors in the per- Enap Responds, concrete initiatives formance of their duties, and in the were implemented, among them: proposal of mitigation measures, all supported and accompanied by in- • Ethical Leadership Certificate for ternal regulation on the matter. In executives: In 2017, the Compli- this way, it is expected that in 2018 ance Management in conjunction the policy, manuals, and protocols for with the Faculty of Economics and protection of free competition will Business of Universidad de Chile, be formalized, instruments that will conducted for the first time the be disseminated through training to certificate “The Ethical Dimension workers and directors. of Leadership”. The objective of this program, in which managers, supervisors and union leaders of all the Business Units participated,

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was to provide tools and encourage • Diversity and Inclusion Commit- spaces for reflection on the ethics tee (D&I): ENAP has a Corporate and values that inspire ENAP. The Policy on Diversity and Inclusion, certificate began in June and end- which covers all vulnerable groups ed in November, with 21 graduate defined by the United Nations Or- students. In addition, Enap Sipet- ganization and determines actions rol Argentina conducted an Ethical aimed at advancing in non-discrim- Leadership Program, aimed at de- ination and inclusion issues. During cision-makers, including managers 2017, the Corporate Committee on and process managers, which had Diversity and Inclusion began its the advice of Deloitte. operations. This committee is composed of executives and workers • Socialization, training, and continu- representing the different business ing education program: One of the units, meets bi-monthly, with 6 ses- central pillars in the consolidation sions during 2017. of an organizational ethics culture is the socialization and continu- In Sipetrol Argentina, a local com- ous training of different publics of mittee representative of the subsid- interest, both in face-to-face in- iary was established. Likewise, the stances as well as via e-learning members of both committees were and information documents. Thus, trained in diversity and inclusion in 2017, training was carried out in matters, and work commissions fo- all the business units, both in Chile cused on gender and disability is- and foreign subsidiaries, involving sues were formed. around 1,500 workers. The instances addressed issues related to Com- pliance Management, through an Integrity approach.

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Management and Investigation of the Regarding the Ethics Committee, it Line of Queries and Complaints ENAP met six times during 2017, knew a total Responds: of 28 complaints and recommended to the General Management the adop- In 2017, the “ENAP Responds” system tion of measures ranging from im- received a total of 78 complaints for provements in processes and genera- breaches of the Code of Ethics. 56.4% tion of procedures to the imposition of (44) of the complaints received were reprimands and dismissals. nominative, and 43.6% (34) were anonymous.

The increase of 44.4% compared to 2016, speaks of the trust in the system and the impact that the management development and the dissemination and management of the “ENAP Re- sponds” Line has generated in the organization.

As of December 31, 2017, 64% of all the complaints filed during the year were closed; they were resolved by the Eth- ics Committee, declared inadmissible, closed with agreement or derived to other instances of resolution.

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The following graphs represent the complaints received in 2017, broken down by Business Unit and subjects:

Complaints per Business Unit in 2017: Issues Reported in 2017:

2% 1% %1% 3%1 27% 8% 4% 5%

18% 7% 39%

10%

23% 22% 10% 14%

DAO 2 Discrimination and/or Mistreatment 30 Argentina 6 Others 11 ERA 14 Conflicts of Interest 8 Head Office 17 Violation to Suppliers Regulations 8 ERBB 18 Work Harassment 5 Magallanes 21 Misuse of Company Assets 4 Embezzlement/Theft 4 Fraud, Forgery, Adulteration 3 Bribery 2 Sexual Harassment 1 Labor Safety 1 Drugs and Alcohol 1

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RISK MANAGEMENT

The Implementation of the Risk Man- THE IMPLEMENTATION agement Model concluded during One of the main achievements in the delivery of all of their Quantita- 2017, an objective that was achieved terms of roles and responsibilities tively Evaluated Mega Risks. with 100% compliance in all of the As- that was achieved in the process of sets, Business Units, International Af- • For July, a second goal milestone implementing the Risk Management filiates, Business Lines and Core Cor- was defined, where ENAP’s Core Model was the early definition of a porate Management of ENAP. Corporate Managements were in- series of compliance milestones, corporated with the Quantitative which were captured in the Area Evaluation of their Mega Risks and, Result Factor of each Business Line at the same time, the Business and Core Corporate Management of Lines incorporated an Analysis of ENAP, for the purposes of the vari- the Value of Residual Risk, upon able income system. completion of the evaluation of the Specifically, this meant that goals contributions generated by the mit- were defined in detail for the differ- igation measures or existing con- ent areas of ENAP, with specific mile- trols in the reduction of the Impact stones, responsibilities, and dead- and/or Probability of Occurrence of lines. The objective was for each of the Mega Risks reported in May. the Stages of the Risk Methodology • A third goal milestone was defined to be executed throughout the year: for the end of September with the Identification, Evaluation and Risk information of the Mega Risks iden- Mitigation. The milestones were es- tified and quantified throughout tablished as follows: the organization. It was oriented • By the end of May, the first goal towards the identification of new milestone was assigned to the three mitigation plans or control systems Business Lines, which consisted of required to implement in ENAP, to

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reduce the exposure levels of their titatively evaluating its most Critical Mega Risks (Probability of Occur- Risks (Mega Risks and High Risks), rence, Level of Impact or both situ- knowing their mitigation measures ations simultaneously), thus achiev- and existing controls, but also leaving that all these new investments ing in the budget the new measures and costs be duly incorporated in necessary to develop to reduce their the structuring of ENAP’s Invest- level of impact and/or probability of ment Budget for the following year occurrence. (Annual Management Plan-2018).

• Finally, for December, the last milestone of compliance with the Area Statistical Report: Identified and Analyzed Risks Result Factor goal related to Risk Management was defined, which 269 involved all of the Business Lines and Core Corporate Management of ENAP in the Quantitative Assess- ment process of their Risks, quali- fied as High Risks in a first qualitative analysis, carried out at the beginning of the year.

In this way, a commitment assumed by the Administration with the Com- pany’s Board of Directors was also 13 13 23 16 met, implementing the Risk Man- 1 agement Methodology defined the STRATEGIC MARKET/ OPERATIONS ORGANIZATION PROJECT POLITICAL/ FINANCIAL EXECUTION SOCIAL previous year, identifying and quan- Nota: In 2017, the different Business Units, Subsidiaries, and Corporate Managements identified 335 risks, of which 80% correspond to operational risks.

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DEVELOPING A CULTURE OF RISKS IN ENAP

One of the fundamental elements to • Risk Impact Analysis: consolidate an adequate Risk Man- How are risks linked to the impact agement Model, is related with the on performance and competitive Risk Culture of the organization, position? which is evaluated through the level b) Risk Appetite and Strategy of Maturity or Understanding that all • Risk Strategy: the members and the different levels What is the Risk Strategy? have of the application of the Risk What are the risks to avoid? Management Methodology in their daily work and in making any type of c) Decisions and Follow-up decision. • Critical Risk Mitigation: What risks are mitigated? A couple of years ago, when ENAP began its process of strengthening d) Organization and Government in the field of Risk Management, a • Involvement of the Board of survey was prepared, supported by Directors: the McKinsey Consultancy, to assess How is the Board of Directors the level of maturity in this area. The involved in the risks issue? survey was based on the review of 14 e) Risk Culture and Performance parameters, grouped into five major Evolution themes that represent the Risk Cul- • Risk Culture: ture Level in any organization: How is the risk culture observed in the Organization? a) Structured Identification • Identification and Prioritization: How are the risks in ENAP identified, communicated and updated?

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After analyzing the results of the sur- Defense was resolutely promoted to vey, the conclusion was that the level adopt a much more active position, so of Maturity that the company had in that they could exercise a more chal- the implementation of each of the lenging and questioning role in the 14 parameters reached an average evaluations carried out and proposed of 19%, a very low value for the objec- mitigation measures or controls. tives of ENAP. Therefore, an Imple- Finally, as a form of review and valida- mentation Plan was launched quickly tion of the implementation program for 2017, which focused on strength- of the Risk Management Model de- ening the Risk Culture, strengthening fined for 2017 and its incorporation the pillars of the Government Model into ENAP’s Culture, the independent defined for Risk Management in evaluation of the International Con- ENAP. sultancy ABS Consulting was hired, This was how throughout the year which from the same survey devel- we worked directly with the First oped by McKinsey, managed to de- Lines of Defense located in the differ- termine that the progress achieved in ent Business Units, Subsidiaries and ENAP in its first year of Implementa- Core Corporate Management of the tion of the Risk Management Model company. In particular, considering reached levels of maturity equivalent that they are capable of identifying, to 42%, which means a growth of 121% evaluating and mitigating the risks with respect to the results obtained of the processes under their respon- in the first survey. sibility, we worked to empower them in their direct role as owners of the risks. Likewise, the Second Line of

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RISK REPORTABILITY

Other significant advances in the the analysis of the most critical risks mitigate them and control their po- Implementation Process of the Risk evaluated in the last period, with the tential impacts”. Management Model were achieved aim of establishing actions to miti- In this scenario, the challenges for in terms of reportability. The most gate their impacts under the defini- 2018 are related to the definitive important thing is that formal in- tion of Risk Appetite, especially those consolidation of the Risk Manage- stances were defined to inform the that: endanger life of ENAP workers ment Model, further enhancing the High Administration about the main and collaborators, cause damage to level of methodological knowledge risks of the organization, its detailed the environment, affect the viability within each of the areas and process- quantitative evaluations and the miti- of the business, and/or negatively im- es of the organization, being able to gation plans to reduce its criticality. pact the image and reputation of the identify and evaluate in timely man- This is how a Risk Committee was company. ner the risks and defining mitigation created, chaired by the General Man- CHALLENGES plans increasingly efficient and ef- agement of ENAP and seconded by fective. This with the firm purpose of all the Business Line Managers and ENAP’s operations in Chile and abroad reaching the levels of Maturity in Risk Core Corporate Managers, plus the will continue to face changing envi- Management of the companies that Risk Management, which assumed ronments, with uncertainty or risks are in the First Quartile of the Oil&Gas the role of leading the collection and inherent in the different businesses Industry, which have reached levels systematization of all the information that are developed, with new risks of Maturity close to 59%. presented in said Committees. related to the proposed future challenges and others that will disappear A second step in this area was the due to the mitigation and control consolidation of the role of Risk Man- measures developed. Consequently, agement in the Risk and Compliance the initial premise raised is still valid: Audit Board Committee, which was In ENAP “We cannot eliminate risks, defined every six months. In this in- but we can learn to manage them, stance, special focus was placed on

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MARKET RISK FACTORS

MARKET RISK ANALYSIS

The refining and marketing of its prod- The supply of crude oil of ENAP Refin- As a core strategy to address the risk of ucts in Chile represent a significant part erías S.A. is mainly obtained from South changes in refining margins, ENAP has of ENAP operations. In this context, the America and the North Sea. Its main directed its investments to increase its company accesses the international suppliers are Brazil, Colombia, Ecuador, production flexibility and product qual- market for the supply of crude oil and Argentina, and the UK. The company’s ity. So far no financial derivatives have products. This allows the company to refineries have the necessary facilities been hired to fix the refining margin, ensure the supply and the fulfillment of for the reception and storage of this but the price levels offered by the mar- its trade commitments. raw material. As for the origin of the ket are being monitored constantly. imported refined products, during the The relevant risks to the business are last year, these products came mainly essentially the refining margin and the from the United States. price fluctuations in international oil The business of ENAP Refinerías S.A. markets and products, due to the time consists mainly of buying crude oil in delay between the purchase (ship- the international market for refining ment) of the raw material and sale of and sale of the products thus produced the refined products. Hedges such as in the domestic market, according to Time Spread Swaps are made to cover its policy of import parity prices. The re- the latter risks. Such hedging strate- fining margin is subject to fluctuations gies are complemented with the use of in international prices of crude oil, the swap sales contracts of refined prod- refined products and the difference ucts. between them (international margin or Given the high volatility in oil prices, “crack”). Considering an average refin- the administration has continued with ing level of 65 million barrels per year, a the hedging contracting policy that al- variation of US$1 per barrel in the crack low minimize the impact of any sudden would have, ceteris paribus, an impact and significant declines in oil prices, on the results of US$65 million in one considering the refining business cycle, way or another.

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the gap between selling prices of the to maintain the optimization criterion products and the cost of crude oil re- that prevailed at the time of awarding fining. However, it is important to men- the purchase of crude oil. tion that these instruments, by their The exchange rate is another business nature and way of operation, protect risk factor because an important part of from changes in crude oil prices, but do revenues is in pesos and the liabilities not ensure 100% elimination of effects in dollars. This factor is minimized by on results due to the volatility in the the hedging policy of exchange rate of purchase of raw material. accounts receivable and prices of prod- Likewise, ENAP has conducted swap ucts based on import parity indexed in rate differential operations, which aim dollars, a situation that is analyzed peri- to set the price of those shipments in- odically to maintain a competitive posi- dexed to WTI or DTD markers to Brent tion, taking into account the freedom ICE marker. In each crude oil purchase of prices and importation that exists in tender, the decision to buy one alterna- Chile. tive over another is based on an optimi- Regarding the fair value of currency zation model that takes into account, forward contracts is calculated taking among other variables, a projected re- as reference current forward exchange fining margin using the ICE Brent mark- rates for contracts with similar matu- er. Therefore, when awarding a tender rity profiles. The fair value of the differ- for crude oil to an offer denominated in ential swap is calculated using relevant WTI or DTD marker it is important to en- markers’ futures contracts tables (Ny- sure that the differential between such mex WTI, Brent DTD or ICE Brent). marker and the ICE Brent, at the moment of the decision to purchase, does not deteriorate significantly, in order

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SYNTHESIS OF RESULTS

In an adverse international market Line, which had a negative margin of context for the industry with high- US$ 5.5 million. er crude oil purchase costs, ENAP The Gross Margin of the R&C Business achieved a positive result of US$ Line of US$ 387.7 million was lower 23.7 million, as of December 31, 2017, than the US$ 427.9 million obtained and an EBITDA of US$ 664.5 million. in the year 2016, due to a higher cost This EBITDA, which is US$ 47 million of the refining basket, where lower higher than the expected in ENAP’s discounts were obtained in the pur- Annual Management Plan (PAG), has chase of crude oil, and also by a non- been the result of the management crude oil increase in costs related to of the Administration, which man- the increase in the international price aged to minimize the negative effects of Brent crude oil. To this, the greater for this year in the international mar- use of complementary loads is added, ket, maintaining positive results and which also increased their cost. This an EBITDA of more than US$ 600 mil- result was positively offset by higher lion in the last five years. As a result of sales volumes of own production and this, ENAP’s equity increased, reach- the operational management of the ing US$ 838.6 million, as of Decem- refineries. ber 31, 2017. The Gross Margin of the E&P Busi- The Consolidated Gross Margin ness Line of US$ 124.8 million had a reached US$ 507.0 million, which negative variation of US$ 8.1 million, is explained by the gross margin of with respect to the previous year. the Refining and Commercialization This is explained by lower crude oil (R&C) Business Line of US$ 387.7 revenues, due to lower sales volumes million; Exploration and Production and higher lifting costs in Argentina, Business Line (E&P), of US$ 124.8 as well as higher cost of depletion million, and Gas and Energy Business quota in Magallanes. This was posi-

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tively offset by an increase in gas obtained in the year 2016, which is sales volumes in Magallanes and an mainly explained by (i) Greater export increase in revenues and margins in of volumes to Argentina and (ii) incor- Ecuador (due to higher production of poration of the energy sales margin. new wells), and a greater margin in In the fiscal year January-December Egypt, due to lower lifting costs and 2017, the price of Brent ICE crude oil lower costs of transport associated global benchmark registered an av- with the operation of the pipeline. erage of US$54.8 per barrel on the The Gross Margin of the G&E Business London Intercontinental Exchange, Line had a negative margin of US$ 22% higher than the average for 2016 5.5 million and compares positively (US$45.1 per barrel). with the negative US$ 13.6 million

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INCOME

The increase in ordinary income left by the planned refinery plant of US$ 1,203.1 million is mainly ex- stoppage was covered with third- plained by higher sales of proprietary party products. Together with the products (US$ 945.5 million), due to above, the sale price increased from the increase in the international price US$57.2 per barrel to US$ 73.6 per of products, which has an impact barrel, which explains, at the income on sales prices in the local market, level, the increase of US$ 237.4 mil- and the increase in the volume sold. lion from one fiscal year to the other. The average sale price of proprietary products increased from US$57.0 per Revenues from sales in E&P increased barrel in 2016 to US$69.3 per barrel by US$ 14.6 million, mainly originated in 2017 (21.59%). in E&P Magallanes, with an increase of US$ 21.6 million. This result is due In the case of volume, this increased to higher crude oil revenues due to in the year 2017 by 2.64%, compared higher prices, higher gas revenues with the same period of the previous associated with higher sales to Meth- year. The sales volume of own pro- anex and higher revenues from Raw duction increased to 66 MMbls, com- Product, due to higher volume and pared to 64.3 MMbls as of December price. 31, 2016. In Ecuador, there is an increase of US$ With respect to the sale of products 26.2 million associated with PBH-I imported and purchased by R&C (die- and MDC, due to higher production sel, gasoline and fuel oil), this totaled versus the previous year (+ 23% and + 12.5 MMbls accumulated as of De- 20%, respectively). This is counterbal- cember 2017, which compares with anced by Argentina, which shows a the 11.9 MMbls of the previous year. decrease of US$ 30.9 million, mainly This increase of 4.8% is mainly ex- due to lower crude oil revenues due plained by the fact that the demand to lower volume (-23% vs. 2016) and

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export incentives that did not apply • The purchase cost of crude oil in- Production costs in E&P were af- for 2017. Egypt shows a decrease of creased US$ 924.9 million (35.2%), fected, mainly, by an increase in the US$ 2.2 million due to lower volume which is explained by a rise in the depletion quota of US$ 41 million in (-19% vs. 2016). price of raw product cost, which Magallanes, product of higher pro- went from US$ 41.7 per barrel av- duction to sales and investment acti- Revenues from the sale of natural gas erage in 2016, at an average of vations. in G&E increased by US$ 22.6 million, US$ 53.7 per barrel during fiscal mainly explained by (i) price effect Non-crude oil costs presented the fol- year 2017, related to the increase due to higher parities and Brent glob- lowing changes in the year 2017, with in the international price of Brent al benchmark than in 2016, (ii) higher respect to 2016: crude oil. sales of export volumes to Argentina. • Variable costs increased by US$ 53.5 The net effect (charge or credit) of The income associated with the com- million, mainly due to higher cost of the Time Spread Swap hedging set- pensation of the State of Chile, which energy derived from fuel gas, US$ tlement during the year, a charge covers the lower value obtained from 17 million, reversal of provisions for of ThUS$ 71,520 and a payment of the sales of gas produced in the Ma- US $ 20 million in 2016 and other ThUS$ 26,002, for the years ended on gallanes Region, was US$ 95.3 million effects, for US$ 16.5 million. December 31, 2017, and 2016, respec- (versus US$ 95.5 million, at 31 De- tively, are included in the purchase cember 2016). cost of oil. This was aimed at displac- COST OF SALES ing, financially, the price taking window of the crude oil shipments and In line with the increase in revenues, adjusting it to the dates in which the the cost of sales as of December 31, refined products take price, in order 2017, increased by US$ 1,243.3 mil- to be able to have inventory costs that lion, decreasing the gross profit mar- are in line with the prices of the prod- gin to 8%. ucts to be sold. In this way, the time The higher sales costs are explained spread to which the company is nat- by the variation of: urally exposed is mitigated, through the coverage of the cost of sale.

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PRIME MARGIN 2016, to US$ 229.5 million as of De- cember 31, 2017, mainly due to the in- The average Unitary Prime Margin in crease in maritime, land and oil trans- fiscal year 2017 is practically in line port and logistics. with the previous year. The Financial Costs show an increase VARIATIONS IN OTHER CATEGORIES of US$ 19.2 million, from US$ 187.0 Other gains (losses) decreased US$ million as of December 31, 2016, to 98.2 million, from US$ 105.9 million, US$ 206.2 million, as of December as of December 2016, to US$ 7.7 mil- 31, 2017. This increase is explained lion, as of December 31, 2017, as in by greater obligations with the public 2016 the Group acquired the Petro- (bonds), for US$ 14.5 million, for rec- power Complex (Petropower Energía ognition of long-term non-financial Ltda., PPW), generating a positive im- liabilities, US$ 6 million; liabilities for pact on results of US$ 92.7 million. leases (IFRS 16) of US$ 4.2 million; net of capitalized interests that in- Other Income by function decreased creased by US$ 7.5 million, given the US$ 30.7 million, from a balance of cogeneration and PIAM projects. US$ 71.8 million as of December 31, 2016, to US$ 41.1 million, at the end Administrative Expenses increased by of fiscal year 2017. In 2016 additional US$ 11.4 million, as of December 31, sales of surplus energy were recog- 2017, compared to fiscal year 2016. nized to the SIC, which included re- The increase corresponds mainly to classification of previous years by higher training expenses, readjust- Petropower, insurance recovery and ment and appreciation of the peso in others. the year, for US$ 5.2 million, higher services for US$ 1.7 million, realloca- The Distribution Costs presented an tion of cost centers (which were in- increase of US$ 23.1 million, from direct costs in 2016), for US$ 2.5 mil- US$ 206.4 million, as of December 31, lion, and others, for US$ 2 million.

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The exchange difference varied from 2016, this item included, mainly, a a negative balance of US$ 18.4 million provision for uncollectible accounts as of December 31, 2016, to a negative in ENAP Sipetrol Argentina S.A. and balance of US$ 2.1 million as of De- dry exploration wells. cember 31, 2017, both values include The tax item reflected a profit of US$ the cost of the hedges of accounts col- 102.1 million as of December 31, 2017, lect. These hedges consist of forward which compares with the benefit of contracts that allow the exchange US$ 55.4 million obtained as of De- rate to be determined in the future, in cember 31, 2016. anticipation of the risk of loss for accounts receivable from customers, de- In summary, the fiscal benefit as of nominated in local currency. December 31, 2017 of US$ 102.1 million is mainly due to the recognition Additionally, given that the coverage of the special tax of 40% on the re- of accounts receivable begins be- sults of ENAP Head Office, since, at tween 7 and 10 days before the ac- the level of income tax, it is produced count receivable originates, the date a compensation between the income on which the inventory takes price, taxes payable by Enap Refinerías SA the counterpart to this coverage and Sipetrol S.A., with the income tax compensates the costs of coverage. benefit of ENAP Head Office. Under Other expenses per function, however, there is a lower variation of US$ 1.0 million compared to the previous year, during the year 2017, which includes adjustments for deterioration in Argentina in Pampa del Castillo-La Guitarra, for US$ 34.4 million, and US$ 21.8 million in Camp Central Cañadón Perdido (CCCP). In

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ASSETS - The Product Inventory in- This explains the increase in creased by US$ 165.7 million, trade debtors of US$ 146.0 mil- As of December 31, 2017, the total from US$ 366.3 million as of lion (26.3%). assets presented an increase of US$ December 31, 2016, to US$ 949.5 million, in relation to the total In addition, sundry debtors in- 532.0 million, as of December assets existing as of December 31, creased by US$ 8.7 million and 31, 2017, which is explained by 2016. This increase is mainly gener- there was an increase in other the increase in the unit cost ated by the offset effect of the varia- receivables, by US $ 23.6 mil- of inventories of US$ 59.8 per tions experienced in the balances of lion, due to loans to personnel barrel, as of December 31, 2016, the following items: established in collective agree- to US$ 71.6 per barrel as of De- ments. • The Inventories item reflects an in- cember 31, 2017, and also due - The Right of use assets ac- crease of US$ 311.1 million (42.7%) to the increase in the volume of count presents a balance as of with respect to December 31, 2016. product inventory, which went 3 December 31, 2017 of US$ 129.3 The main variations are due to: from 973.4 Mm as of Decem- ber 31, 2016, to 1,111.9 Mm3, as million, which corresponds - The Inventory of Crude Oil of December 31, 2017. to the anticipated applica- increased by US$ 140.9 mil- tion of IFRS 16 “Leases”, which - On the other hand, there was an lion, from US$ 289.3 million consists of applying a control increase in the stock of ware- to US$ 430.2 million, which model for the identification of house materials and in transit is explained by an increase in leases, distinguishing between 3 for US$ 4.5 million. volume from 899.5 Mm on leases and service contracts, December 31, 2016, to 1,030.1 - The trade receivables and other based on whether there is an 3 Mm , on December 31, 2017, receivable accounts increased identified asset controlled by and for an increase in the unit US$ 178.2 million, from US$ the customer. price of crude oil, which went 644.1 million, as of December - The deferred tax net assets ac- from US$ 48.4 per barrel on 31, 2016, to US$ 822.3, as of De- count increased US$ 96.7 mil- December 31, 2016, to US$61.9 cember 31, 2017 (27.7%), mainly lion, from US$ 834.7 million per barrel as of December 31, due to a 24% increase in the as of December 31, 2016, to 2017. level of sales in December 2017, US$ 934.4, as of December 31, compared to December 2016.

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2017 (11.9%), mainly due to the uct of the closing position, Project Magallanes Area (PIAM), for increase in temporary differ- given the short-term commit- US$ 80 million. ences in assets for tax losses, ments assumed. On the other hand, on May 18, 2017, temporary differences related The above is partially compen- the parent company made a bond to rights of use and temporary sated, mainly by: placement in Unidades de Fomen- differences related to reserves to (UF), in the local market, for an for cash flow hedges. - Dues from related companies (current), reflecting a decrease amount of UF 6,500,000, for a term - A net increase in the Property, of US$ 15.5 million (31.9%) with of 10 years, with a single final repay- plant and equipment account respect to December 31, 2016, ment; net of transfer to the short of US$ 103.1 million (3.3%), mainly due to the decrease in term of other debts. mainly as a result of the in- the account with the Ministry crease in E&P investments and Finally, on September 14, 2017, ENAP of Energy and decrease in GNL works in progress. made the issuance and placement Chile S.A. of a bond of type 144 A in the US - The Current tax assets account LIABILITIES market, at an interest rate of 4.5% increased US$ 82.4 million, per annum, for an amount of ThUS$ from US$ 135.3 million as of De- - Other current and non-current fi- 600,000. The expiration term is 30 cember 31, 2016, to US$ 217.7, as nancial liabilities, which increased years. The interest payments are of December 31, 2017 (60.9%) , US$ 511.3 million, mainly due to the semiannual and the amortization of mainly, due to VAT-fiscal credit, increase in indebtedness to finance the capital will be made at maturity. associated with investments in working capital, investments and Property, plant and equipment refinancing debt due, in the second - Trade creditors and other accounts in the Aconcagua Refinery, in- half of 2017. payable have a balance as of De- crease in Foreign recoverable cember 31, 2017, of US$ 866.2 mil- tax, and an increase in Monthly The first operation carried out cor- lion, which compares with US$ provisional payments, net. responds to a loan from the sub- 584.1 as of December 31, 2016, and sidiary Enap Sipetrol Argentina S.A. whose increase corresponds to the - An increase in the cash and that signed a credit agreement with financing of crude oil and product cash equivalents account of The Bank of Nova Scotia, as sec- shipments at the end of the year. US$ 25.4 million (38.4%), prod- ond financing of the Incremental

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- Other financial liabilities (current EQUITY nanced with available resources in fi- and non-current) has a balance as - Equity increased by US$ 31.3 million nancial assets of the Public Treasury. of December 31, 2017 of US$ 131.0 (3.9%) as of December 31, 2017, com- This contribution was incorporated million, which corresponds to the pared to December 31, 2016, as a re- into the budget for the year 2018. anticipated application of IFRS 16 sult of the US$ 23.7 million profit for “Leases”, which consists of applying the year, and an increase in reserves a model of control for the identifica- for hedges, which was partially offset tion of the leases, distinguishing be- by a negative effect on actuarial re- tween leases and service contracts serves in defined benefit plans. The based on whether there is an identi- net effect amounts to US$ 7.6 million. fied asset controlled by the client. Extraordinary capital contribution The foregoing is partly offset mainly by: The Ministry of Finance, through Su- - The decrease in Other non-cur- preme Decree No. 1639, dated No- rent liabilities, of US$ 41.2 million vember 6, 2017, authorized an ex- (14.1%), from US$ 292.8 million as traordinary contribution of capital to of December 31, 2016, to US$ 251.6 Empresa Nacional del Petróleo, for million, as of December 31, 2017. ThUS$ 400,000. This contribution This decrease corresponds, mainly, will be made through one or more to the decrease in deferred tax li- deposits, within a period that cannot abilities. exceed August 6, 2018, and will be fi-

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DIVIDEND POLICY / DIVIDEND POLICY 2017 OF ENAP DISTRIBUTABLE PROFIT SUBSIDIARIES

The Chilean Treasury, through the is based on the instructions given In the 36th General Shareholders’ Ministry of Finance, can order the in Resolution No. 526 dated July 3, Meeting of ENAP Refinerías S.A., held transfer of ENAP’s advances and/or 2006, of the Ministry of Finance, on April 27, 2017, shareholders put on profits to the State’s General Reve- which establishes the transfer of record that there would be no distri- nue Account, in accordance with the 100% of the annual profits. The Min- bution of dividends from the prof- provisions of Article 29 of Decree Law istry of Finance according to Resolu- its earned by the Company during 1,263 of 1975. tion No. 804, dated April 18, 2017, re- the 2016 financial period, until the solved to suspend for 2017 the policy Company has absorbed the accumu- Subsequently, the Ministry of Finance of distributing 100% of the profits lated losses that exceed the amount through Resolution No. 1292 dated of ENAP subsidiaries and capitalize of such profits, which amounts to July 15, 2012, and Resolution No. 100% of the profits obtained in the MUS$233,421 as of December 31, 1125 dated May 20, 2013, under the fiscal year 2016. 2016. financial situation of the company, decided to authorize a profit distri- Enap Sipetrol S.A., at the 27th Ordi- bution policy with the aim of contrib- nary Shareholders’ Meeting, held on uting to stability and reconstruction April 27, 2017, the shareholders, pur- of the company’s equity, which is to suant Resolution No. 804 of the Min- maintain the annual review of the fi- istry of Finance dated April 18, 2017, nancial situation of the company, to which authorized the subsidiary Enap decide whether or not to authorize Sipetrol S.A. to capitalize the profits the capitalization of the subsidiaries’ corresponding to the year 2016, for an and parent company’s profits in a tax amount of ThUS $ 25,543.54, unani- loss situation. mously approved not to distribute the profits as of December 31, 2016 as div- The dividend policy of the subsidiar- idends to shareholders. ies of Empresa Nacional Del Petróleo

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DISTRIBUTION OF DIVIDENDS FROM ENAP SUBSIDIARIES

Resolution No. 804, also suspended ENAP Refinerías S.A., in its 36th Or- Enap Sipetrol S.A., in its 27th Annual the policy of distributing 100% of the dinary Shareholders’ Meeting held on Shareholders’ General Meeting, held profits of the subsidiaries for the year April 27, 2017, unanimously agreed to on April 27, 2017, shareholders agreed 2017, established by the Treasury in place on record not to distribute divi- unanimously not to distribute the the Official Letter No. 526/2006. dends from the profits earned by the profits generated in the fiscal year Company during the 2016 financial 2016. period, since the Company reports accumulated losses that exceed the amount of such profits. (Article 78 of Corporations Law 18,046).

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PROCUREMENT

Purchase Volume and Contracts 2020 Vision of Provisioning

In 2017, ENAP made purchases of During 2017, progress was made in Regarding Value Added to the ENAP goods and services contracts totaling the implementation of the Strategic business, the committed Three-Year US$999 million (excluding the pur- Roadmap of the Procurement func- Savings Plan was met, reaching US $ chase of crude oil). More than 80% of tion, framed in the guidelines of the 67 million of lower cost in purchases the total amount corresponds to ser- Energy Agenda and the Strategic and critical contracts for the busi- vice contracts, and the remaining per- Plan of ENAP and in the dimensions ness. centage corresponds to purchase of of Safety, Value Aggregation, and In order to advance in Process Ef- goods. The most relevant areas were: Process Efficiency, as well as Integral ficiency, the implementation of the Drilling, Maritime and Terrestrial Lo- Management from providers. ENAP Procurement Model was initi- gistics, Maintenance, Construction, In the field of Safety, the level of de- ated, which establishes differenti- Chemical Products, among others. mand in the process of qualification ated approach strategies for pur- of contractors was increased, in line chasing and contracting processes, with the best performance of ENAP according to the degree of technical in accidentability. Likewise, the scope specialization, criticality, historical was extended to purchases of goods performance, risk management and that have a service associated as part intensity of contract administration. of the start-up and operation; criteria Regarding the Relationship with Sup- for the transfer of demands to sub- pliers, the execution of the portfolio contractors for certain levels of risk of projects created under the Com- were defined and specific control prehensive Supplier Management frameworks for SMEs were estab- Model was continued, which seeks to lished. This resulted in a reduction in connect the capabilities and trends the accident frequency rate of con- of the supplier market with the needs tractors’ workforce with respect to and challenges of ENAP. By virtue of 2016. the above, different instances have

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been generated with relevant actors During 2017, the projects “Real Time of the supplier market, with the par- Multiphase Measurement” (automa- ticipation of Chambers of Commerce tion of the capture of fracking data to and Embassies of different countries improve its design and reduce cost); (Germany, Argentina, South Korea, “New Simulation Technologies” (in- Holland, Italy, Canada, Israel, among crease the scope and coverage of others), as well as national and re- training in critical controls of fatality gional suppliers, allowing to generate risks); “Tank maintenance” (reduction a communication and collaboration of time and improvements in safety); channel for the development of solu- Development of Service Poles (devel- tions with innovation, efficiency and opment of SMEs in the regions where safety components. ENAP operates), stood out among others.

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ICAT MANAGEMENT

During 2017, ICAT Management con- 1. OPERATIONAL CONTINUITY tinued with the deployment of the I. ICAT Services strategic plan that was proposed in 2016, which has as its main axes: The most extensive and transforma- and access of all users to Internet tional telecommunications project services. 1. Reinforcement of the technological the company has faced in recent operational continuity and secu- The project contemplated a complete years, called “Convergent Telecom- rity of the company’s information. renovation of communication plat- munications Project” was completed. forms, which provide high standards 2. IT Value Management through the This represented a contribution to the of efficiency and information security. digital transformation of the com- axis of Operational Efficiency, given pany; creation of value to the busi- that, of 11 contracts, it was possible II. Information Security ness based on the implementation to consolidate all services in two, thus of digital technologies, originated achieving efficiencies in administra- 2017 was, without a doubt, a year that in the offer of technological in- tion and operation. This important left many lessons learned in relation novation. Operational efficiency project means a change in the way to cyber attacks, which affected in- through the simplification and these services are delivered. terconnected systems throughout standardization of services. the world and of which ENAP was not The “Convergent Telecommunica- exempt. These attacks put to the test 3. Operational excellence, by tions Project” generates a unique, in- both the procedures and the protec- strengthening our team and its tegrated, standardized and prepared tion and backup platforms, which al- capabilities to face current and fu- look for future requirements, for all lowed having very limited impacts, ture challenges. ENAP offices and facilities in the avoiding putting at risk the continuity national territory and international of the company’s operation. In this context, the achievements made subsidiaries, supporting applications during this year are detailed below. such as telephony and business com- However, the change in the global munications, business ERP applica- scenario of cyber attacks requires tions, corporate email, video confer- constant revision of the practices of encing services, telemetry services companies and forces us to generate

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new ways to deal with threats. This security and its methodologies ap- has posed the challenge of strength- plied to the automation processes, ening a series of practices and tech- highlighting the implementation nologies to face potential risks. of the IT/OT Monthly Security and Alignment Committee, the defini- The key factors identified to mitigate tion of the CSIRT, the continuous the risks to which we expose our- identification model of vulnerabili- selves are: ties in applications and platforms. 1. Strategic definition for the implementation of new technologies focused on the visibility and protection of the Information asset.

2. The level of maturity of the organization in terms of information

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2. IT VALUE MANAGEMENT

During 2017, Management made The first pilots of technological in- taking of thermographic measure- significant progress in the role that novation were developed within the ment, achieving a complete auto- technological innovation plays in scope called “Industry 4.0”. Among mation of the process. contributing to the company’s stra- them stand out: tegic pillars. In this context, an in- Along with the contribution of the novation model was launched, which - Submarine Robotics: A conceptual area of Technological Innovation, the aims to lead the digital transforma- test of an underwater robot with Digital Transformation in ENAP was tion of ENAP to contribute to the characteristics of visual inspec- implemented by more than 40 proj- sustainability of the company and tion and analytical interpretation ects carried out with different busi- the deployment of its strategic role, of images was developed, which ness management, among which are: has the potential to monitor both understanding as digital transforma- I. Transformation of business pro- ship and underwater conditions to tion, that adoption of technology that cesses supported by SAP: transforms processes, increases the reduce environmental risks. In line with the strategic agreement intensity of information and knowl- - Drones: During 2017 a test pilot signed in 2015, significant progress edge and enhances the connectivity was conducted for the aerial moni- was made in the implementation of of physical resources. toring of ENAP pipelines, consid- SAP solutions during 2017, includ- ering variables of geo-referencing ing the implementation and start-up and image analysis, which will al- of the Business Intelligence platform low early identification of situa- BOBJ Business Object; the imple- tions that may affect the operation mentation of phase 3 of the budget- and thus ensure its continuity. ing solution (SAP BPC); the start of - Augmented Reality: A conceptual Phase 2 Human Resources (SAP Pay- test of the typing of a maintenance roll and SAP Success Factors); the process was carried out in full with design stage for the deployment of assistance to the operator, finger- the Safety, Occupational Health and ing of analogous instruments and Environment solution (SAP EHS) and

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the development of Architecture for lytics developments have been agement systems for production the Oil&GAS industry solution (SAP arranged in the Cloud, being the operations, centralized manage- IS Oil). In particular, this latest initia- first user areas of this technol- ment of hydrocarbon production, tive will be part of the most important ogy Procurement, Accounting, and energy consumption manage- changes ENAP will have in the coming Maintenance. ment, and pipeline management. years regarding the business process- - Implementation of the first pilot III. Development of the eLTE com- es supported by SAP. of integration of management and munications platform in Magallanes: II. Implementation of the informa- operational information (IT/OT) in This project represents an unprec- tion management strategy: the Cloud, by means of the integra- edented innovative technology in tion of the HANA and IP platform During 2017, numerous advances Chile. It was implemented by ENAP as of Osisoft, which allows to make were made in the implementation of a pilot in 2016, achieving this year the available the information captured corporate solutions to provide the frequency assignment for 10 years through the tags in the plants and business with reliable and timely op- from Subtel, thus ensuring the conti- make available, through the PI/ erational information for decision- nuity of the investment plan associ- SAP connector, the information in making, among which the following ated with this technology. HANA for use through different BI stand out: tools. As part of its profitability, IOT tech- - Availability of SAP’s analytics plat- nology has been provided for the - Generation of boards focused on form in the Cloud: In order to en- measurement of 16 Flow Units of the the operation: There was an im- sure flexible growth, all new ana- Arenal Block, which were enabled to portant display of panels and man-

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transmit large amounts of telemetric customer portal, and they will be de- data allowing remote viewing of the livered progressively from 2018. operating data of said units. Also, the first phase of the asset man- IV. Optimization of R&C opera- agement project was completed. tions: The achievement in the definition of standard maintenance processes for Within the context of ICAT’s align- both refineries in the unification of ment plan with the business strat- the taxonomy of productive physical egy, the implementation of the TAS assets and in the generation of new - Fuel - Facs was completed in four classes of maintenance notices are loading yards, with the deployment to highlighted. All this in preparation the remaining yards remaining in ex- for the implementation of the APM, ecution. It was possible to implement which will allow the management of four important functionalities of the assets based on risks and reliability.

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3. OPERATIONAL EFFICIENCY 4. OPERATIONAL EXCELLENCE

During 2017, an improvement was One of the most important challenges technology trends, through partic- made to the Management Model of in the implementation of technolo- ipation in various SAP conferences the ICAT Management and to the gies is to have our workers in line with associated with the Oil&Gas Indus- availability and standardization of ser- industry practices and trends so that try, Supply Change Management, vices in all ENAP units, to generate ENAP operates at world-class levels. and best practices. Within the op- the necessary efficiencies and opti- In this sense, a series of training and erational perspective, IP Osisoft mize the value delivered to the busi- management improvements have training and conferences were at- ness, reducing operating costs. been carried out: tended to deepen the profitability of these technologies. Considering the large number of new - Change Management: One of the technologies that are being deployed great challenges is to develop the During 2018 the development of the in ENAP, during 2017 the implemen- skills of our workers to be able to objectives set by ICAT will continue, tation of the practice of Enterprise adopt new technologies. Thus, in order to promote that ENAP con- Architecture began, formalizing the during 2017, corporate agree- tinues on the path of adopting the disciplines required to make ICAT a ments were signed to unify the digitalization of the business, accord- key ally of the business, redefining Change Management services as- ing to the trends of Industry 4.0. All its legacy processes for reduction of sociated with the Digital Transfor- this is supported by an innovation technological debt and creating new mation Projects. This will allow us model that makes it possible to be capacities to assume the challenges to work with this standardized ser- leaders in supporting the business of a dynamic and changing environ- vice at the corporate level, making with technology. ment, where the duality of strategy available and improving the man- and operation are enabled through agement capacity with our clients, the management of information tech- as well as reducing associated nology, under the best practices and costs. the implementation of projects of - Update on technological trends: transformation aligned to the strate- This year we continued to train gic business plan. the team in the latest industry and

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05 BUSINESS LINES

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EXPLORATION AND PRODUCTION (E&P) BUSINESS LINE

SYNTHESIS OF MANAGEMENT

In 2017, ENAP’s Exploration and Pro- In Magallanes, there was greater gas duction (E&P) Business Line, includ- production, due to the good results ing ENAP Magallanes, produced 20.6 obtained in the exploration and de- million barrels of oil equivalent (MM- velopment wells in the Arenal Block. boe) of hydrocarbons, slightly down As part of the investment plan, 36 -0.2% from production of 2016. new wells were drilled in the E&P The lower crude production was con- business line (8 crude oil and 28 centrated in Egypt, due to the natural gas). The results were highlighted in decline of the Shahd area wells and the Arenal block in Magallanes, oper- the non-completion of the drilling ated by ENAP, where 28 wells were campaign due to the lack of approval drilled, of which 26 were for develop- of military permits. Likewise, produc- ment and two for exploration. Eleven tion in Argentina decreased, both in of them are in production, twelve are the Pampa del Castillo block (PDC) waiting for fractures, four in connec- due to the cancellation of drilling action and one in production test. tivities, and in the Block Camp Cen- tral Cañadón Perdido (CCCP), due to a greater decline than expected and climatic incidents. occurred in April and June that affected both blocks.

The foregoing is partially offset by the good performance in Ecuador, where the drilling campaign carried out in the MDC block had successful results, along with the incorporation and good results of the PBH-I wells.

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ENAP Oil and Gas Production 2016 y 2017

COUNTRY 2016 2017 VARIATION 2017/2016

Oil Gas Total Oil Gas Total Oil Gas Total (MBLS) (MBOE) (MBOE) (MBLS) (MBOE) (MBOE) (MBLS) (MBOE) (MBOE)

Ecuador 4,770.6 0.0 4,770.6 5,787.1 0.0 5,787.1 21.3% - 21.3%

Egypt 3,590.6 0.0 3,590.6 2,915.2 0.0 2,915.2 -18.8% - -18.8%

E&P International 11,400.0 2,325.8 13,725.8 11,202.9 2,351.5 13,554.5 -1.7% 1.1% -1.2%

Magallanes (Chile) 987.3 5,908.8 6,896.1 869.2 6,151.7 7,020.9 -12.0% 4.1% 1.8%

E&P National 987.3 5,908.8 6,896.1 869.2 6,151.7 7,020.9 -12.0% 4.1% 1.8%

TOTAL E&P 12,387.3 8,234.6 20,622 12,072.1 8,503.2 20,575 -2.5% 3.3% -0.2%

TOTAL E&P 12.387,3 8.234,6 20.622 12.072,1 8.503,2 20.575 -2,5% 3,3% -0,2%

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OIL PRODUCTION

The volume of oil produced in 2017 by In Argentina, there was a lower pro- ENAP abroad was 11.2 million barrels, duction, of 17.7%, compared to 2016, a figure that represents a decrease of due to a greater decline in the Bel- 1.7% compared to the previous year. lavista Sur zone (CCCP) and the post- This decrease is explained by a lower ponement of the drilling campaign. In production in Egypt, of 18.8%, versus PDC there was lower production due 2016, due to the natural decline of the to decline and delivery problems in Shahd wells and the postponement of El Trébol, together with the climatic the drilling campaign. incidents of April and June that affected both blocks.

However, this decrease is offset by ENAP Sipetrol Monthly Production of Oil (in Thousands of Barrels) Ecuador, since there is a greater production of 21.3% in 2017, versus 2016, Oil Sipetrol (Mbbls) given the good results of the MDC 1.200 wells, and in Inchi, due to the higher 994 995 1.006 985 963 1.000 929 930 943 production of the wells belonging to 868 846 872 872 800 block PBH-I. Mbbls

600 Oil production in Chile, Magallanes

400 Region, reached 869 thousand bar- ENE FEB MAR ABR MAY JUN JUL AGO SEP OCT NOV DIC rels, 12% lower than the volume produced in 2016. The decrease in production is mainly explained by the Oil Magallanes (Mbbls) 140 natural decline of the wells, closure/ 120 100 opening management of unprofitable 83 82 81 74 74 75 80 72 70 67 69 wells and lower production of con- Mbbls 61 61 60 densate associated with the reduc- 40 tion of gas production. 20 ENE FEB MAR ABR MAY JUN JUL AGO SEP OCT NOV DIC

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NATURAL GAS PRODUCTION

ENAP’s 2017 production of natu- ENAP Sipetrol Monthly Production of Gas (in Thousands of Barrels) ral gas at international subsidiaries (Sipetrol) reached 400 million cubic 350 Gas Sipetrol (MBoe) meters (2,351,511 equivalent barrels), 307 300 with an increase of 1.1% compared to 250 212 217 203 196 196 200 187 184 2016. This increase is explained by 200 173 175 MBoe the end of the incremental flow of the 150 102 PIAM project at the end of the year. 100 50 Meanwhile, the production of natu- ENE FEB MAR ABR MAY JUN JUL AGO SEP OCT NOV DIC ral gas in Chile (Magallanes) reached Gas Magallanes (MBoe) 1 million standard cubic meters

572 561 581 (6,151,701 barrels equivalent), which 600 531 551 533 497 492 480 467 represents a production higher by 433 454 4.1% compared to the previous year. 400

This greater production in 2017 was MBoe associated to the success in the ex- 200 ploration and development campaign 0 of the Arenal Project. ENE FEB MAR ABR MAY JUN JUL AGO SEP OCT NOV DIC

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NATIONAL EXPLORATION AND PRODUCTIONS

ENAP’s exploration activity in Chile Dorado-Riquelme Block draulic fracturing. Subsequently, hy- continued to develop with an active draulic fracturing was performed for It should be noted that ENAP has a drilling campaign, particularly in the the Dorado ZG-1 and Palenque Oeste 50% stake in this block (being the op- Magallanes Region. ZG-1 wells, in addition to the Dorado erator), in partnership with Methanex Sur 12 well; and between March and Chile, under the CEOP scheme, signed June 2014, production tests were car- in May 2009 between both partners ried out on these wells, resulting in and the State of Chile. the production of gas at the Dorado In order to explore the presence of 5 well. gas and develop the commercial re- In July 2014, it was decided to contin- serves that are found, this project ue with the Block Exploitation Phase seeks to ensure compliance with de- and not the Exploration Phase. As a liveries of this hydrocarbon required result, during the last quarter of 2014, by the cities of the area and contrib- the closure operations were initiated ute to meet the gas demand of the in five wells that resulted nonproduc- Methanex plant. tive. In February 2015, the surface In 2013, the Environmental Assess- closure of the wells Vellón 2, Dorado ment Service (SEA in Spanish) ap- 1T, Quirquincho Este 1 and Palenque proved the Environmental Impact Este 1 was carried out. Statement to perform hydraulic frac- In March 2016, the Palenque Norte turing work on four drilled wells. Thus, ZG-1 Ex C well began to be drilled, during January and February 2014, which was completed on April 14, completion work was carried out at reaching a final depth of 3,275 m, the Palenque Norte 12 well (Sprin- with objective sandstone of the Glau- ghill), leaving this well ready for hy- conitic Zone.

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In May of that year, the drilling of Between January and March 2017, the Intracampos Block the Puerto Sara Oeste ZG-1 Ex A well Resolutions of Environmental Qualifi- This block belongs 100% to ENAP. was started, which was completed on cation for fracture and construction During 2015, studies were carried out June 25, with a final depth of 3,066 of a flow line for the Cahuil ZG-1 well in the block. In 2016 the investment m., also with objective sandstone of was obtained. On April 8, 2017, the disbursements were US$47,000. the Glauconitic Zone. hydraulic fracturing operation of the Cahuil ZG-1 well was carried out. There was no activity in 2017. From July to September 2016, two wells with a Glauconitic Zone objec- Between April 26 and June 18, the Arenal Block tive were drilled: South Dorado ZG-1 Cahuil ZG-1 well flow line was built, Ex A, with a final depth of 2,348 m, and on June 19, the extended well This block belongs 100% to ENAP. and Pilchero Sur ZG-1 Ex B, with a fi- production test was started, until Au- By 2015, 52 wells have been drilled, nal depth of 2,581 m. gust 4. Currently, the well is closed. which complied with the program of the year. During 2016, 47 gas wells In October 2016, the drilling of the Ca- During the months of July and August, were drilled, of which 37 were de- huil ZG-1 well was completed, reach- the construction of the location for velopment wells and 10 exploratory ing a depth of 2,951 m. In addition, the next Cahuil D well was tendered. wells. the fracturing of the Pilchero Sur ZG-1 It is currently under construction. Ex B well was carried out in October During 2017, 28 gas wells were drilled, In addition, the Cahuil ZG Flow Line 2016. One month later, the third stage of which 26 were development wells was built in 2017 with an approximate was fractured in the Palenque Norte and 2 exploratory wells. extension of 2,500 m. ZG-1 well, and the well Dorado Sur ZG- Investment disbursements in 2017 1, Ex A was fractured in December. In At the end of December 2017, the cu- were US$121.607 million. the same period, sowing work was mulative net investment in the CEOP carried out to recover vegetation in Dorado Riquelme Block reached US the areas intervened in eight wells. $ 286.1 million, with an accumulated production of 879.1 million cubic meters of gas.

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SPECIAL CONTRACTS OF OIL OPERATION (CEOP)

In 2011, ENAP signed a series of agree- Flamenco Block 18.5 Mm3s per day and 2.23 m3e per ments to participate in five blocks lo- day of condensate in September. Dur- This CEOP became effective in No- cated on Tierra del Fuego Island: with ing the last quarter of 2016, ENAP did vember 2012, with the purpose of ex- Geopark, regarding Isla Norte, Campa- not carry out activities in this CEOP. ploring and exploiting the Flamenco nario and Flamenco blocks; with the Block hydrocarbon deposit. The con- The cumulative net annual invest- consortium YPF Chile and Wintershall tract was signed by the State of Chile, ment carried out by ENAP as of De- Chile, regarding San Sebastián Block; Geopark TdF (operator) and ENAP, cember 31, 2016, is US$ 4,000, asso- and with YPF Chile regarding the both with a 50% stake. Thus, the first ciated with the 2015 activity (carry Marazzi-Lago Mercedes block. exploration period began, which lasts overpayments). As a result of this procedure, ENAP for three years. Then there are two As of December 2017, no operational and the mentioned companies sub- more periods, of two years each, to activities or investments were carried mitted to the Ministry of Energy the reach a contract for a maximum of 25 out in the block. respective requests for the subscrip- years. tion of Special Petroleum Operations Isla Norte Block The 2014 Work Program made it pos- Contracts (CEOP) for the indicated sible to meet the minimum commit- blocks. This CEOP became effective in No- ments of the first exploration period. vember 2012, with the purpose of exploring and exploiting the Isla Norte In November 2015, Geopark informed Block hydrocarbon deposit. The con- the Ministry of Energy of the passage tract was signed by the State of Chile, to the second exploratory period, not- Geopark TdF (operator, with a 60% ing that ENAP decided not to continue stake), and ENAP, with a 40% stake. in the next phase, with which the state- owned company participated in those The first exploratory period lasted for areas with declared commerciality. three years and subsequently, there were two periods of more than two In the third quarter of 2016, Chirihue years each, in order to reach a con- X-1 and Chercan X-1 wells are in op- tract for a maximum of 25 years. eration, reaching a gas production of

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During 2015, the Ministry of Energy hydrocarbon deposit, subscribed by signed by the State of Chile, YPF Tier- accepted the consortium’s request to the State of Chile, Geopark TdF (op- ra del Fuego (operator, with a 40% extend the first exploratory period for erator, with a 50% stake), and ENAP, stake); Wintershall, with a 10% stake, 18 months, with the aim of complet- with a 50% stake. and ENAP, with a 50% stake. ing the studies of the block. During 2016 the work of updating the To date, ENAP is in the process of In June 2016, the Ministry of Energy geological and geophysical models leaving the block. authorized the modification of the initiated in 2015 were extended, to Marazzi-Lago Mercedes Block minimum commitments acquired for define with better accuracy the new the First, Second and Third Explora- proposals of wells. Also, on June 30 This CEOP has also been in force since tion Periods of this CEOP. of that year, the Ministry of Energy 2013, with the objective of explor- authorized the modification of the ing and exploiting the Marazzi-Lago Currently, the CEOP has no produc- minimum commitments acquired for Mercedes Block hydrocarbon deposit. tion; The Pantano Oeste X-1 well has the First, Second and Third Explora- The contract was signed by the State an oversupply of water, which makes tion Periods of this CEOP. of Chile, YPF Tierra del Fuego (opera- the operation non-commercial. tor, with a 50% stake), and ENAP, with At the Coordination Committee held At the Coordination Committee held a 50% stake. in August 2016, it was reported that on August 8, 2016, it was reported there were no investment activities in Currently, it is in the process of re- that there were no investment activi- the block. The wells are closed. turning the area to the State. ties in the block. The wells are closed. As of December 2017, no operational As of December 2017, no operational activities or investments were carried activities or new investments were out in the block. carried out in the block. San Sebastián Block Campanario Block This CEOP came into force in 2013, In January 2013, the CEOP entered with the purpose of exploring and ex- into force for the exploration and exploiting the San Sebastián Block hy- ploitation of the Campanario Block drocarbon deposit. This contract was

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INTERNATIONAL EXPLORATION AND PRODUCTION LATIN AMERICA

ARGENTINA

Located in the Austral Basin, ENAP It is operator and holds 100% of the In 2017, the subsidiary celebrated 26 Sipetrol Argentina acts as operator participation interest in the exploita- years of uninterrupted operation in of the exploitation concessions in the tion concession Pampa del Castillo-La the Argentine Republic. Within the Area Magallanes deposit and in CAM Guitarra, in the San Jorge Gulf Basin. framework of the Energy Integration 2/A Sur (Lot Poseidón), with a 50% In addition, it participates as a part- Policy agreed between Argentina participation, and also as the opera- ner, with a 50% stake, in the exploi- and Chile, the Area Magallanes Incre- tor, with 33.33%, on the exploration tation concession of Campamento mental Project (PIAM), developed by permit E2 (ex CAM-1 and CAM-3). Central-Cañadón Perdido, where the the UTE formed between ENAP Sip- operator is YPF. etrol Argentina and YPF, has been

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relevant. With an investment of US$ it sustainably in a leadership posi- continued at the Campamento Cen- 277 million, key stages have already tion, the tender was carried out and tral-Cañadón Perdido. been completed, such as the laying a new on-shore area was awarded in In the commercial sphere, the “Natu- of a new submarine pipeline, from the southern part of the Province of ral Gas Surplus Injection Stimulus the coast to the AM2 platform; the Santa Cruz. This is El Turbio Este, of Program” ended on December 31, assembly of compressors in the new 3,195 km2, which has an exploration 2017, as planned, and the National plant that finished their construction plan associated with an investment Government decided not to extend in the Faro Vírgenes area, and a series of more than US$ 47 million over the it, allowing prices to be regulated of modifications are being concluded next three years. This new area in the through the market. on offshore platforms. Austral Basin limits with El Coirón, a block in Chilean territory in which With respect to the extension of con- This project allows increasing the pro- ENAP has been successfully develop- cessions, the current status per block duction of natural gas by more than ing tight gas and allows the subsid- is as follows: 60%, from 1.2 to 2 million m3 per day, iary to have a binational approach in and increase the associated produc- the exploration and production of hy- tion of crude oil by 25%, from 2,500 to drocarbons. 3,150 barrels per day, in that area of exploitation. In only 18 months, it was Finally, and given the great experi- possible to carry out the engineering, ence that the subsidiary has in the the mobilization of the marine sup- offshore of the Austral Basin, new port to modify the upper side of the acquisitions of offshore areas are be- AM2, the laying and connection of ing evaluated, which allow for further the new submarine pipeline, and the growth in the supply of hydrocarbons execution of the civil works for the for the country and the region. assembly of the new Compression In Pampa del Castillo-La Guitarra, de- plant, among others. velopment was focused on secondary In addition, and as part of the growth recovery and interventions were car- plan initiated by the subsidiary to ried out with workover equipment, project a new company and place and well-repair activities were also

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ÁREA MAGALLANES (AM): effect because the agreed conditions do not occur. On October 3, 2017, Enap Sipetrol Argentina S.A agreed with CAPEX Campamento Central-Cañadón Per- S.A. the terms and conditions for the dido Area (CCCP): In this area that is transfer of 88% of the Exploitation shared in equal percentages with YPF Concession “Pampa del Castillo - La S.A., the concession extension signed Guitarra”, located in the Province of in 2013 with the Province of Chubut, Chubut, for a price of US $ 33 million. remains effective.

The effective sale of the Concession and all the rights and obligations de- riving from it is subject to the occurrence of certain preceding conditions that must be met within a maximum period of three months, which may be eventually extended by agreement between the parties. The Company will inform in due time whether the execution of the sale becomes effective or if the transaction is without

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PRODUCTION OF THE AREA E2 (EX CAM-1/CAM-3) Area and in a lesser degree to the natural MAGALLANES ARGENTINA decline of the production baseline. During 2014 some studies for E2 (EX The production of Enap Sipetrol Argen- CAM1/CAM-3) area were completed. In 2017, the drilling campaign sched- tina, in the reservoir Area Magallanes, It should be noted that Enap Sipetrol uled was not executed, only 22 work- totaled 678,772 barrels of oil and 400 Argentina is the operator of Area E2 overs of wells were carried out. MMm3 of natural gas (2,351,511 barrels in the Austral Basin (CAM in Span- Campamento Central-Cañadón Perdido oil equivalent) in 2017, which gives a to- ish), under the association agreement tal aggregate production of three mil- (signed in September 2006) with the The production of ENAP Sipetrol Ar- lion barrels of oil equivalent (BOE). state-owned company Energía Ar- gentina at the Campamento Central- gentina Sociedad Anónima (ENARSA) Cañadón Perdido deposit, totaled 0.7 These results show a slight decrease and YPF, which ratified the previous million barrels of crude oil in 2017, compared to 2016 in terms of crude oil, agreement signed in February 2006. representing a decrease of 22% com- mainly due to the natural decline in oil pared to the production in 2016, due production. Subsequently, it signed the E2 Tem- mainly to extraordinary weather in- porary Business Association Agree- CAM 2/A Sur cidents and in a lesser degree to the ment (UTE), which regulates the natural decline of the reservoir. CAM 2/A Sur Area’s Poseidón platform relationship of the companies that has been out of production since De- participate in this alliance and ratifies During 2017, the scheduled drilling cember 2010. For this reason, after Enap Sipetrol Argentina as operator campaign was not executed, due to studying the case, with the partner of the E2 Area. the delay in the construction of the YPF it was decided to reverse CAM 2 multi-location due to conflicts with Pampa del Castillo-La Guitarra /A Sur Area to the Province of Tierra the community. Five workovers and del Fuego, for which the negotiations The production of ENAP Sipetrol one conversion of well were carried with YPF and the province itself were Argentina in Pampa del Castillo-La out. initiated. Guitarra deposit reached 1.1 million barrels in 2017, 17% lower than the volume obtained in 2016, mainly due to extraordinary weather incidents

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ECUADOR

The 14-year presence of ENAP SIPEC On the other hand, it continues the Exploration Activity in Ecuador has allowed it to con- participation in exploration activities In the Intracampos Area of the PBH- solidate its position in that country, in the Consortium Block 28, through I Block, incorporated into Ecuador’s through exploration, development, the company of ENAP, EOP Operacio- portfolio in 2011, exploration activi- and exploitation in the Blocks Mauro nes Petroleras S.A. ties were promoted (2011-2014) that Dávalos Cordero (MDC) and Paraíso, included the acquisition and interpre- Biguno, Huachito, and Intracampos ( tation of seismic and the subsequent PBH-I).

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drilling of two exploratory wells Copal Development and exploitation praisal wells were drilled, and in 2017, 1and Inchi 1, the latter being the first activity an appraisal well was drilled and one discovery in Ecuador that incorpo- of the wells drilled in 2016 was in- It is worth remembering that in 2016 rated new reserves as a result of the jected. All of these wells have been the modification contract number 3 renegotiation of contracts with the successful. of the MDC field was signed with the Hydrocarbons Secretariat in 2010. Hydrocarbons Secretariat, which ex- In 2017, 5.8 million barrels were pro- Based on the results of the Inchi 1 tended the duration of the operation duced in Ecuador with an average exploratory well, between 2015 and in this Field, from 2025 to 2034 and annual production of approximately 2017 a total of seven development improved the incremental rate. Sec- 16.5 Mbpd, and an output production and appraisal wells have been drilled ondary recovery investments com- of 17.1 Mbpd. in the Inchi field of the Intracampos mitted included: drilling a Re-entry, area. The successful results of these two producing wells and an injector drillings allow to maintain the explor- well, activities that were executed atory potential of this area. between 2016 and 2017.

Block 28 was incorporated in 2015, As a consequence of the results where EOP Operaciones Petroleras obtained in the new wells, four ad- S.A. participates with 42%, as opera- ditional wells were drilled in 2017. tor in the consortium formed with These investments, along with others Petroamazonas EP (51%) and Belorus- planned for 2018, allowed us to start neft (7%). In this block, progress was a new negotiation process with the made in previous activities to obtain Hydrocarbons Secretariat to improve the Environmental License and drill- once more the incremental rate in the ing of a stratigraphic well began to block. reduce the geological risk of the Mi- As regards the Inchi Field of the PBHI rador prospect. Block, the drilling of two development wells was completed in late 2015. In 2016, four development wells and ap-

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NORTH AFRICA

EGIPTO

The volume of crude oil produced by East Ras Qattara Block ENAP Sipetrol Egypt was 2.9 million A number of discoveries have been exploratory well was drilled, Shahd-4, all barrels, 18,8% lower than the produc- made in the East Ras Qattara Block successful. tion in 2016, due to the natural de- since 2007 to date. The commercial decline of the wells of the Shahd field. In 2015, there were no drilling activi- velopment of these discoveries is car- ties, however, progress was made in the ried out by the joint venture formed be- building of the Pipeline Project. In 2016, tween the Contractor Consortium and the drilling campaign had to be sus- the Egyptian General Petroleum Corpo- pended due to restrictions on military ration (EGPC), each party with 50% of permits. However, the construction of the shares. the oil pipeline was successfully com- During 2014, three development wells pleted. were drilled, Shahd-SE8, Al Zahraa-4, In 2017, the drilling campaign was post- and Shahd-SE9, with positive results. poned until obtaining of the military Moreover, concluded the drilling of the permits, which are already approved. exploration well Diaa-2 and a second

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ENAP SIPETROL S.A. / RESULTS

Enap Sipetrol S.A. had a profit of US$ The Gross Margin of Enap Sipetrol 12.4 million, which compares with the S.A. had a negative variation of US $ US$ 25.5 million obtained as of De- 1.1 million compared to the previous cember 31, 2016, on the other hand, year, explained by lower crude oil rev- the EBITDA reached US$ 148.5 mil- enues due to lower sales volumes and lion, surpassing the US$ 135.6 million higher lifting costs in Argentina. This obtained as of December 31, 2016. was partially offset by an increase in revenues and margins in Ecuador due The equity of ENAP Sipetrol S.A. to higher production of new wells and reached US$ 621,8 million, exceeding a higher margin in Egypt due to lower the US$609,6 million obtained on De- lifting costs and lower transportation cember 31, 2016. costs associated with the operation of the pipeline.

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E&P INVESTMENTS IN CHILE

The investment of E&P Business Line The Flow Line of Cahuil ZG was built, The drilling of 30 development wells, 46 focused primarily on the exploration with an approximate extension of fractures, power plants plus flow lines and exploitation of gas in Magallanes. 2,500 m. and transport and production facilities The investment was US$134,2 million, are expected for 2018. At the end of December 2017, the distributed in the following projects: accumulated net investment in Intracampos Cullen-Lynch CEOP Dorado-Riquelme the CEOP Dorado Riquelme Block (Exploitation Project. Enap is the opera- amounted to MMUS$286.1, and the (Exploitation and Exploration Project. tor, with full ownership). accumulated gas production was ENAP is the operator and has a 50% 879.1 MMm3. There was no activity in 2017 and none participation interest). is expected for 2018, although this well The drilling and fracturing of the Ca- Between January and March 2017, the is producer. huil-D well, two appraisal wells, four Resolutions of Environmental Qualifi- fractures and one Shale Oil type are cation for fracture and construction scheduled for 2018. of a flow line for the Cahuil ZG-1 well were obtained. Arenal

In April 2017, a hydraulic fracturing (Exploitation Project. Enap is the opera- operation of the Cahuil ZG-1 well was tor, with full ownership). carried out. In 2016, 47 gas-target wells (46 ZG The flow line of the Cahuil ZG-1 well and 1 Springhill-ZG well) were drilled, of was built, and in June the extended which 37 were successfully developed; production test of the well was start- 9 are pending fracture and 10 were suc- ed, which lasted until August 4. The cessful exploration wells. The well in well was later closed. Springhill was unsuccessful, but it was finally completed as ZG. From July to August 2017, the construction of the location for the next In 2017, 28 wells were drilled with a ZG Cahuil D well was tendered. gas target, of which all were successful. Eleven of them are in production.

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Vigencia y evolución del CEOP Financing of Projects in the Coirón Roles of ENAP Bloque Coirón Block In addition to being partner, ENAP The CEOP Coirón Block is a contract The development of exploration proj- has fulfilled the following roles in the signed for a maximum term of 35 ects was carried out at full cost of PAE Coirón Block: years, counted from the date of its (ENAP is Carry) and included the regis- (a) Service Provider: ENAP acted as coming into force, and consists of an tration of 3D seismic data and the drill- contractor of PAE-Operator in the ex- Exploratory Stage of three explorato- ing of exploratory wells in the Coirón ploration, development and operation ry periods of 36, 24 and 24 months, Block, above a minimum plan estab- stages. This was fulfilled based on the and a Stage of Exploitation. lished in the CEOP for the Exploration option of rendering services by one of Stage. The development of exploita- The first exploration period, originally the parties is agreed in the Joint Op- tion projects was financed in equal 36 months and with 3 extensions of eration Agreement (JOA) signed by parts by PAE and ENAP. 6, 3 and 3 months, ended on July 28, PAE and ENAP, and that the exploita- 2012. At the end, PAE and ENAP com- tion in question is a Joint Operation. municated to the Ministry of Energy (b) Product Buyer: In the case of gas, their decision not to continue to the following the public bidding for gas second Exploration period and to re- from a Gas Exploitation Pilot Project, turn to the State of Chile the part of developed in the Los Cerros-El Fierro the Coirón Block area provided for in sector, the State exercised the right the CEOP, maintaining only the ex- of reacquisition contemplated in Art. ploitation areas.

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9 of the CEOP, through ENAP, which ACTIVITIES 2017: signed the gas purchase contract • The workover, fracture, and pro- CEOP Caupolicán with PAE-Operador in representation duction test of the well El Fierro 1 of the State. In the case of oil, which As of December 2017, no operational in the ZG play was carried out. To has a marginal production, follow- activities were carried out in the block. this date, the well is closed and the ing private tenders authorized by the In this period, all the activity was cen- results obtained are under revision Ministry of Energy to PAE-CEOP Op- tered on the arbitration demand, so no and analysis. erator, ENAP made oil spot purchases new investments have been generated to PAE. • ÑANCO ZG-1 Well: expanded pro- in this block. duction test was carried out. The Given the low production of gas and well is closed. oil of the Coirón Block, on January 18, 2016, the Coirón Block gas and oil • KALKIN ZG-1 Well: injection tests production was stopped, which was were carried out. Subsequently, the reported by ENAP to the Ministry of fracture and production tests were Energy. completed in August and ended in September. The well is closed.

• MANKE ZG -1 Well: Jobs for the construction of the location are post- poned while reviewing the results obtained from the previous well tests.

The accumulated net investment of Ceop Coiron as of December 2017 is ThUS $ 86,924, of which ENAP has invested ThUS $ 33,824.

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E&P INVESTMENTS ABROAD

The investment was US$ 218 million, Argentina Magallanes Area – Magallanes Area distributed in the following projects: Incremental Project (PIAM) E&P investment in this country focused on: In 2017 key stages were fulfilled, such as engineering, the mobilization of Pampa del Castillo-La Guitarra (Ex- the marine support to modify the up- ploitation project. Sipetrol is the op- per side of the AM2, the laying and erator, with full ownership). connection of the new submarine In 2017 no drilling activities were con- pipeline, and the execution of the civ- ducted, only 22 workovers of wells il works for the assembly of the new were carried out. Compression plant, among others.

Campamento Central-Cañadón Perdi- The PIAM Project is expected to con- do (Exploitation project. Sipetrol has clude in 2018. a 50% participation interest).

During 2017, the scheduled drilling campaign was not executed, due to the delay in the construction of the multi-location due to conflicts with the community. Five workovers and one conversion of well were carried out.

The drilling of one well and secondary recovery activities are expected for 2018.

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Egypt In November 2016, the pipeline that Ecuador was under construction (87 km) was E&P investment in this country fo- E&P investment in Ecuador was inaugurated, with a capacity to trans- cused on: concentrated in the Blocks Mauro port 30,000 barrels per day. The in- Dávalos Cordero (MDC), Paraíso Bigu- East Ras Qattara (Exploitation and vestment was MMUS$11.2 (50.5%). no Huachito Intracampos (PBH-I) and exploration project. ENAP Sipetrol is During 2017, no drilling campaign was Block 28 (Exploration and Exploita- the operator, with a 50.5% stake in carried out pending the approval of tion Project. ENAP SIPEC is operator the Contractor Consortium, which, military permits. with 100% participation). in turn, commercially develops this block through a joint venture with For 2018, it is expected the drilling of The original budget for 2017 in MDC EGPC, where each party participates three development wells and two ex- considered investments for US$ 18 with 50% each). ploratory wells. million that included the commitments acquired in the modification

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contract number 3. Subsequently, The drilling of six wells (four develop- • Construction of a washing tank for this budget was increased with value- ment and two appraisal) is consid- 5,000 barrels of capacity and gas adding activities until reaching the ered for 2018. They are part of the boot, plus civil works on the Inchi sum of US$ 46.4 million. proposed investments for the new re- B platform. negotiation of incremental rates that In 2017, the following activities are Block 28 Consortium are being carried out with the State carried out: of Ecuador. Exploration and Exploitation Project. • Seven producer wells were drilled EOP Operaciones Petroleras S.A. is the Paraíso Biguno Huachito with technologies that ensured the operator, with a participation of 42%). Intracampos (PBH-I) early incorporation of the production During 2017, exploratory investment and the stimulation of the reservoirs Exploration and Exploitation Project. activities were carried out, including: to complete them, which allowed ob- Enap SIPEC is the operator, with full taining two surveys in the year: ownership. • Start of activities related to the preparation of the Environmental - In the MDC-25 well, for being the In 2017, the following activities were Impact Study to obtain the Envi- first run in Ecuador with a single bit carried out in the Inchi field of the In- ronmental License for exploratory drilling formations from Orteguaza tracampos area: well drilling. to Hollín in 12 ¼ section. • Drilling of the Inchi C-3 well. • The drilling of a stratigraphic well - In the MDC-28 well, drilling record • Construction of route and plat- to reduce the geological risk of the in 17.4 days. form in Inchi C. Mirador prospect concluded. • Reconditioning work and expan- • Construction of a bridge on the ac- • The core analysis of the strati- sion of platforms and facilities that cess road to the Inchi C platform. graphic well was carried out. support the operation of the new wells. • Inchi A8 well conversion from pro- • Implementation of the Community ducer to injector. Engagement Program. • Update of the static and dynamic models of the block, which gave • Incorporation and commissioning The construction of access roads and the support for the negotiation of of Inchi separator for use in gas a platform for the drilling of a con- the incremental rate of the second- generation. tractually committed exploratory well ary recovery project. is planned for 2018.

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REFINING AND COMMERCIALIZATION (R&C) BUSINESS LINE

MANAGEMENT SUMMARY

In 2017, ENAP obtained excellent fi- ies and the higher production of valu- nancial results and achieved -for the able products (diesel, gasoline, and fifth consecutive year- an EBITDA of kerosene) allowed to obtain a greater over US$ 620 million, reaching US$ yield per refined barrel. In 2017, 81% of 664.5 million. This consolidates a situ- production of valuable products was ation of stability that projects it into achieved. the future as a state-owned company that increases its capacity to gener- Refining ate value and, at the same time, with a Total R&C strengthening of equity at an unprec- Crude Oil Mm3 % Can. edented level, which gives the impe- tus to continue moving forward with Light 434 4 strength in growth, together with its Intermediate 5,762 49 workers, to contribute concretely to the country’s energy development. Heavy 3,803 32

The high-level of achievement a in Supplementary Loads 1,770 15 the operational availability of refiner- Total 11,768 100

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Without including supplementary Origin of Refined Crude Oil in 2017 loads, in 2017 the refineries of ENAP, Aconcagua, Bío Bío and Gregorio, pro- South America 96% cessed 10,0 million m3 of crude oil, Europe 2% imported mainly from South America Domestic 2% (96%).

Total R&C Net Production Mm3 % Can. Liquefied Gas 521 5 Gasoline 4,084 36 Kerosene 926 8 Diesel 3,658 33 Fuel Oil 1,231 11 Industrial Products and Others 817 7 Total 11,237 100 Volumetric Yield 95,5%

The production of fuels and other The average utilization rate of both products in 2017 was 11.2 million m3. Aconcagua and Bío Bío Refineries Of this total gasolines stand out with was 75.7%, higher than the 74.3% re- 36% and diesel with 33%. The period’s corded in 2016; and the plant avail- volumetric yield was 95,5%. ability reached 93.2%, slightly lower than the 94.0% recorded in 2016.

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In 2017, domestic consumption of The slight increase in consumption most consumed among oil-based fu- refined oil products reached 19.78 compared to previous years is ex- els. The decrease in diesel consump- MMm3, equal to 340,784 bpd, increas- plained by the increase in prices to the tion was mainly due to the contraction ing by 1.7% over the previous year. end user and by lower national eco- in the mining activity, an important nomic activity. Thus, according to pre- consumer of this product in its opera- liminary estimates by the Central Bank tions. The price increased by 13.3% of Chile in its Monetary Policy Report to the end user, in real terms, that (IPOM Informe de Política Monetaria), is, discounted the effect of inflation Chile’s GDP expanded by 1.5% in 2017, 2016/2017. maintaining the trend shown since Domestic consumption of vehicle gas- 2016, when the growth reached 1.5%. oline was the second largest by vol- During 2017, the production of the ume, with 4.67 MMm3 (80,510 bpd), copper mining sector continued with growing 2.4% over the level in 2016. low rates, as well as a decrease in in- Gasoline grew due to the increase in vestments and lower activity in the the vehicle fleet. The price to the end construction sector. user had an increase in real terms of By analyzing the change in consump- 3.5%. tion per product compared to 2016, Liquefied Petroleum Gas (LPG) be- very different behaviors are appreci- came the third most important prod- ated, stands out the declines in the uct in terms of consumption, with consumption of fuel oil and industrial 2.37 MMm3 (40,886 bpd), registering products, contrasting with the in- an increase of 5.7% over the previous creased consumption of Liquefied Pe- year. In this case, the higher consump- troleum Gas (LPG), vehicular gasoline, tion is explained by a higher growth of and kerosene. the bottled LPG segment. The prices Total consumption of diesel increased of liquefied gas grew by 16.5% in real by 0.8%, 9.76 MMm3 (168,253 bpd); terms. maintaining its status of the product

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Kerosene consumption increased by dustry) and asphalts-, totaled 0.384 13.6%, to 1.67 MMm3 (28,736 bpd). MMm3 (6,612 bpd), 6.2% lower com- Within the total, aviation kerosene, pared to 2016. which represents 89% of the consumption, increased by 11.4%, while household kerosene increased 36.5%. The price of this fuel to the end user increased 14.0% in real terms. Domestic Consumption

Fuel oil consumption increased 0.8% 2017 2016 Variación 3 3 and reached 0,92 MMm3 (15,787 bpd). Mm Mm 2017/2016 The consumption of fuel oil in indus- Liquefied Gas 2,373 2,244 5.7% trial applications increased by 1.9% Gasoline 4,672 4,562 2.4% (11,400 m3), while the sales of fuel oil as marine fuel in the country’s ports Kerosene 1,668 1,467 13.6% fell by 1.2% (3,912 m3). The price of this Diesel 9,764 9,846 -0.8% fuel to the end user increased 37.5% in real terms. Fuel Oil 916 909 0.8% Industrial Products Finally, consumption of industrial 384 409 -6.2% and Others* products -solvents, olefins (basic raw materials for the petrochemical in- TOTAL 19,776 19,438 1.7%

* Includes propylene, ethylene, Naphtha, solvents, and asphalt, among others.

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SALES AND MARKET SHARE 2017 (Figures in Mm3)

Domestic Domestic Sales Domestic Market Variations Exports ENAP ENAP Import Sales Consumption ENAP Share 2017/2016 Products

2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 Domestic ENAP 3 3 3 3 3 3 3 3 3 3 Consump- Domestic Mm Mm Mm Mm Mm Mm Mm Mm Mm Mm tion Sales

Liquefied Gas 2.373 2.244 375 323 15,8% 14,4% 131 22 7 11 5.7% 16.1%

Vehicular 4.672 4.562 4.447 4.531 95,2% 99,3% 0 15 403 568 2.4% -1.9% Gasoline

Kerosene 1.668 1.467 1.032 947 61,9% 64,5% 0 0 142 119 13.6% 9.0%

Diesel 9.764 9.846 4.956 4.357 50,8% 44,2% 9 10 1,385 904 -0.8% 13.8%

Fuel Oil 916 909 906 904 98,9% 99,5% 305 343 2 19 0.8% 0.2%

Industrial 384 409 264 312 68,9% 76,3% 36 28 1 3 -6.2% -15.4% Products/

Others*

TOTAL 19.776 19.438 11.980 11.374 60,6% 58,5% 481 419 1.940 1.625 1,7% 5,3%

* Includes propylene, ethylene, Naphtha, solvents, and asphalt, among others.

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SALES DOMESTIC MARKET

Total sales reached 12.46 MMm3 Sales to the domestic market were ket share of 15.8%. Finally, industrial (214,733 bpd), slightly over the previ- 11.98 MMm3 (206,438 bpd), with a products, with 0.26 MMm3 (4,553 ous year. This increase is mainly ex- market share of 60.6%, which is 1.7 bpd) and a market share of 68.9%. plained by the higher level of sales percentage points higher than in to the domestic market, which in- 2016. EXPORTS 3 creased from 11.37 MMm in 2016 to 3 The largest market share was largely ENAP exports reached 0.48 MMm 11.98 MMm3 in 2017 and an increase due to the increase in diesel sales, of oil-based products, equivalent to in the level of export sales of 0.42 with a positive variation of 13.7% com- 4.5% of the total production of its re- MMm3 in 2016 to 0.48 MMm3 in 2017. pared to the 2016 sales. fineries. The products with the largest share Among domestic sales, the most sold of ENAP sales corresponded to gaso- product was diesel, with 4.96 MMm3 line and diesel, with 36% and 40%, re- (85,405 bpd), achieving a market spectively. share of 50.8%. Of the total sales in the domestic The second best-selling product was market, 10.43 MMm3 (179,699 bpd) vehicular gasoline, with 4.45 MMm3 corresponded to own production, (76.631 bpd) and a market share of representing 83.7% of total sales. The 95.2%. remaining 16.3%, 2.03 MMm3, (35,034 bpd), was supplied mainly by imports In order of magnitude of sales, the and, to a lesser extent, with purchas- following volumes correspond to ker- es from national third parties. osene, with 1.03 MMm3 (17,781 bpd) and a market share of 61.9%; Fuel oil, with 0.91 MMm3 (15,609 bpd) and a market share of 98.9%; LPG, with 0.38 MMm3 (6,460 bpd) and a mar-

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ENAP’S REFINING AND MARKETING IN MAGALLANES

Fuels supply for the Region of Fuel Supply for the XII Region Magallanes y Antártica Chilena. 300,0 ENAP’s Refining and Commercializa- 250,0 tion Business Line in Magallanes sold 3 a total volume of 283,329 m of liquid 200,0

fuels (gasoline, aviation kerosene, ve- 3 150,0

hicle and marine diesel), 0.2% lower Mm than 2016, fully supplying the region- 100,0 al demand. 50,0

0,0 2012 2013 2014 2015 2016 2017

Gasolinas KeroJet Diésel B MGO

Gregorio Refinery Refined Crude Oil

237,097 m3 of light crude oil was re- 100% fined (° API > 32). The basket was 80% composed by 95% oil of national origin and 5% from Argentina. 60%

Of the total volume produced in Gre- 40% gorio Refinery, 37% corresponded to 20% naphtha; 14% to aviation kerosene; 0% 20% to marine diesel and 29% to re- 2012 2013 2014 2015 2016 2017 duced crude oil. Nacional Argentino

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Refined Crude Oil Basket

350,0 The sales of the products processed 300,0 at Gregorio during 2017 were as fol- 3 3 250,0 lows: 66,824 m of MGO; 40,425 m of Kerojet; 72,919 m3 of Naphtha and

3 200,0 62,867 m3 of reduced crude. Mm 150,0

100,0

50,0

0,0 2012 2013 2014 2015 2016 2017

E&P Magallanes Sipetrol Geopark Others

Diesel MGO Annual Sales (Includes transfers between lines)

80 With regard to MGO sales in the re- 70 gional market, during 2017 sales de- 60 creased by 7% compared to 2016,

3 50 mainly due to a lower demand for the

Mm 40 product. 30 20 10 0 2012 2014 2015 2016 2017

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Cabo Negro Plant

240,209 m3 of raw product was fractured at the Cabo Negro Plant, of which 59% is of national origin and 41% is imported (the years 2014 to 2016 there was no imported raw product). 200,780 m3 of LPG (propane and butane) and 39,429 m3 of natural gasoline were obtained, of which 15,283 m3 were used to prepare 93 octane gasoline.

Fractured Raw Product

600 Of the total LPG processed in Cabo Negro, 84,415 m3 (equivalent to 43.3 MTon), most of it was used to sup- 400 ply the demand for liquefied gas in the Central zone of the country and a smaller part to supply Regions XI, Aysén del General Carlos Ibáñez del 200 Campo, and XII, Magallanes y Antár- tica Chilena.

0 With respect to LPG exports, these 2012 2013 2014 2015 2016 2017 amounted to 131,112 m3 (equivalent to 72.3 MTon) with various destinations Materia Prima Nacional Materia Prima Importada such as Ecuador, Puerto Rico and the Mauritius Islands in the Indian Ocean to mention a few.

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TRAINING AND LEARNING FOCUS OF THE BUSINESS IN 2018

Training activities meant approxi- In addition, cross-sectional train- Given the success that was achieved mately 9,042 hours. The different ing was conducted on PES, SafeStar in 2017, by 2018, the focus is to con- courses by area are: standards, advanced defensive driv- tinue on the same path, generating ing, basic concepts of handling dan- other strategic alliances that allow Laboratory: Training in Infrared Spec- gerous substances, interpretation, incorporating new raw products into trometry (FTIR) and Software use, and analysis of the ISO 9001: 2015 our processes, in such a way to ex- Pinacale Atomic Absorption Instru- quality management system, togeth- pand the business to new horizons ment, Introduction to the Charac- er with professional development and and customers, strengthening the terization of Reservoirs and Inter- strengthening programs. role of ENAP in the supply of liquid fu- pretation and Analysis of NCH ISO els and liquefied gas for the Regions 17025:2005. In addition, the commercial area par- of Magallanes, Aysén and other locali- ticipated in the IHS Latin America Maritime Operations: Control of spills ties of the austral zone. LPG Seminar&Workshops 2017. into the sea and inland waters (OS- MGRA15), Emergencies with LPG and LNG, IMO 3.21 Port Facility Protec- tion Officer, OSMGRA16 On-Scene Commander-Americas (IMO Level2) and participation in the XI Forum and International Fair on maritime safety and protection.

Plants and Terminals: Certification in API Standard 653, Seminar of Pneu- matic Systems applied to the Oil In- dustry, Measurement, calculation and volumetric balance processes (S- TMS) and Training program in measurement and verification of projects.

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QUALITY MANAGEMENT SYSTEM ISO 9001:2008

The first certification of the Qual- Services, maintaining their certificate the importance of adopting a Qual- ity Management System of R&C Ma- in force until September 2018. ity Management System (QMS) ) as a gallanes was in November 2006, strategic decision for an organization. Once this process was completed, carried out and evaluated by the certi- work began throughout 2017 and fication company Bureau Veritas. The early 2018 on the transition and nec- continuity in the development and im- essary regulatory changes so that, plementation of this system has been in the next follow-up audit, the “Up- maintained up to the present. grade” of the standard can be cho- Thus, during 2017 said certifying com- sen (ISO 9001: 2015). For this, gap pany satisfactorily performed two au- analyses, work plans, training and dits, the last one in September, suc- communication of the modifications cessfully recertified under ISO 9001: that presented this new version to 2008, corresponding to the manage- all areas were carried out, where the ment of the processes of the Plan- essential objective will be to achieve ning, Crude Oil Refining and Fraction- the successful Up Grade with Bureau ation of LPG for the production and Veritas in April 2018. By 2018, a fun- commercialization of fuels. Specifi- damental part of the QMS will be the cally, the processes of Quality Certi- implementation phase towards the fication of Products, Maintenance, transition from ISO 9001 from version Operations, Plants and Terminals, 2008 to version 2015, with the pur- Logistics and Supply Planning, Mar- pose of maintaining the current cer- keting and R&C Directorates Man- tificate. Its focus will be to encourage agement in Magallanes, as well as greater attention from internal and the support processes: Training and external stakeholders, as part of the Development, Management of Mate- adoption of a risk-based approach to rials Procurement and Contracting of quality management, and to highlight

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INVESTMENT AND FINANCING MANAGEMENT

2017 R&C Investments Hydrogen recovery in gases from the Catalytic Reforming Unit - The refineries Aconcagua (includ- Aconcagua Refinery ing Logistics investments), Bío Bío and R&C Magallanes facilities made This project will allow the hydrogen During 2017, civil works were com- disbursements for investment proj- concentration of the Aconcagua Re- pleted and a large part of the main ects amounting to US$14.57 million, finery fuel gas to be maintained at equipment was received, beginning US$20.76 million and US$0.38 mil- levels adequate for the operation of the assembly and interconnections lion, respectively. existing furnaces and boilers, avoid- of the plant. By 2018 it is expected ing a their potential unsafe operation. to complete the assembly and the The progress made on the main in- This also allows using the recovered start of the operation during the first dustrial projects are as follows: hydrogen as an input in the process months of the year. In 2017, the proj- units. ect had a disbursement of US$8.372 million.

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Construction and Modification of received, a large part of the detailed Construction of New Islands in Loading Yard - San Fernando engineering and acquisitions and the the Loading Yard of Cabo Negro – construction began. The execution of Magallanes This project will allow to strengthen the project will continue in 2018 and the loading yards within the commer- This project aims to make the neces- the start-up expected for the second cial strategy of ENAP, to approach the sary modifications to the current load- semester. In 2017, the project had a industrial market and the developing system and update it according to disbursement of US$18.307 million. ment of retail distributors, expanding legislation. During 2017 the construc- the geographic coverage and the mix Construction of Isomerization Plant tion, assembly, and start-up of the of products in Loading Yards. - Bío Bío Refinery. yard was completed, with a total disbursement of US$ 4.485 million. During 2017, the EPC contract for the This project will increase the produc- execution of the works was devel- tion of Isomerate with a minimum oc- Acid Plants Construction - Bío Bío oped, beginning the start-up in De- tane of 82, in order to have greater and Aconcagua Refineries cember of that year. The project had flexibility in the formulation of gaso- These projects aim to improve the a disbursement of US$4.111 million in lines, as well as increase the produc- treatment of acid gases in both ENAP 2017 and a global disbursement close tion of final gasolines (93 and 97 oc- refineries. to US$ 5.700 million. tane) at ENAP refineries. During 2017, the development of the Installation of FCC (Wet Gas The development of the basic engi- basic engineering of the Plants was Scrubber) emissions abatement neering of the Plant was completed completed and the management of system - Bío Bío Refinery in 2017, and the management of en- environmental permits in both loca- vironmental permits and the bidding This project will allow to reduce the tions began. By 2018, it is expected to of the EPC contract was initiated. By emissions of fine particulate matter obtain the environmental permit for 2018, it is expected to obtain the en- and sulfur compounds, fulfilling the Aconcagua, continue with environ- vironmental permit and initiate the commitment made to the environmental management in Bío Bío and development of the execution con- mental authority. initiate the bidding of contracts for tract. In 2017, the project had a dis- execution in the two refineries. Alto- During 2017, the main equipment bursement of US$0.963 million. gether, the projects had a disburse- (Scrubber and Heat Recuperator) was ment of US $ 1.249 million in 2017.

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Construction of Acid Water Installation of FCC (Wet Gas Scrub- Construction of Deasphalting Plant - Treatment Plants - Bío Bío and ber) emissions abatement system in Bío Bío Refinery Aconcagua Refineries Aconcagua – Aconcagua Refinery This project will increase the produc- These projects aim to increase the This project will reduce the emissions tion of gasoline and diesel, and re- capacity of acid water treatments in of particulate matter and sulfur diox- duce the production of Fuel Oil, in ad- both refineries of ENAP, in order to ide generated in the area of the Cata- dition to increasing the potential for ensure the reliability of the process lytic Cracking Unit. processing heavy crude oil at a lower units and the utilization rate, as well cost. The development of the Basic Engineer- as to adapt their treatment capacity ing of the Plant and the environmental During 2017, the tender for the ba- for future requirements of the refin- procedures began in 2017. By 2018, it is sic engineering of the Plant was ne- eries. The development of the basic expected to advance with these topics gotiated, whose implementation is engineering of the Plants was com- and develop other engineering studies. expected by 2018, in addition to ini- pleted in 2017. By 2018, it is expected In 2017, the project had a disbursement tiating environmental processing. In to start processing the environmental of US$0.248 million. 2017, the project had a disbursement permit in both locations, as well as the of US$0.510 million. bidding for contracts for Execution.

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SUPPLIERS SYNTHESIS OF RESULTS

In 2017 Enap Refinerías S.A. covered ENAP Refinerías S.A., had profits of The Gross Margin of the R&C Busi- 98% of its crude oil requirements with US$75.3 million for the year, com- ness Line of US$ 378.7 million was imports from Latin America and 2% pared to the US$233.4 million profit lower than the US$ 429.3 million ob- with imports from Europe. as of December 31, 2016. The lower tained in 2016, as a result of a high- profit of US$ 158.1 is mainly explained er cost of the refining basket where All crude oil was acquired through by higher costs of crude oil purchases lower discounts were obtained in the purchases in the spot market. and that in 2016, US$ 92.7 million repurchase of crude oil. It was also due As for purchases of refined products, lated to the positive impact on results to a non-crude oil increase in costs re- the main origins were USA, with 87% of the acquisition of the Petropower lated to the higher international price of purchases, and Asia (South Korea complex is included under Other of Brent crude oil and to a greater use and Japan), with 10% of purchases. gains. The EBITDA generated as of of complementary loads, which also December 31, 2017, was US$428.3 increased their cost. The above was million, compared with US$493.2 positively offset by higher sales vol- million generated as of December umes of own production. 31, 2016. The equity of ENAP Refin- The Gross Margin of the G&E Busi- erías S.A., was US$839.9 million as ness Line had a negative margin of US of December 31, 2017, an increase of $ 1.2 million and compares positively US$69.3 million compared to Decem- with the negative US $ 8.9 million ob- ber 2016. tained in 2016, this improvement is Consolidated gross margin reached mainly explained by (i) Greater export US$377.5 million, which is explained of volumes to Argentina and (ii) to by the gross margin of the Refining the incorporation of the energy sales and Commercialization Business Line margin. of US$378.7 million, and the negative margin of US$1.2 million of the Gas and Energy Business Line. The gross margin as of December 31, 2016, was US$420.4 million.

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PROPERTY AND EQUIPMENT

Aconcagua Refinery cluding one single buoy in Quintero; At this refinery the main crude oil a chemical laboratory; headquarters and complementary load process- for the Fire Department for 24-hour ing plants are: Topping and Vacuum shifts; fire engines, equipment and I, Topping and Vacuum II, Visbreak- elements for fire-fighting; specialized ing, Catalytic Cracking, Continuous maintenance and repair workshops Catalytic Reforming, Hydrocracking, for all the plants; emergency electri- Mild Hydrocracking (MHC), Gasoline cal equipment powered by diesel fuel Hydrodesulphurization (HDG), Diesel and gas; a natural gas interconnec- Hydrotreatment, Isomerization, Al- tion system to be used as fuel in boil- kylation Complex, DIPE Plant, Sulfur ers and to generate steam; and facili- Plants, and Delayed Coker Complex. ties for contractors.

Also, there are a Sulfuric Acid Regen- The company also owns the following eration plants, a Sulfur Fixation plant, real estate in Concón: Avenida Bor- Kerosene, a Liquefied Gas and Fuel goño 25777 building (industry), C-9 Gas Treatment plant, an Effluent and Sports Field Lot; S-Sonacol Lots (in- other treatment plant; closed cooling dustry); Lot E7/B6 (vacant); Dos Norte, system; oil pipeline from the refinery Lot R-1 (industry); Vía 2 to 5, Lot E7/ to the Quintero Maritime Terminal; B1 (vacant); Calle 2 Norte, Lot R-3, internal piping facilities from the pool (industry); Tierra del Fuego and Ma- areas to processing plants and from gallanes (Open House); Vía 2-A-5, Lot these plants to pools of intermediate R-5 (vacant); ERSA Aconcagua private and final products; pumping areas to road, Lot R-4 (vacant); Lot R-6-3 (in- send products from the refinery to dustrial); Lot R-6-4 (vacant); Lot R-7 the Metropolitan Region through an (vacant), Dos Norte, Lot H-4 (vacant); oil pipeline owned by Sonacol; pump- Barros Borgoño 25175, Rotonda Con- ing areas and maritime terminals, in- cón, Lot 1, offices; Fundo Colmito, Lot

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1 Well 23 (vacant); Fundo Colmito Lot There are also Merox Kerosene Treat- 2 Well 25 (vacant). It also owns park- ment plant, Gasoline and Liquefied ing 152, on the street Blanco 625 in Gas Treatment plants, Sodium Hydro- Valparaíso; and other two in Avenida sulfide plant; Sulfur Recovery plants Manantiales LT 3A-B, and ST 420. No1 and No2; Gas Treatment plant; Acid Water Treatment plant; Oily Wa- In Quintero, the real estate are: Cami- ter Treatment plant; Cooling Water, no Costero N° 701, Vía 5-6 P.I.V.; Cami- Steam and Power Supply; storage no Costero N° 1201, Vía 5-6 P.I.V.; Lot pools for crude oil and intermediate 117 (vacant); Lot 172 (vacant); Plot 16 and final products. Mantagua (vacant); y Lots 11, 12 and 13, Fundo Las Gaviotas (vacant). Other industrial facilities are the pipelines for the transportation of Bío Bío Refinery end products from the refinery to the At this refinery, the main crude oil city of San Fernando, where it con- and complementary load processing nects with the Sonacol pipeline (San plants are: Topping and Vacuum I; Fernando-Maipú) and pumping sta- Topping and Vacuum II; Visbreaking; tions at Bío Bío Refinery, Chillán, and Catalytic Cracking; Continuous Cata- Molina; oil pipelines from the refinery lytic Reformation; Diesel Hydrotreat- to San Vicente Maritime Terminal for ment 1; Diesel Hydrotreatment 2; Gas- the transportation of crude oil and oline Cracking Desulfurization (HDG); finished products; San Vicente mari- Hydrocracking; Benzene Saturation; time terminal, which has a dock; in- Isomerization; Propylene Separator ternal piping from the tank areas to and Purifier; CHT Hydrogen Plant; the processing plants and from these Delayed Coking (Coker) and Diesel to the intermediate and final product Hydrotreatment (HDT), Cogeneration tanks; gas pipeline for the reception Power Plant; Bío Bío Hydrogen Plant, and delivery of liquefied gas; motor- co-owned with Sigdo Kopper S.A.; Mild pumps for sending products from the Hydrocracking Plant of Gas Oil (MHC). Refinery to San Fernando and San Vi-

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cente; motor-pumps in San Vicente In the Eighth Region Enap Refinerías San Pedro de la Paz District (vacant); for shipments of products by sea and S.A. owns the following properties: Lot B6, subdivision of Lot B of Fundo the reception of imported crude oil Bío Bío Refinery’s land, a building lo- Hualpén, Hualpén; land at the Talca- also by sea; chemical laboratory; fa- cated on Camino a Lenga 2001, Hual- huano General Cemetery, used for ca- cilities and fire station for the Emer- pén District (for industrial purposes); thodic protection of the oil pipeline at gency Response Brigade operated by Faja Fundo Las Golondrinas, Hualpén; facilities; Lot B-2, subdivision of Lot B, the volunteer workers of the plant; Cerro Las Pulgas (used as a pool area), San Miguel de Diguillín, Pemuco Dis- specialized workshops for mainte- Hualpén; San Vicente Terminal: real trict; usufruct for a period of 99 years nance and repairing of all the plants; estate and Lot A-1 Talcahuano; Bo- of part of the estate located in Talca- electricity emergency equipment that catoma Bío Bío land, located in Hual- huano, patch A. works with diesel and natural gas, and pén District; rest of Lot C and Lot A1, an interconnection system for natural both are next to the Refinery; Chillán gas to be used as fuel in boilers and Terminal Lot 7, Route 5, Chillán; Mo- furnaces (steam generation). lina Terminal, Talca; Hijuela Rucalhue,

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Storage and Pipeline Division (DAO)

The main real estate are: Huerto El Milagro, Maipú (Agricultural); Hijuela Norte of San Juan de Chena, Maipú (industrial); North-western portion of Fundo San Gabriel and San Manu- el, Linares; part of Fundo or Chacra Palermo, San Fernando; and Lot N° 7, part of Fundo Las Acacias, Chillán. Liquefied Natural Gas Regasification Plant in Pemuco, Eighth Region.

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QUALITY MANAGEMENT IN REFINING AND COMMERCIALIZATION

ENAP Refinerias S.A. continuing with It promotes in its processes the On the other hand, DAO specified the its commitment to quality, during health, the integral development and update of the Quality Management 2017 it reformulated its Management the safety of the people, the security System in 2017, by achieving the cer- Policy, which today establishes: of the facilities, the care of the envi- tification of ISO 9001, in its 2015 ver- ronment, the commitment with the sion. “ENAP Refinerías SA, assumes the communities and the efficient use of commitment to be a leader in the In this way, the quality management the energy “ management, refining, and distribu- systems of each of the business units tion of hydrocarbons and their deriva- In accordance with its policy, work have given support to other manage- tives, in order to meet the fuel supply has been done in all business units to ment systems that have been imple- needs of its customers and other in- project quality management accord- mented in ERSA, such as; ISO 50001: terested parties, in aspects of prod- ing to the 2014-2025 Strategic Plan. 2011 Energy Management System, uct quality, quantity and opportunity. Chilean Standard NCh 3262: 2012; In particular, the Aconcagua Refinery Gender equality management system Our purpose is to supply fuels through and the Gregorio Refinery were re- and reconciliation of work, family and the execution and development of certified in the ISO 9001 standard in personal life, NCh-ISO 17025; “General their processes, committed to the ap- its 2008 version, and they began the requirements for the competence of plicable requirements and continu- update process for a future certifi- testing and calibration laboratories”, ous improvement of the Management cation under the ISO 9001 standard, ISO 55001; Asset Management Sys- System, ensuring sustainability and version 2015. Meanwhile, the Bio Bio tem and Operational Integrity Man- operational excellence, in order to in- Refinery that has already been recer- agement System. crease the operational reliability and tified in late 2016, focused on the up- competitiveness of the company in dating process for a future certifica- the market. tion under ISO 9001 version 2015.

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LOGISTICS MANAGEMENT

ADMINISTRATION AND MANAGEMENT

In 2017, and consistent with the com- • Promote compliance with environ- • Achieve greater competitiveness pany’s Strategic Plan, the Logistics mental and maintenance require- in relation to a future competence, Management carried out a series of ments. enhancing the management of activities and initiatives focused on • Preserve the commercial position- the supply chain and capture ef- the following challenges: ing. ficiencies. • Develop improvement projects in • To highlight the importance of processes and operational excel- customer service quality concepts. lence. To achieve an adequate communica- • Improve procurement policies. tion of its core functions and to gen- • Develop the organizational struc- erate internal work teams, it is worth ture and staffing. highlighting the realization of the • Compliance with the Structural first workshops in coordination with Safety Program (PES). the commercial areas, Aconcagua Re- finery, and Bío Bío Refinery, as well as Likewise, and regarding the specific the permanent work, carried out dur- objectives of the Business Unit, ing the year by ENAP Maritime Termi- special attention has been given nals group. to: • The generation of transportation capacity to mobilize a larger volume of valuable products from the refineries, as well as the intermediate products necessary for their elaboration.

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COMMITMENT TO SAFETY

Among the most relevant advances in • The goal of obtaining a consolidat- ments with the aquatic environ- security, are the following: ed Accident Frequency Indicator ment, in different bays at the na- below 2.2 (lost time accidents by tional level. millions of man-hours) was met. • Permanent work with the different • Ten and eleven years were com- suppliers of the Logistics Manage- pleted without Lost Time Acci- ment to materialize the progress dents at the Linares and San Fer- of the implementation of the Saf- nando plants, respectively. eStart safety management system. • The Vetting area, which reports to • Execution of training activities, the Maritime Transport Director- infrastructure and equipment im- ate, evaluated a total of 335 ves- provements for the implementa- sels, reducing risk exposure and, tion of the Operational Standards to a large extent, managing this of ENAP Rules for Life (PES, Struc- exposure. tural Safety Program). • The interaction of the Vetting area • Execution of simulation of inci- with maritime terminals is main- dents in the Land Transport Di- tained, evaluating all the ships rectorate, including emergency that are served in them. The objec- agencies, to review the response tive is to guarantee an adequate capabilities and coordination nec- process of revision of operation in essary to control these critical sit- ENAP terminals, regardless of the uations properly and in time. origin of the vessels. • Active participation in joint drills with terminals and maritime authority, in the face of incidents associated with spills and commit-

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LOGISTICS MANAGEMENT DIRECTORATES

Directorate of Maritime Transport and attain a 20% decrease in fuel con- of the tugboat contract of the VIII sumption and emissions. Region is obtained, which provides a The replacement of four tankers cor- reduction equivalent to the renewal responding to ENAP’s time charter The tanker that joins the operation of contracts for one more year. fleet are made in 2017, according to of storage and transport of crude oil the expiration dates of the contracts has a greater capacity, improving the The objectives that are reached with and the planning carried out in 2016. service of imports and also has eco- the activities described are: to make The change considers the replace- efficient technology. In this way, the the supply of the Magallanes area in- ment of two ships of the national efficiency of this type of operations dependent of the fluctuations of the cabotage fleet, the incorporation of increases and a reduction in demur- national cabotage demand, to make an additional ship to perform inter-re- rage costs associated with the move- the necessary movements of prod- fineries movements and the replacement of crude oil is projected. ucts and complementary charges ment of a ship for the operation of between refineries, to increase the In relation to the tugboat service, crude oil. reliability and availability of the fleet, contracts are renewed with improve- decrease demurrage costs, and im- The ships that join the cabotage fleet ments in rates until the year 2021, prove the service to internal and cab- are all ships up to 5 years old, have which entails savings of approximate- otage customers. eco-efficient and sustainable tech- ly US$ 1.8 million per year. Addition- nology from the energy point of view, ally, the activation of the extension

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Directorate of Inventory Control

During 2017, the challenges of the Inventory Control Management Sys- tives, and Committees, SAP Oil&Gas Directorate of Inventory Control and tem (ICMS) project and early investigation of Management basically focused on quality and/or quantity incidents in The purpose of this system is to have consolidating systems and core tools crude oil and products. a standard inventory control process that form a structural part of its func- that considers operating procedures, tions: roles, and responsibilities for the reg- Crude Oil and Products Balance Tool istration, control, and management of (S-TMS) ENAP inventories. During 2017, the team of local trainers from the related This integrated production account- areas was structured and normative ing tool, which provides reliable and and effective communication aspects timely information on the invento- were reinforced, for the subsequent ries of crude oil and products for the training of operative procedures (13) subsequent decision making of the to the workers of each area, sharing company, currently operates on a sys- the experiences of all the loading tem, generating daily balances of the yards of R&C. refineries and DAO. The implementation of the Process Units Balances is For 2018, the main challenges are ori- expected for 2018. ented in the field of Plant Balances, GN/LNG balances, Variations Objec-

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Directorate of Land Transport

During 2017, the land transport area cost reduction and operational im- This system allows the consolidation made changes in its direction incor- provements. and control of the different GPS pro- porating a new director of the area viders of all the carriers that provide Incorporation of new technologies and a new pipeline controller. services to ENAP, in order to auto- In line with ENAP’s safety commit- matically manage safety rules, time of This directorate accumulated a total ment and one of its rules for life (“Safe stay, route deviations and timely noti- of movements by type of transport Driving”), during 2017 the Land Trans- fications to customers regarding their mode as follows (approximate values): port Directorate began the imple- delivery programs. Transportation in trucks: 724,000 mentation of a comprehensive road Finally, at the end of 2017, the instal- tons, with 19,400,000 km traveled. risk management system. This tech- lation of the new corporate image of nology is focused on improving the Transport by pipelines: 5,165,000 m3. ENAP began in the vehicles belong- performance and safety of transport ing to the company’s fixed contracted companies that provide services for These volumes correspond to approx- fleet. imately 50% of the total national dis- ENAP and manage action protocols tribution. for symptoms of fatigue, drowsiness and driving distraction. The infor- With regard to the changes in trans- mation provided by this tool is pro- port contracts, the tender for the cessed online because the system is transfer of LNG Quintero-Pemuco and connected to ENAP’s Land Transport the Concón-Ventanas coal oil trans- Center and coordinates with all the portation tender stand out, both with carriers that are providing services for greater efficiencies and improve- the company. ments in safety aspects. Related to the control of the fleet It is also worth highlighting the ma- contracted by ENAP, an integrated terialization of a new LNG tank main- GPS monitoring system was incorpo- tenance contract, which resulted in rated for all fuel distribution vehicles.

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Storage and Pipelines Division (DAO)

In 2017, DAO developed an Integrated With a focus on improving the com- Management System, which involved prehensive management of DAO, new two major milestones: Updating the core supervisions were created: Head Quality Management System, based of Risk Management, Head of Gen- on the ISO 9001 standard, from the eral and Administrative Services and 2008 to the 2015 version, and obtain- Head of Product Control and Invento- ing the certification of the Energy ry, which has made it possible to pro- Management System based on ISO vide more coordinated and efficient 50001, version 2011. Both manage- support to the storage plants. In the ment systems have been a great con- Pipeline Division, changes were also tribution for the Directorate, main- made to its structure and the Head of taining the quality of its operations Integrated Pipeline Management was as a base, as well as improving its ef- created, which is focused on the op- ficiency. erational integrity of all the oil pipelines belonging to DAO.

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Oil Pipeline South Hualpén-San Fer- nando

Pipeline Integrity Assurance: During 2017 began the diagnosis of the different mechanisms or factors of damage that affect the integrity of the southern pipeline. This report delivered an improvement plan and a list of recommendations, with a general and strategic long-term view.

Consistent with this strategy, during this year the maintenance activities of the pipeline were increased with a focus on mechanical integrity with repair and deepening works, going from a monthly task to six simultaneous tasks.

Hualpén - San Fernando Oil Pipeline Maintenance Plan: During the year, repairs were made to defects for a total of 712 m of repaired pipeline.

Additionally, the repair and remediation of rupture was carried out in the Tinguiririca river sector and prepara- tions for the final solutions in this section and in the Andalién river began.

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DAO PLANTS

The most relevant milestones and ac- Hydraulic Systems for LPG Deliveries integral administration of all ERSA tivities are detailed below: - Maipú, San Fernando, and Linares loading yards. During 2017, the works Plants were completed at the Linares and Electric System Modernization Proj- San Fernando plants. ect, Maipú Plant. This project consists of replacing hydraulic opening and closing systems Maintenance of LPG Tanks - Linares In order to improve the reliability of of safety valves for reception and de- and San Fernando Plants the electrical system and update the livery of LPG, with the aim of having equipment to the current technology, The project for the inspection, main- adequate circuits that guarantee op- investments were made that reduce tenance, and certification of the 10 erational reliability. This project end- the risk of possible failures, in order tanks of the Linares plant and 26 in ed the second half of 2017. to maintain the production process the San Fernando plant was devel- under safe operating conditions. This Construction of San Fernando Load- oped In order to comply with LPG’s project ended the second half of 2017. ing Yard pressurized tank maintenance plan.

Modernization Project of the Maipú - During this year, the execution stage Pemuco LNG Satellite Regasification San Fernando Plant Fire Network of the construction of the loading Plant (PSR) yard was completed. This project aims This project is currently being devel- Maintenance and repair were car- to incorporate a new loading yard to oped at the Maipú plant and its pur- ried out to environmental vaporizers improve ENAP’s strategic position, pose is to adjust the fire systems to bases. particularly in the industrial market, the regulatory framework, through wholesale distributors, and retailers. During 2017, the Plant worked with- the improvement of water storage out problems, supplying the neces- and pumping capacities. In 2017, ac- Automation of ERSA Loading Yards sary LNG for the operation of the Bío tivities for the assembly of pumps and This initiative considers a technologi- Bío Refinery. tenders for the construction of water cal tool (software) to guarantee the tanks for both plants were developed. safety in the control of loads and the

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Vinapú Terminal, Easter Island.

The terminal focused on finalizing The works described above, together projects related to safety and op- with the complete renovation of the erational integrity. The first of these electrical system completed in 2016, was the maintenance of the storage make up the total scope planned for tanks, started in 2014. In 2017, the adaptation to the D.S. 160 of the ter- maintenance of the last two tanks of minal. 800 m3 each was completed, both of Another relevant project that is in its Aviation Kerosene. This meant a new culminating stage is the complete configuration of storage of products renovation of the Fire Network, which per tank, allowing supplies to the ter- led to a change in the fire network minal with a more extensive program- matrix (water - foam), the construc- ming, increasing efficiency in the re- tion of a water tank of 1,800 m3 and ception of products and optimization the incorporation of two fire pumps, of the ship that supplies this terminal. work that will end during the first half In relation to the maintenance of the of 2018. submarine line of the terminal, it was On the other hand, and within the successfully completed in 2017, fulfill- management of the plant, the Safety ing its scope of repair and standard- and Risk Management System (SRMS) ization. was developed for the Maritime and Additionally, and with the objective Terrestrial Terminal, which allows to of maintaining the reliability of the ensure the integrated management supply of Kero Jet for aircraft in Eas- of the terminal, covering safety, op- ter Island, a new refueler truck was erations, and maintenance issues, acquired and will allow continuity of among others. the operation, particularly in periods of high demand.

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HUMAN RESOURCES DAO

Some activities and advances of the Dialogue Work Environment Study period by the Human Resources area In 2017 a Social Dialogue Roundtable Given the results of the organization- of DAO are highlighted below (more was established in DAO, to materialize al climate study carried out in 2017, details in the chapter People Man- formal communication channels be- different lines of action were taken agement). tween the Administration and work- and materialized in a climate man- ers, aimed at strengthening ENAP and agement plan carried out during the thus contribute to the compliance of year. This plan has five axes or area its strategic plan.. of improvement: Communication and Coordination, teamwork and interpersonal environment, recognition, quality of life and development of people. The result of this work was reflected in obtaining the best climate indicator as a unit in Chile.

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Dissemination of the DAO Strategic DAO Olympics Diversity and inclusion Plan The DAO Olympics were held in 2017, Since late 2016, a person with differ- In order to bring the strategic vision after many years of not being carried ent capacities works as external sup- closer to the work teams, the local out. This event seeks to reinforce the port in the area of General Adminis- managers held a series of regular relationship between the different tration and Service of DAO, as part of meetings with the employees of all plants and areas of the Division in a the ENAP - Fundación Descúbreme the Division’s plants. The purpose relaxed atmosphere where the focus Diversity and Inclusion Program. In was to explain in person the role of was on sharing and not on competi- the annual celebration for recogni- the Division within the company and tion. tion of years of service, this collabora- the new challenges that the logistics tor was awarded for his commitment management and specifically DAO to his work, excellent adaptation and will have to face. contribution to this Business Unit.

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GAS AND ENERGY (G&E)

During 2017 the efforts of this line tification in the five operating units consisted in continuing to promote of the country, and the participation greater use of natural gas and improve of ENAP in electricity supply tenders. the competitiveness of the electricity In relation to the economic perfor- market, the supply of cleaner energy mance of G&E, there was an improve- and energy management in the dif- ment in the EBITDA compared to ferent Business Units in the national 2016 of MMUS $17.4. The foregoing is scope. In addition, the Energy Control mainly explained by (i) a greater vol- Management was added to the Line, ume exported to Argentina, (ii) great- continuing with the progress of the er energy margin due to the Energy initiatives that comply with the Co- support contract with Cabo Leones I operation Agreement signed in 2014, and (iii) Articulation of GNL Quintero by ENAP and the Ministry of Energy, purchase option to Borealis. which seeks to promote the efficient use of energy resources in all its operating units.

Remarkable milestones include the agreement to supply natural gas (NG) and long-term regasification between Colbún and ENAP, the cogeneration project in Aconcagua, the Cerro Pa- bellón geothermal project, the development of a wind farm project in Ma- gallanes, the articulation the second natural gas export operation to the Argentine Republic and the first assistance Swap between both nations, the Energy Management System cer-

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GAS MANAGEMENT

Among the main objectives of the Brief History management is the development of In May 2004 the Government of Chile of the regasification terminal project. initiatives that promote the use of the commissioned ENAP to lead the de- Currently, ENAP has a 33.3% and 20% Liquefied Natural Gas (LNG) in the velopment of a project to import LNG participation in these companies, re- national energy matrix, through the that would allow the country to ob- spectively. marketing of volumes of LNG or natu- tain greater independence and secu- ral gas to customers in the industrial, The GNL Quintero regasification ter- rity of supply by diversifying its ener- thermoelectric, transport and distri- minal began operations in September gy matrix. bution sectors. In addition, the Gas 2009 and has had a high utilization Management must set associative Thus, a pool of consumers was creat- rate, contributing significantly to the figures for the development of stra- ed that generated the necessary de- use of a clean fuel and at lower-cost, tegic projects to promote the com- mand to access the international LNG reducing the increase in the price mercialization and improve ENAP’s market, creating the companies GNL of electricity during the period of position in the natural gas domestic Chile and GNL Quintero for the devel- drought that has affected the coun- market. opment, construction, and operation try since 2010 to this date.

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Gas Commercialization through Gas Virtual gas pipeline Mobile LNG Pipelines Thinking about supplying its Bío Bío Mobile LNG corresponds to a busi- The regasified LNG at the Quintero Refinery, ENAP developed a virtual ness model based on the marketing of Terminal is injected into the Elec- gas pipeline using LNG cryogenic liquefied natural gas, by loading cryo- trogas pipeline and transported to trucks, which are unloaded in a Satel- genic tank trucks at the Quintero LNG the points of consumption, includ- lite Regasification Plant (PSR) locat- Terminal, and transport it to industrial ing ENAP’s Aconcagua Refinery, the ed in Pemuco, Eighth Region. There, plants under a valid supply contract. main thermoelectric plants located in LNG is regasified and injected into There, LNG is downloaded in Satellite the central zone, industrial consum- the Pacific Pipeline, which supplies Regasification Power Plants (PSR) ers, residential and commercial gas natural gas to the refinery, and also and vaporized to be used as fuel in its distributors of the Metropolitan and sales volumes of natural gas to distri- respective production processes. This the Fifth Regions, and the intercon- bution companies and industries of process is performed under corporate nection with Argentina for the export the Eighth Region. safety standards whose requirements of Natural Gas. exceed the existing legislation.

Regarding generators, it is worth not- By the end of 2017, 25 industrial PSR ing that during 2017 ENAP and Col- were operating with ENAP LNG, lo- bún S.A. signed a contract for a pe- cated between the IV and X regions, riod of 13 years, which allowed ENAP belonging to different production ar- to place part of its natural gas rem- eas leader in their respective markets. nants and regasification capacity, It should be noted that, during 2017, and Colbún to guarantee the supply ENAP, together with Lipigas, inaugu- of gas for its Nehuenco combined rated two PSRs in Osorno and Puerto cycle plants. Montt, with the aim of supplying the residential and commercial network of these cities.

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Gas Exports to Argentina Energy Swap Chile - Argentina

With the purpose of deepening the The G&E line successfully coordi- energy integration between both nated the first natural gas assistance countries, the G&E business line led, exchange between both nations. This for the second consecutive year, the exchange represents a historical fact, articulation of the export of natural which allowed to support the resi- gas to the Argentine Republic, us- dential demand of the Metropolitan ing the Quintero LNG Terminal and Region and the Fifth Region, as well the Electrogas and GasAndes gas as the demand of the ENAP refinery pipelines. Actually, ENAP led a group located in Concón, during the sched- formed by the main public and pri- uled maintenance of the Quintero vate actors of the national natural GNL Terminal. This agreement allows gas market in the negotiations with the use of the existing infrastructure its Argentinean counterpart ENARSA, in both countries, to provide mutual managing to finalize an export of nat- assistance and thus be prepared for ural gas during Winter, equivalent to any operational contingencies that about 3.0 MMm3 per day. occur on both sides of the Andes.

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PROJECTS, OPERATIONS, AND ELECTRICITY MANAGEMENT

The Projects, Operations, and Elec- Brief History tricity Management aims at the de- With the creation of the Gas and En- This project has had an active pro- velopment and implementation of ergy business line in 2014, Manage- cess of socialization with the com- power generation projects to improve ment has developed a process to en- munities involved, allowing ENAP to the efficiency and safety of the com- ter the electricity market, which was become closer to the residents of pany’s operations, contribute to the achieved by extending ENAP’s line Concón, Quintero, and Quillota, whose competition of the national electric- of business in February 2016. This concerns and suggestions have been ity market and make viable energy allowed participating in bidding pro- considered for the implementation of solutions based on clean energies or cesses of electricity supply, contracts the Nueva ERA Comprehensive Pro- complementing them. for the supply of energy to generators gram. Its main functions include the devel- and the development and realization In 2016, after a strategic partner se- opment of projects, from their stages of electricity generation projects. lection process, an agreement was of conceptual definition, planning, In 2015 the Nueva ERA Power Plant signed with the Japanese company execution, to putting them into ser- Project entered the Environmental Mitsui with which ENAP participated vice. It also considers the operation Assessment System (SEA); the proj- in the bidding process of Electric Dis- of the assets, coordinating the en- ect consists of a generator of 510 MW tribution Companies, a process with ergy requirements of the refineries in Aconcagua Refinery, marking one high participation and competition, in with the growing regulatory require- of the relevant milestones in ENAP’s which prices reached historically low ments of the electricity sector, which process of entering the electricity records, achieving the objectives de- move in a direction of greater require- market. The Nueva ERA Power Plant fined in the Energy Agenda 2014. ments and specific knowledge of the will be developed jointly with a strate- regulations. It is also responsible for Other important milestones are the gic partner of ENAP and will allow the the commercialization and adminis- construction of the Aconcagua Co- company to participate in tenders of tration of electricity supply contracts generator, which began in 2016 and power supply, thus, increasing com- for the generation assets of the ENAP will begin operations in the first quar- petition in the generation market, group of companies. ter of 2018, and the commissioning of which translates into a direct contri- the Cerro Pabellón Geothermal Plant bution to the reduction in the prices in March 2017. of electricity.

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Instalaciones Cerro Pabellón, Segunda Región, Chile.

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Aconcagua Steam Cogeneration Project

The Aconcagua Cogeneration proj- The safe and stable operation with of the current output of the refinery’s ect consists of the construction of a cutting-edge technology allows a boilers). cogeneration plant based on natural more harmonious coexistence with The refinery will consume in full the gas that will produce high-pressure communities and the environment. steam produced by the cogenera- steam to feed the conversion pro- The cogeneration plant will involve tion plant and 35 MW of the electrical cesses of Aconcagua Refinery. In the cessation of operation of two of power generated, injecting the sur- addition, it will produce electricity, the refinery’s boilers, fulfilling the plus to the CEN. supplying the entire demand for this commitment assumed with the com- plant and injecting surplus into the munities. The cogeneration company is locat- Coordinador Eléctrico Nacional (CEN) ed in an industrial sector away from The Aconcagua Cogeneration plant (National Electricity Coordinator). populated areas, surrounded only by consists of the installation of a nat- other industries. This land is located This project is part of the Govern- ural gas turbine, with its respective approximately 2 km east of Concón ment’s Energy Agenda, which has power generator, with a capacity to coastal and 1.6 km from the point of given an active role to ENAP, with the produce 77 MW of power coupled to steam connection. objective of reducing energy costs by a heat recovery boiler that will pro- contributing with the generation new duce 125 ton/h of steam, overheated It is important to indicate that, given projects based on natural gas. at high pressure (Representing 40% the current water conditions in which

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the Aconcagua river basin is located, Refinery. It is expected that the plant On March 15, through Exempt Reso- the cogeneration plant will not re- will enter into operation in the first lution No. 29 of the Environmental quire additional water supply, as it quarter of 2018. Evaluation Service, the favorable En- will operate in a closed condensate/ vironmental Rating of the project was Some mitigation measures commit- steam cycle with the refinery, main- obtained. Subsequently, funds were ted by Environmental Qualification taining the overall consumption of obtained from the Regional Govern- Resolution 318/2007 of this project, water in relation to the current situ- ment of Magallanes to finance the include the paving of Concón streets, ation. project, with the approval of the Re- the improvement of the air qual- gional Council of Magallanes on April The procedures for the approval by ity measurement network, and on- 4 for a contribution of US$ 5 million the National Electrical Coordinator line monitoring of emissions from the for the realization of the project by (CEN) of all the necessary studies for plant and refinery boilers. ENAP. On April 27, the execution of the connection and synchronization Likewise, the project has financed the the Wind Farm was approved by the of the Aconcagua Cogeneration proj- construction of a new park of 11,900 Board of Directors of ENAP and then ect to the electrical system were car- m2 by means of participatory design by the Ministry of Finance. ried out and obtained in 2017. with the neighborhood councils in- Finally, a favorable resolution was ob- As of December 2017, the works of volved, ensuring the preservation tained from the Office of the Comp- the Aconcagua Cogeneration Power of green areas and strengthening troller General of the Republic regard- Plant have a 98% of advance. Regard- ENAP’s relationship with its surrounding the application of regional funds ing safety statistics, at the end of ing communities. to the project.. 2017, 1.400.000 hours were reported Wind Farm in Magallanes without lost time accidents, a clear sign of ENAP’s commitment to the During 2017, the development and safety of its workers. approval stage for the execution of the Magallanes wind farm project Likewise, as of December 2017, more was concluded, which will allow the than 200 people are participating in addition of an installed power of 10 the construction, assembly and inter- MW and contribute up to 18% based connection works with Aconcagua on renewable energies to the region.

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Cerro Pabellón Nueva ERA Power Plant

ENAP and ENEL inaugurated the Cer- Progress in the Environmental Pro- Quillota, as part of the “ Nueva ERA ro Pabellón plant, the first geothermal cess of the Nueva ERA Power Plant Comprehensive Program”. plant in South America, consisting of Project: This project will generate 510 Progress was also made in the presen- two units of 24 MW each. In perma- MW, through a combined cycle plant, tation of the final electric concession nent regime, it will inject approxi- using exclusively natural gas as fuel, request for the substation that will mately 340 GWh per year into the which is environmentally friendlier. allow the connection to the national system. The plant is located in the In February 2017 new inquiries were interconnected system, which was commune of Ollagüe, 4,500 meters received from the environmental au- declared admissible by the Superin- above sea level and in the Atacama thority and in the period between tendency of Electricity and Fuels, in Desert. March and May, meetings were held November. The first unit began its synchroni- with the different services in order zation to the system in March 2017, to clear up doubts regarding the en- while the second unit began in June vironmental effects. Finally, in June 2017. In terms of actual operation, 2017, it is requested to extend un- the Cerro Pabellón plant generated til July 2018 the suspension of the 63 GWh. term for the evaluation of the project, with the purpose of deepening the ENAP and ENEL are partners in Geo- complementary studies, specifically termia del Norte (GDN), owner of Cen- in the results of the health risk study tral Cerro Pabellón, which allowed the prepared by the Department of Public geothermal prospecting studies that Health of the Pontificia Universidad ENAP has developed in the country Católica. for a long period to materialize in a specific project. Additionally, during 2017, several trust works were continued in the communes of Concón, Quintero, and

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Petropower Cogeneration Plant

On the occasion of the purchase of of the Petropower plant, and Acon- required impact analysis to determine the participation interest of the part- cagua and Bío Bío refineries, to meet the way to comply with the least im- ner in Empresa Petropower Ltda., at the new standards required by the pact of the company’s processes. the end of 2016, the representation regulations in force in the facilities, in of this company had to be assumed favor of the correct operation of the before the CEN. Management roles Electrical System. include the management of compliance with the requirements imposed The application of the new require- by the current electrical regulations, ments of the technical standard of working together with personnel quality and safety and service have

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ERSA Bío Bío Self-Producer Energy support contract with Cabo Participation in Power Supply Leones I Tenders One of the relevant initiatives developed by the Electricity Management In 2017, the surplus energy of the Pet- During 2017, ENAP participated in during 2017 consisted in obtaining ropower Power Plant and subsequent various electricity supply tenders for the self-producer qualification for ERSA Self-Producer was commer- final customers, through the surplus- the Central Petropower - Bío Bío Re- cialized through an energy backup es of the Aconcagua Cogeneration finery complex. This allowed ENAP contract with the company Parque Project (ERSA) and the Petropower Refinerías S.A. to enter the electric- Eólico Cabo Leones I S.A., which was power plant. Participation in these ity business as “ERSA Self-Producer”, managed and operated by the Elec- processes is aligned with the objec- together with an important optimiza- tricity Management. The energy sold tive of contributing to the competition of the operational costs associ- through this contract was 177 GWh. tiveness of the sector, as defined by ated with the electricity market. the Energy Agenda.

In order to achieve the qualification, Likewise, and through the offer the requirement was presented to awarded to ENEL in the Electricity the CEN, which was finally validated Supply Tender for Distributing Com- by the Superintendence of Electricity panies 2017, GDN will develop the and Fuels. Among the main benefits third unit of the Cerro Pabellón geo- of the self-producer qualification is thermal plant, with an installed ca- the reduction in payments for the pacity of approximately 33 MW, which use of transmission facilities for the will be put into service by 2024. Central Petropower - Bío Bío Refinery complex, and greater safety and operational autonomy of the complex.

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ENERGY CONTROL MANAGEMENT

The initiatives to comply with the Co- ISO 50001 Energy Management This certification will strengthen the operation Agreement signed in 2014 System Certification. development of the initiatives associ- by ENAP and the Ministry of Energy, ated with the good use of energy in The implementation of the Energy aimed at promoting the efficient use each of the units based on specific Management System (EMS), based of energy resources in all its operat- action plans, in such a way that the on the international standard ISO ing units continued during 2017. ENAP objective can be achieved by 50001: 2011, continued in ERA, ERBB, 2025. The following is a summary of the DAO and Magallanes operations. Cer- main activities carried out during this tification audits began in October year: and ended in early December. With this, ENAP became the largest Chil- ean company certified by this system.

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Energy Efficiency Seal

In November, ENAP was recognized as Likewise, within the requirements to a Leader in Energy Efficiency by win- apply for the Energy Efficiency Seal, ning the seal in its Gold category for the validation of the energy savings its five production units (ERA, ERBB, was requested by an external consul- DAO, E&P Magallanes and R&C Ma- tant. For these purposes, ENAP hired gallanes). This seal delivered by the a consultant with professionals who Ministry of Energy is a recognition for hold important international certifi- those companies that demonstrate a cations related to energy and energy high commitment of the Board of Di- efficiency (CEM and CMVP). rectors and/or Management, in terms of energy efficiency, achieving an organizational culture of good use of energy resources.

In addition to several requirements, ENAP’s recognition was based on the development of ten projects that make good use of energy within its operations, which together total energy savings of 1,174,940 GJ/year, equivalent to 10.4 million dollars.

These initiatives represent 55% of the energy savings presented by the 22 companies that received awards in the three categories of the seal. This energy is equivalent to the annual energy consumption of 42,604 homes.

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Projects

The following is the status as of De- Projects executed in the period Operation of Energy Management cember 2017, considering the initia- 2015-2017 System (EMS) tives executed and in operation in the period 2015-2017, the current ini- The accumulated savings between It is estimated that the operation of tiatives in engineering development the years 2015 - 2017 for projects the Energy Management System in during this year 2017 (product of the already executed and currently in the units will cause a 3% decrease in different Energy Audits, and the work operation are equivalent to MMUS$ global energy consumption, equiva- with the units), and also contemplat- 15 per year of nominal savings and lent to an economic saving of approx- ing the projections of future benefits 1,600,000 MMBTU per year of energy imately MMUS$12.5 per year, and an of the operation of the Energy Man- savings. energy saving of 1,135,000 MMBTU per year. agement System. With respect to the Portfolio of Energy Efficiency latter, it is estimated that by 2025 Projects Energy Audit to ERA and ERBB ENAP will present energy savings of Electrical Systems 4,880,000 MMBTU per year and eco- This portfolio has been built with ini- nomic savings of MMUS$ 55 per year. tiatives that date back to 2015, and An estimated economic benefit of have been generated from Energy Au- MMUS$ 5.5 per year and 480,000 Here is an itemized summary of these dits and proposals raised by the ENAP MMBTU per year of energy savings benefits: units. is estimated, by implementing projects that optimize the electricity con- The official portfolio of Energy Effi- sumption of refineries. ciency Projects for the year 2017 to- tals an estimated economic savings of MMUS$ 22 per year as of December, and an energy saving of 1,665,000 MMBTU per year, with an investment amounting to about MMUS$ 64.4.

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Dissemination of the Energy Policy Energy Efficiency in Projects Training in Energy Efficiency Development ENAP established its Energy Policy, In order to support the implementa- with the participation of senior man- The “Energy Management Manual tion of the EMS in ENAP, the Energy agement and workers of all its operat- in the Development of ENAP Proj- Management Department planned ing units, being approved by the Board ects” was prepared to incorporate and developed different instances of Directors in August and disseminat- energy efficiency in the evaluation of training and awareness in the oped in ERA, ERBB, and ENAP Magallanes and design of projects, and will serve eration units. In parallel, various ac- during December 2016. as support to the Energy Manage- tivities related to knowledge management Team Leader (LEGE in Spanish ment were developed, which allow Technical Cooperation ) of the different Functional units of strengthening the technical capaci- In 2016, ENAP signed a Technical Co- ENAP, to incorporate the variables of ties associated with energy efficien- operation Agreement with the Banco energy management in the evalua- cy, highlighting: de Desarrollo de América Latina y el tion of projects. • E-learning course that was de- Caribe, which is still effective. On the veloped throughout the year, in other hand, the Inter-American Devel- which 1,650 ENAP employees par- opment Bank (IDB) provided funding ticipated in the different business to develop initiatives in DAO. units. • ENAP Energy Manager Certificate, dictated by CAMCHAL. • Measurement and Verification Course, dictated by the Chilean Energy Efficiency Agency (AChEE). • ISO 50001 Internal Audit Course, dictated by the Energy Control Management in E&P and R&C Ma- gallanes.

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MANAGEMENT SUMMARY

In 2017, ENAP was the recipient of 27% of deliveries of natural gas from the Quintero LNG Terminal, either via gas pipeline or tanker trucks loading yard.

Comparison of Deliveries 2016-2017 LNG Quintero Terminal ENAP’s Market Share 2017

120

100 3 Otros 80 73%

Millones de m 40 Enap 27%

0% 10% 20% 30% 40% 50% 60% 70% 80% 0 2016 2017

ENAP OTROS

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During 2017 ENAP’s natural gas volume sales, through Sales destined to the residential-commercial (RESCOM) GNL Quintero, showed a decrease of 5% compared to the and industrial segments of the Fifth and Eighth regions previous year, which is explained by a lower number of increased from 14% in 2016 to 15% in 2017, with respect spot shipments, due to lower demand from the thermo- to the total deliveries product of spot sales. The internal electric market. consumption of the refineries remained at the same levels as in previous years. Natural Gas Deliveries in 2017 The second export of Natural Gas to Argentina, allowed a greater participation of ENAP, managing to increase sales from 7% in 2016 to 14%, in 2017.

GNL Móvil 4% During 2017, it was also possible to reach a total of 25 industrial customers with PSR, achieving a growth of five plants over the previous year. Rescom-Industriales VIII Región 5% The sales of the thermal electricity sector reached 29% of the total deliveries of ENAP and, according to the CEN Exportación 14% electricity generation matrix, during 2017 ENAP had a 15% share of the LNG electricity production.

Rescom-Industriales V Región 10%

CEN LNG Generation ENAP Refinería Bio Bio 11%

Otros 85% ENAP Refinería Aconcagua 26%

Generación Eléctrica 29% ENAP 15%

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At the end of the exercise, ENAP was positioned as a leader in the Mobile LNG market, concentrating 56% at national level, of the installed Regasification Satellite Plants (SRP) for supply of natural gas to industrial customers, which added to the deliveries through the virtual gas pipeline towards Pemuco SRP, represents 75% of the deliveries through the Quintero LNG Loading Yard.

Participation in Volume Delivered TLF Quintero 2017

Otros 25%

ENAP 75%

Participation in LNG Mobile Segment per Number of SRP

Agesa 31%

Enel 13%

ENAP 56%

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6 AFFILIATED COMPANIES

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DIRECTORES, GERENTE GENERAL O DIRECTORIO DE LA SOCIEDAD EJECUTIVOS PRINCIPALES DE ENAP EN DIRECTORIO PROPORCIÓN DE LA INVERSIÓN SOBRE EL TOTAL DE ACTIVOS DE ENAP CAPITAL ACTOS O DOMICILIO DOMICILIO FECHA DE PRESIDENTE DIRECTORES DIRECTORES GERENTE PARTICIPACIÓN DIRECTORES DIRECTORES DIRECTORES RELACIONES MONTO SOCIEDAD RUT SUSCRITO OBJETO SOCIAL CONTRATOS ESTATUTARIO COMERCIAL CONSTITUCIÓN DIRECTORIO TITULARES SUPLENTES GENERAL ENAP TITULARES SUPLENTES ENAP COMERCIALES INVERSIÓN Y PAGADO CELEBRADOS

REFINACIÓN Y COMERCIALIZACIÓN (R&C) REFINACIÓN Y COMERCIALIZACIÓN (R&C)

Fernando Prado, Lorena Oliver, Lorenzo Gazmuri, Ramiro Méndez, Juan Diuana, Juan C. Carrasco, A través de ERSA, Avenida Isabel La SOCIEDAD Comuna de Las Transporte de Alejandro Álvarez, Leonardo Ljubetic, transporte de Católica N° 4472, Javier Villacorta, NACIONAL DE 81.095.400-0 Condes, ciudad 31.05.1957 M$59.575.440 productos derivados Fernando Prado Juan Juanet, Patricia Figueroa, 10.06% No hay No hay productos comuna de Las Roberto Hetz Jorge Lembeye. OLEODUCTOS S.A de Santiago del petróleo y conexos. Pablo Munita, Alberto Corona, derivados del Condes Francisco Javier Villacorta, Jorge Lembeye, petróleo y conexos Nicolás Correa, Alan Sherwin, Joaquín Cruz . José Odone.

PO Box 309, Sociedad de Gabriel Grzona, Mariel Augusto, Ugland House, inversiones y A&C PIPELINE Guillermo Rocchetti, Ricardo Aguirre, Martín Cittadini, 0-E Cayman Islands Grand Cayman, 10.11.1992 MUS$ 900 financiamiento. Gabriel Cesar Grzona 36.25% No hay No hay No hay HOLDING COMPANY Gustavo Chaab, Raúl Rodríguez, Walter Fernández KY1-1104, Controladora Martín Cittadini. Walter Fernández C. Cayman Islands de OTA y OTC.

Transporte Gabriel César Grzona, Mauricio A. Martín, Marc Llambías, OLEODUCTO Sarmiento 778, de productos Miguel Angel Zubizarreta, Rubén P. Ottossen, Martín Cittadini, TRASANDINO 0-E Buenos Aires piso 4, 07.12.1992 MARG$ 34.143 derivados del Gabriel Cesar Grzona Guillermo Rocchetti, Ricardo Aguirre, Mario Pablo Leder 35.79% Marc Llambías Alfredo del Carril No hay Alfredo del Carril, ARGENTINA S.A. Buenos Aires petróleo y Marc Llambías, Alfredo del Carril, Walter Fernández. conexos. Martín Cittadini Walter Fernández.

Marc Llambías Alfredo del Carril, Transporte de Marc Llambías, Servicio de OLEODUCTO Av. El Bosque Sur Martín Cittadini, Walter Fernández, Comuna de productos Martín Cittadini, alquiler de TRASANDINO 96.655.490-8 69 oficina 302, 11.12.1992 M$ 12.771.107 Gabriel César Grzona Gabriel C. Grzona, Mauricio A. Martín, Jaime Pulido 35.83% Marc Llambías Alfredo del Carril Santiago derivados del Alfredo del Carril, estanques y (CHILE) S.A. Las Condes. Alejandro Zubizarreta, Pablo Ottosen, petróleo y conexos. Walter Fernández. cañerías. Guillermo Rocchetti. Ricardo Aguirre.

Comprar y vender, importar y exportar hidrocarburos, refinarlos y comer- cializarlos, tratarlos e industrializarlos. Transportar y almacenar hidrocarburos. - Cuenta corriente Participar junto con mercantil. ENAP en una sociedad ENAP REFINERÍAS S.A. Eduardo Bitrán - Financiamiento de destinada a la explor- Eduardo Bitrán, Jorge Fierro, (“”ERSA””) Jorge Fierro importaciones de acion y explotacion de Jorge Fierro, Carlos Carmona, Sociedad Anónima Av. Borgoño Carlos Carmona crudo y productos Comuna hidrobarburos fuera Carlos Carmona, Alberto Salas, Cerrada, inscrita en el 87.756.500-9 25.777 16.07.1981 MUS$1.403.668 Eduardo Bitrán No Aplica Marc Llambías 99,98% Alberto Salas No hay mediante el pago de Concón de Chile. Recepcionar Aberto Salas, Bernardita Registro Especial de Concón Bernardita que efectúa y almacenar hidrocar- Bernardita Piedrabuena, Piedrabuena, Entidades Informantes Piedrabuena directamente buros en instalaciones María Isabel González. María I. González bajo el número 95.” María I. González. ENAP a los construidas al efectoy proveedores prestar servicios rela- extranjeros. cionados. Construir y operar oleoductos y gasoductos y otorgar servicios de transporte de combustribles, terminales, terrestres y maritimos, de combustibles.

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REFINACIÓN Y COMERCIALIZACIÓN (R&C) REFINACIÓN Y COMERCIALIZACIÓN (R&C)

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DIRECTORES, GERENTE GENERAL O DIRECTORIO DE LA SOCIEDAD EJECUTIVOS PRINCIPALES DE PROPORCIÓN ENAP EN DIRECTORIO DE LA INVERSIÓN SOBRE EL TOTAL CAPITAL ACTOS O DOMICILIO DOMICILIO FECHA DE PRESIDENTE DIRECTORES DIRECTORES GERENTE PARTICIPACIÓN DIRECTORES DIRECTORES DIRECTORES RELACIONES MONTO DE ACTIVOS DE ENAP SOCIEDAD RUT SUSCRITO OBJETO SOCIAL CONTRATOS ESTATUTARIO COMERCIAL CONSTITUCIÓN DIRECTORIO TITULARES SUPLENTES GENERAL ENAP TITULARES SUPLENTES ENAP COMERCIALES INVERSIÓN Y PAGADO CELEBRADOS

REFINACIÓN Y COMERCIALIZACIÓN (R&C) REFINACIÓN Y COMERCIALIZACIÓN (R&C)

Construcción, implementación, opera- ción y explotación de una planta de coker, Avenida Borgoño con la finalidad de Ciudad y Pedro Echeverría F., número 25.777, prestar servicios de ENAP 10,00%; ENERGÍA CONCON S.A. 99.519.820-7 comuna 25.11.2002 MUS$ 21.579 Pedro Echeverría F. José D. Ilharreborde C., No Aplica Marc Llambías No hay No Aplica "No hay No hay comuna procesamiento a Enap ERSA 90,00% de Concón y José P. Scagliotti R. de Concón Refinerías S.A, de fondos de barril crudo para transformarlos en productos livianos (díesel y gasolina).

Producción de energía y procesamiento de combustible mediante el desarrollo, la construcción y el SRL es SRL es SRL es Contrato de Camino Claudio Montes PETROPOWER Comuna de mantenimiento de una administrada ERSA 92,5% administrada administrada operación y 78.335.760-7 Ramuntcho 22.12.1992 MUS$70.461 No aplica No Aplica (Ejecutivo No hay ENERGÍA LTDA. Providencia planta de coquización directamente ENAP 7,5% directamente directamente mantención de s/n Hualpén Principal ENAP) retardada, incluyendo por los socios. por los socios por los socios. la Cogeneradora. una planta de cogeneración de energía eléctrica, vapor y agua desmineralizada.

Construcción y operación de una planta Juan E.Errázuriz Málaga 120, COMPAÑÍA DE destinada a la Naoshi Matsumoto, Comuna de Las Condes, Juan Eduardo ERSA 5% Luis Manríquez HIDRÓGENO 99.519.810-K 17.02.1993 MUS$6.597 producción de Juan Pablo Aboitiz, No Aplica Juan Pablo Aboitiz No hay No hay No hay 0,02% Las Condes Región Errazuriz ENAP 5% Balmaceda BÍOBÍO S.A. hidrógeno de alta Gonzalo Cavada, Metropolitana pureza a partir de gas Luis Manríquez. natural y otras cargas.

Distribución de gas Servicios varios Calle 2 Norte Angel Mafucci, José M. Bambach, licuado con cobertura de transporte Contrato de N° 200, comuna Osvaldo Rosa, Mylene Iribarne, Pendiente Ciudad de entre la Primera y Se- Jorge Lembeye de GLP, Suministro de NORGAS S.A. 78.889.940-8 de Concón 12.08.1996 M$2.758.365 Angel Mafucci Esteban Rodríguez, Luis Alberto Orlandi, Morris Pessó 42% Marc Llambías designación de 1835 Viña del Mar gunda Región de Chile. Francisca Díaz además de Gas Licuado (Planta Concón Jorge Lembeye, 2 Vacantes directores Enap Importación de gas la compra de Petróleo. Lipigas) Francisca Díaz. (directores ENAP) desde Argentina. de GLP a granel

EXPLORACIÓN Y PRODUCCIÓN (E&P) EXPLORACIÓN Y PRODUCCIÓN (E&P)

Realizar fuera del territorio nacional, actividades de exploracion y explotacion de hidrocarburos; comercializar dentro o fuera ENAP SIPETROL S.A. del territorio nacional, Eduardo Bitran, Eduardo Bitran, - Cuenta corriente (“”SIPETROL””) los hidrocarburos que Eduardo Bitran, Bernardita Bernardita Piedra- mercantil. Sociedad Anónima provengan de sus Bernardita Piedrabuena, Piedrabuena, buena, - Prestación de Cerrada, inscrita Av. Apoquindo Julio Aranis Ciudad de propias actividades Paul Schiodtz, ENAP 99,613 % Paul Schiodtz, Paul Schiodtz, servicios en el Registro 96.579.730-0 2929 piso 5 24.05.1990 MUS$639.222 Eduardo Bitran No Aplica (Ejecutivo No hay Santiago en el exterior o de la Jorge Fierro, ERSA 0,386% Jorge Fierro, Jorge Fierro, petroleros y Especial de Las Condes. Principal ENAP) actividad de sus fili- María Isabel González, María Isabel María Isabel prestación de Entidades ales; prestar servicios Carlos Carmona González, González, servicios Informantes de asesoria, tanto en Carlos Carmona. Carlos Carmona. administrativos. bajo el número 187. Chile como en el extranjero, en las actividades de exploracion, explotacion y benefi- cio de yacimientos de hidrocarburos.

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EXPLORACIÓN Y PRODUCCIÓN (E&P) EXPLORACIÓN Y PRODUCCIÓN (E&P)

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EXPLORACIÓN Y PRODUCCIÓN (E&P) EXPLORACIÓN Y PRODUCCIÓN (E&P)

La exploración y explotación de hidrocarburos, compraventa, importación, exporta- ción, almacenamien- tos y transporte de hidrocarburos y sus subproductos; su refina- ción y comercialización; Martin Cittadinni, ENAP SIPETROL ENAP SIPETROL montaje, construcción, Roberto Abraham, Martin Cittadinni, 0-E MARS$ 15.029 Hesketh Streeter Lisandro Rojas Martin Cittadini S.A. 99,5 % Hesketh Streeter No hay ARGENTINA S.A. y operación de insta- Hernán Flores, Hesketh Streeter ENAP 0,5% laciones y estructuras Miguel Pesque. de perforación, elabo- ración y procesamiento mineras y petroleras; prestar servicios de asesoramientos relacio- nados a las actividades anteriores; operación de plantas petroquímicas.

Estudio, exploración y explotación de hidrocarburos líquidos y/o gaseosos y demás minerales, su industria- lización, transporte y co- mercialización y de sus derivados. Generación Luis Díaz, ENAP SIPETROL de energía eléctrica Walter Fernández, PETROFARO S.A. 0-E MUS$ 20.318 Daniel Abraham Alberto Rivero, No Aplica ARGENTINA S.A. No hay No hay Walter Fernández No hay a partir de hidrocar- Marcos C. Hirsch Francisco García. 100% buros; Realización de inversiones y aportes de capital con exclusión de las previstas en la ley de entidades financieras, y otras para las que se requiera el concurso público.

Ejecución de labores destinadas a la explo- ración, explotación, estudio, investigación, arrendamiento de equi- pos, maquinarias y cam- pamentos, prestación de servicios destinados ENAP SIPETROL PETRO Diego Blanco, 0-E MARS$2.000 a la exploración y explo- Ariel Azar Nuñez No Aplica No Aplica S.A. 99,5% Ariel Azar Nuñez No hay Andrea Sabignoso No hay SERVICIO CORP S.A. Andrea Sabignoso. tación de yacimientos ENAP 0,5% de hidrocarburos, y en general desarrollar cualquier actividad industrial, minera y comercial relacionada con yacimientos de hidrocarburos.

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EXPLORACIÓN Y PRODUCCIÓN (E&P) EXPLORACIÓN Y PRODUCCIÓN (E&P)

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EXPLORACIÓN Y PRODUCCIÓN (E&P) EXPLORACIÓN Y PRODUCCIÓN (E&P)

En el exterior: Inversio- nes; Operaciones de Comercio Internacional; Operaciones financieras; Operaciones co- Ciudad de 25 de mayo merciales, industriales, SIPETROL Hesketh Streeter, ENAP SIPETROL Hesketh Streeter, Hesketh Streeter, 0-E Montevideo, N° 455, piso 4, 27.12.1989 MUS$66.747 en diversos ramos; Toda Hesketh Streeter No Aplica No Aplica No hay No hay INTERNATIONAL S.A. Lisandro Rojas Galliani S.A. 100% Lisandro Rojas. Lisandro Rojas. Uruguay. Montevideo clase de operaciones con bienes inmue- bles. En el país podrá efectuar actividades permitidas por la Ley 11.073.

La actividad hidrocarburífera incluyendo la ENAP SIPETROL EOP OPERACIONES 0-E MUS$2.659 exploración, Diego Diaz No Aplica No Aplica Eduardo Tapia S.A. 99% No hay No hay No hay No hay PETROLERAS S.A. explotación, transporte ERSA 1% y comercialización de hidrocarburos.

CLASE A: CLASE A: Luis F. De Ridder, Gustavo Carlos Monti, Alberto D. Massacese, Daniel E. Valencio, Esteban Rivarola, Prestación de servicios TERMINALES Rodolfo E. Berisso, Walter Fernández, de almacenaje y ENAP SIPETROL Martín Cittadini, MARÍTIMAS 0-E 06.01.1994 MUS$ 15.939 Federico Caldora Néstor H. Falivene, Daniel G. Ciaffone, Daniel Scalise No hay No hay No hay embarque de S.A. 13.79% Walter Fernández PATAGÓNICAS S.A. Martín Cittadini. Walter José Ramón hidrocarburos. CLASE B: Tomás. Andrés M. Scarone, CLASE B: José M. Márquez. Raúl Á. Rodríguez, Gustavo E. Di Luzio

Lorenzo Gazmuri Schleyer, Ramiro Méndez, Exploración y Heskeet Streeter, COMPAÑÍA Ciudad y Leonardo Ljubetic, Juan C. Carrasco, ENAP 20% producción de Ramón Concha Álvaro Hercolani, LATINOAMERICANA 96.668.110-1 comuna de 31.12.1992 M$ 3.101.208 Lorenzo Gazmuri Federic Chaveyriat, Ramon Concha, ENAP SIPETROL Heskeet Streeter No hay No hay hidrocarburos Barrientos Lisandro Rojas, PETROLERA S.A. Santiago. Heskeet Streeter, Lisandro Rojas, S.A. 20% en el extranjero. Denisse Abudinen. Álvaro Hercolani. Denisse Abudinen.

SIPETROL Desarrollo comercial INTERNATIONAL de los descrubrimientos Asraf Ashraf Yehia El Amir, S.A.50% en el área del contrato Mahmoud Mostafa, (en comunidad East Ras Qatara, Abdalla Bekheet, con KUWAIT suscrito con la Egyptian Medhat El Basel, PETROSHAD O-E MEGP 20 Ashraf Yehia El Amir No Aplica Sayed Rezk ENERGY No hay No hay No hay General Petroleum Sayed Rezk, COMPANY), Corporation para la Walid Gad, 50% EGYPTIAN exploración y Kamel El Sawi, GENERAL explotación de Ahmed Haidar PETROLEUM hidrocarburos. CORPORATION.

Producción y comer- cialización de biodiesel de segunda generación Gerardo Passeron, Alvaro Araya, a partir de la biomasa José Barriga, Álvaro Araya, Exequiel Gonzalez Jeria, FORENERGY S.A. Ciudad de forestal, incluyendo Paulina Valenzuela, Álvaro Hercolani, 76.932.370-8 10.08.2007 M$ 508.542 Peter Hiller Peter Hiller, Paulina Valenzuela S. ERSA 40.00% No hay No hay No hay en Liquidación Santiago determinar la viabilidad Daniel Hiller, José Barriga, Juan Jose Cueto, y ejecutar el proceso de Antonio García E., Gerardo Passeron. Pablo Vargas. instalación, construc- Antonio García. ción y desarrollo de una planta piloto.

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GAS Y ENERGÍA (G&E) GAS Y ENERGÍA (G&E)

Explotar, almacenar, transportar, distribuir, comercializar, im- Pedro Echeverría, portar, exportar e intermediar Av. Apoquindo Pedro Echeverría Faz, Alfredo del Carril, José Domingo Pedro Echeverría, Comuna de toda clase de combustibles y ENAP 95% GAS DE CHILE S.A 96.694.400-5 2929 piso 5, 15.03.1994 MUS$ 1.896 Pedro Echeverría José D. Ilharreborde, Se eliminaron (Ejecutivo Ilharreborde, No hay José D. Ilharreborde, No hay Santiago subproductos o ERSA 5% Las Condes y José Pedro Scagliotti. Principal ENAP) y José P. y José P. Scagliotti derivados, y en especial gas Scagliotti Ravera natural en cualquiera de sus formas o estado.

Klaus Lührmann, Pendiente, Carmen Figueroa, Ernesto Peñafiel, - Contrato de Participar en sociedades cuyo Rafael Salas, Gonzalo Ojeda, compra de objeto sea comprar, vender, O’higgins 940, David Minchot, María Teresa Rojas, gas natural Ciudad de comercializar y suministrar gas INNERGY HOLDING S.A. 96.856.650-4 piso 10, comuna 23.01.1998 MUS$ 191.513 Klaus Lührmann Mauricio Midón, Pablo Sánchez, Patricia Palacios 25% No hay No hay Jorge Lembeye - Servicio de Concepción natural o construir y explotar y de Concepción Francisco Sánchez, Edmundo Laborde, Operación y operar toda clase de redes de Jorge Lembeye, Pendiente, Mantenimiento transporte de gas natural. Francisca Correa, Pendiente, PSR. Roberto Piriz. Juan I. Vinagre.

Matias Hepp, Horacio Cristiani, Pablo Sobarzo, Gabriel Wilkinson, Carmen Figueroa, Uriel O´Farrel, Walter Fernandez, Klaus Lurhmann, Compañía dedicada a a la Agustin Siboldi, Jorge Lembeye, Gonzalo Soto, GASODUCTO DEL inversión y financiamiento. Mauricio Midon, Martín Cittadinni, 0-E 22.08.1995 MUS$ 50 Horacio Cristiani Rafael Salas, Mauricio Midón 22.80% No hay No hay No hay PACÍFICO CAYMAN S.A. Controla a Gasoducto del Walter Fernandez, Rafael Salas, Paula Valenzuela, Pacífico Argentina S.A. Jorge Lembeye, Paula Valenzuela, Yasna Ross, Martín Cittadinni, Yasna Ross. Ignacio Noguera, Roberto Piriz, Marcos Miguel Alejandro Fernandez, Browne.

Horacio Carlos Cristiani, Pablo Sobarzo, Gabriel Wilkinson Rafael Salas, Uriel O’Farrell, Gonzalo Soto Walter Fernandez, Operar el gasoducto para Agustín Siboldi, Klaus Lührmann Jorge Lembeye, GASODUCTO DEL transportar gas natural desde Mauricio Midón Matías Hepp, Martín Cittadinni, PACÍFICO ARGENTINA 0-E 22.08.1995 MARS$155.811 Argentina hacia Chile y realizar Horacio Cristiani Mauricio Midón 2,63% No hay No hay No hay Carmen Figueroa Walter Fernández Rafael Salas, S.A. todas las actividades relacio- Jorge Lembeye Paula Valenzuela, Paula Valenzuela, nadas con ese servicio. Martín Cittadini Yasna Ross Yasna Ross Roberto Piriz Juan I. Vinagre, Alejandro Fernández Marcos Browne .

Pablo Silva Pablo Sobarzo, Parte de la Pablo Sánchez Matías Hepp, Yasna Ross, provincia de Ernesto Peñafiel, Construcción, Gonzalo Soto, Jorge Lembeye, Santiago sobre Rafael Salas, propiedad, exploración y ope- Carmen Figueroa, Oscar Santibañez, GASODUCTO DEL la que tiene David Minchot, 96.762.250-8 07.08.1995 MUS$ 105.842 ración tecnica y comercial de Klaus Lührmann Klaus Lurhmann, Patricia Palacios 25% No hay No hay Patricio Pérez- No hay PACÍFICO S.A. jurisdicción el Gonzalo Ojeda, gasoductos para Mauricio Midón, Cotapos, Conservador Paula Valenzuela, transportar gas natural. Jorge Lembeye, Fernanda Nash, de Comercio de Patricio Pérez - Yasna Ross, Ignacio Noguera. Santiago Cotapos, Oscar Santibáñez. Claudia Escobar.

Sociedad anónima cerrada de carácter operativo cuyo objeto social es prestar servicios de Thomas Keller Lippold, Rodrigo Pérez, transporte de gas natural y Contrato de Juan Eduardo Vásquez, Sebastián Fernández, Ciudad de otros combustibles , por cuen- Alfredo del Carril, transporte de ELECTROGAS S.A. 96.806.130-5 14.10.1996 MUS$ 21.266 Eduardo Lauer Rodrigo Costa, Marta Almeida, Alan Fischer 15% Alfredo del Carril Oscar Santibáñez Santiago ta propia o ajena ,para lo cual Óscar Santibáñez. Gas Zona 1 y Gonzalo Morais Soares, Joao Faria Conceicao, podra construir, operar y man- Zona 2. Alfredo del Carril. Óscar Santibáñez. tener gasoductos , oleoductos, poliductos e instalaciones complementarias.

292 / ENAP MEMORIA ANUAL 2017 / EMPRESAS RELACIONADAS

GAS Y ENERGÍA (G&E) GAS Y ENERGÍA (G&E)

ENAP MEMORIA ANUAL 2017 / 293 / EMPRESAS RELACIONADAS

GAS Y ENERGÍA (G&E) GAS Y ENERGÍA (G&E)

Gas Sales Agreement entre ERSA y GNL Chile S.A. Juan Oliva Vasquez Rosario Norte Servicios de importación Alex Díaz Sanzana (“”GNLC””). Ciudad de Juan Oliva (presidente) Javier Yasna Ross GNL CHILE S.A. 76.418.940-K 532, oficina 1303, 16.11.2005 MUS$ 3.026 y comercialización Javier Fuenzalida, Alejandro Palma 33.33% No hay Sale and Pur- Santiago Vásquez Yasna Ross Romero Fuenzalida Javier Fuenzalida Las Condes. de gas natural. Gonzalo Romero chase Luis Arancibia Yametti. Agreement entre ERSA, GNLC y BGLNG trading.

Jose Antonio De Las Jose Antonio De Las Heras, Heras, Jesús Saldaña Fernández, Desarrollo, construcción, Jesús Saldaña, Rosario Norte Carlos Ródenas de la Vega, Ciudad de operación y mantenimiento de Pendiente Carlos Ródenas, Antonio Nicolás García, GNL QUINTERO S.A. 76.788.080-4 532, oficina 1604, 09.03.2007 MUS$ 114.058 Luis Romero Urrestarazu, 20% Nicolás García Andrés González Santiago una terminal de regasificación designación Luis Romero, Bacigalupo Andrés González. las Condes Bruce Crane, de gas natural licuado. Bruce Crane, Juan Camargo, Juan Camargo, Nicolás García Nielsen. Nicolás García.

Investigación, exploración, Av. Presidente Claudio Montes Dessy, Carlos Alberto Reyes, Claudio Montes desarrollo y explotación de Carlos Alberto GEOTERMICA DEL Ciudad de Riesco 5335, Valter Moro, Liliana Schnaidt, Claudio Montes Dessy, 96.971.330-6 29.12.2000 M$242.363.020 energía geotérmica y todas Ali Shakhtur Said Guido Cappetti 15,41% Reyes NORTE S.A. Santiago Piso 15, Ali Shakhtur Said, Francesco Tutoli, Dessy Carlos Alberto sus actividades complemen- Comandari Las Condes Giuseppe Di Bello. Adrien Coudurier, Reyes Comandari. tarias.

Investigación, exploración, Av. Presidente Claudio Montes Dessy, Rodrigo Lobos Roldan, Claudio Montes, desarrollo y explotación de Claudio Montes, EMPRESA NACIONAL Ciudad de Riesco 5335, Carlos Alberto Reyes, Gonzalo Paredes Saieg, Rodrigo Lobos, Carlos A. Reyes, 99.577.350-3 05.01.2001 M$12.647.753 energía geotérmica y todas Ali Shakhtur Said Guido Cappetti 49.00% Carlos A. DE GEOTERMIA S.A. Santiago Piso 15, Valter Moro, Liliana Schnaidt, Gonzalo Paredes. Rodrigo Lobos, sus actividades complemen- Reyes Las Condes Ali Shakhtur Said. Francesco Tutoli. Gonzalo Paredes. tarias.

294 / ENAP MEMORIA ANUAL 2017 / EMPRESAS RELACIONADAS

GAS Y ENERGÍA (G&E) GAS Y ENERGÍA (G&E)

ENAP MEMORIA ANUAL 2017 / 295 / EMPRESAS RELACIONADAS

6 CONSOLIDATED FINANCIAL STATEMENTS

296 / ENAP MEMORIA ANUAL 2017 EMPRESA NACIONAL DEL PETROLEO

Financial statements for the years ended December 31, 2017 and 2016 and independent auditors’ report

Deloitte Auditores y Consultores Limitada Rosario Norte 407 Rut: 80.276.200-3 Las Condes, Santiago Chile Fono: (56) 227 297 000 Fax: (56) 223 749 177 [email protected] INDEPENDENT AUDITOR'S REPORT www.deloitte.cl

To the Chairman and Board of Directors of Empresa Nacional del Petroleo

We have audited the accompanying consolidated financial statements of Empresa Nacional del Petroleo (The Company), and Subsidiaries, which comprise the consolidated statement of financial position as of December 31, 2017 and 2016, and the related consolidated statements of comprehensive income, changes in shareholders’ equity and cash flows, for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the preparation and fair presentation of the entity's consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we do not express such opinion. An audit also includes assessing the appropriateness of the accounting policies used and the reasonableness of the significant estimates made by the Company's Management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Deloitte® se refiere a Deloitte Touche Tohmatsu Limited una compañía privada limitada por garantía, de Reino Unido, y a su red de firmas miembro, cada una de las cuales es una entidad legal separada e independiente. Por favor, vea en www.deloitte.com/cl/acercade la descripción detallada de la estructura legal de Deloitte Touche Tohmatsu Limited y sus firmas miembro.

Deloitte Touche Tohmatsu Limited es una compañía privada limitada por garantía constituida en Inglaterra & Gales bajo el número 07271800, y su domicilio registrado: Hill House, 1 Little New Street, London, EC4A 3TR, Reino Unido. Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Empresa Nacional del Petroleo and Subsidiaries as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board (“IASB”).

Other-matter – Translation of the financial statements

The accompanying consolidated financial statements have been translated into English solely for the convenience of readers outside Chile.

January 29, 2018 Santiago, Chile

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

EMPRESA NACIONAL DEL PETRÓLEO 2017 

ENAP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2017 AND 2016 (In thousands of US dollars - ThUS$)

Notes 12.31.2017 12.31.2016 ASSETS ThUS$ ThUS$

Current assets: Cash and cash equivalents 8 91,496 66,104 Other current financial assets 9 807 11,733 Other current non-financial assets 10 24,328 17,315 Trade and other receivables 11 822,299 644,062 Due from related companies 12 33,137 48,636 Inventories 13 1,038,985 727,890 Current tax assets 14 217,733 135,260 Current assets other than assets classified as held for sale 2,228,785 1,651,000 Non current assets classified as held for sale 17 40,991 12,775

Total current assets 2,269,776 1,663,775

Non-current assets: Other non-current financial assets 9 14,749 13,915 Other non-current non-financial assets 10 27,707 36,829 Non current receivable 11 30,578 23,117 Due from related companies 12 - 1,066 Investments accounted for using the equity method 15 135,160 121,632 Intangible assets other than goodwill 3,082 3,082 Property, plant and equipment 16 3,240,672 3,137,639 Right-of-use 18 129,316 - Investment property 22 7,370 7,461 Deferred tax assets 14 934,402 834,731

Total non-current assets 4,523,036 4,179,472

TOTAL ASSETS 6,792,812 5,843,247

The accompanying notes are an integral part of these consolidated financial statements

ENAP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AS OF DECEMBER 31, 2017 AND 2016 (In thousands of US dollars - ThUS$)

Notes 12.31.2017 12.31.2016 EQUITY AND LIABILITIES ThUS$ ThUS$

Current liabilities: Other current financial liabilities 23 960,210 867,592 Lease liability 18 42,178 - Trade creditors and other accounts payable 24 866,214 584,079 Due to related companies 12 20,082 13,000 Other short-term accruals 25 1,165 1,944 Current tax liabilities 14 105,682 74,280 Current accruals for employee benefits 26 59,844 48,885 Other current non-financial liabilities - 10,619 Current liabilities other than liabilities included in disposal groups classified as 2,055,375 1,600,399 held for sale Liabilities included in disposal groups classified as held for sale - 3,099

Total current liabilities 2,055,375 1,603,498

Non-current liabilities: Other non-current financial liabilities 23 3,558,352 3,139,718 Lease liability 18 88,849 - Other non-current accounts payable 24 756 1,681 Other non-current accruals 25 129,190 127,697 Deferred tax liabilities 14 22,856 70,197 Non-current accruals for employee benefits 26 96,444 92,841 Other non-current non-financial liabilities 2,363 293

Total non-current liabilities 3,898,810 3,432,427

Total liabilities 5,954,185 5,035,925

Equity: Paid-in capital 27 1,232,332 1,232,332 Other reserves 27 (128,950) (146,544) Accumulated losses 27 (264,899) (287,612)

Equity attributable to owners of the Parent Company 838,483 798,176 Non - controlling interest 28 144 9,146

Total equity 838,627 807,322

TOTAL EQUITY AND LIABILITIES 6,792,812 5,843,247

The accompanying notes are an integral part of these consolidated financial statements

ENAP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME PER FUNCTION FOR THE YEARS ENDED AT DECEMBER 31, 2017 AND 2016 (In thousands of US dollars - ThUS$)

01.01.2017 01.01.2016 Notes 12.31.2017 12.31.2016 ThUS$ ThUS$

Revenues from ordinary activities 30 6,420,163 5,217,063 Cost of sales 31 (5,913,237) (4,669,858) Gross margin 506,926 547,205

Other revenues 41,070 67,782 Distribution cost 32 (229,446) (206,421) Administrative expenses (111,891) (100,505) Other expenses, per function 33 (107,809) (106,748) Income from operational activities 98,850 201,313

Other income 36 7,733 105,931 Financial income 4,557 7,200 Financial expense 34 (206,191) (186,990) Equity in earnings of associates recorded using the equity method 15 18,697 18,153 Exchange differences 37 (2,131) (18,449) (Loss) income before taxes (78,485) 127,158 Income from tax expense 14 102,140 55,422

Net income 23,655 182,580 Attributable net income: Net income attributable to owners of parent company 22,707 181,296 Net income attributable to non - controlling interest 948 1,284 Net income 23,655 182,580

The accompanying notes are an integral part of these consolidated financial statements

ENAP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME PER FUNCTION FOR THE YEARS ENDED AT DECEMBER 31, 2017 AND 2016 (In thousands of US dollars - ThUS$)

01.01.2017 01.01.2016 12.31.2017 12.31.2016 ThUS$ ThUS$

Net income 23,655 182,580

Components of other comprehensive income that will not be reclassified to income or loss before tax Components of other comprehensive income that will not be reclassified to income or loss Other comprehensive income before tax, gain (losses) because remeasurement on defined benefit (6,539) (949) plans Total other comprehensive loss that will not be reclassified to income or loss before tax (6,539) (949)

Components of other comprehensive income that will be reclassified to income or loss before tax Currency translation differences Gain on currency translation differences, before taxes 1,350 1,791 Cash Flow Hedges Gain from cash flow hedges, before taxes 23,111 3,374 Reclassification adjustments on cash flow hedges before tax (6,960) (50,403) Other components from other comprehensive income, that will be reclassified to income or loss 17,501 (45,238) before taxes

Income tax relating to components of other comprehensive income that will not be reclassified to income or loss Income tax relating to remeasurements of defined benefit plans of other comprehensive income 2,353 196 Income tax relating to components of other comprehensive income that will be reclassified to income or loss Income taxes related to cash flow hedges (1,759) 2,435 Total income tax relating to components of other comprehensive income that will be reclassified to income or loss 594 2,631

Other comprehensive income 11,556 (43,556)

Total comprehensive income 35,211 139,024

Comprehensive income attributable to: Comprehensive income attributable to owners of parent company 34,263 137,740 Comprehensive income attributable to non - controlling interest 948 1,284

Total comprehensive income 35,211 139,024

The accompanying notes are an integral part of these consolidated financial statements

ENAP AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED AT DECEMBER 31, 2017 AND 2016 (In thousands of US dollars - ThUS$)

Changes in other reserves Revaluation Reserves for reserve on Net equity exchange Reserves for Actuarial reserves financial assets Other Total attributable to Non - Paid in differences for cash flow on defined available miscellaneous other Accumulated the owners of the controlling Total capital translation hedges benefit plans for sale reserves reserves losses Parente Company interest Equity ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Opening balance at 01/01/2017 1,232,332 (77,491) (60,485) (7,312) 1,190 (2,446) (146,544) (287,612) 798,176 9,146 807,322 Increase (decrease) due to correction of errors ------Restated initial balance 1,232,332 (77,491) (60,485) (7,312) 1,190 (2,446) (146,544) (287,612) 798,176 9,146 807,322 Changes in Equity Extraordinary contribution to capital 400,000 400,000 400,000 Capital increase to be received (400,000) (400,000) (400,000) Comprehensive income Income 22,707 22,707 948 23,655 Other comprehensive income - 1,350 14,392 (4,186) - - 11,556 - 11,556 - 11,556 Comprehensive income 1,350 14,392 (4,186) - - 11,556 22,707 34,263 948 35,211 Increase (decrease) due to transfers and other changes - - - - - 6,038 6,038 6 6,044 (9,950) (3,906) Total changes in equity - 1,350 14,392 (4,186) - 6,038 17,594 22,713 40,307 (9,002) 31,305

Final balance at 12/31/2017 1,232,332 (76,141) (46,093) (11,498) 1,190 3,592 (128,950) (264,899) 838,483 144 838,627

Opening balance at 01/01/2016 1,232,332 (79,282) (15,891) (6,559) 1,190 27,270 (73,272) (470,726) 688,334 12,393 700,727 Increase (decrease) due to correction of errors ------Restated initial balance 1,232,332 (79,282) (15,891) (6,559) 1,190 27,270 (73,272) (470,726) 688,334 12,393 700,727 Changes in Equity Comprehensive income Income 181,296 181,296 1,284 182,580 Other comprehensive income - 1,791 (44,594) (753) - - (43,556) (43,556) - (43,556) Comprehensive income 1,791 (44,594) (753) - - (43,556) 181,296 137,740 1,284 139,024 Increase (decrease) due to transfers and other changes - - - - - (29,716) (29,716) 1,818 (27,898) (4,531) (32,429) Total changes in equity - 1,791 (44,594) (753) - (29,716) (73,272) 183,114 109,842 (3,247) 106,595

Final balance at 12/31/2016 1,232,332 (77,491) (60,485) (7,312) 1,190 (2,446) (146,544) (287,612) 798,176 9,146 807,322 The accompanying notes are an integral part of these consolidated financial statements

ENAP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED AT DECEMBER 31, 2017 AND 2016 (In thousands of US dollars - ThUS$)

Notes 12.31.2017 12.31.2016 Statement of Cash Flows, Direct Method ThUS$ ThUS$

Net cash flows provided by (used in) operating activities Classes of cash receipts from operating activities Proceeds from sales of goods and services 9,430,765 8,274,401 Other receipts (payments) from operating activities 51,295 41,110 Classes of cash payments Payments to suppliers for goods and services (6,312,407) (5,225,139) Payments to and on behalf of employees (405,786) (328,399) Other payments for operating activities (2,328,794) (2,156,285) Dividends paid (3,282) (4,590) Dividends received 16,398 16,616 Interest paid (2,067) (1,035) Interest received 11 1,542 Income taxes refunded (paid) (8,523) (11,246) Other ouputs in cash 428 12,012

Cash flows from operating activities 438,038 618,987

Net cash flows from (used in) investing activities Cash Flows Used In obtaining control of subsidiaries or other businesses - (59,150) Other cash payments to acquire equity or debt instruments of other entities (8,514) - Purchases of property, plant and equipment 16 (726,033) (623,893) Purchases of intangible assets 2,300 - Cash advances and loans to third parties (275) (1,307) Proceeds from sales of property, plant and equipment 17,648 - Collections from the reimbursement of advance payments and loans granted to third parties 2,629 1,447 Collections to related entities 674 2,731 Interest received 2,454 3,261 Other inputs in cash - 3,823

Cash flows used in investing activities (709,117) (673,088)

Net cash flows from (used in) financing activities Proceeds from long-term loans 100,209 128,848 Proceeds from short-term loans 560,581 326,820 Proceeds from obligations with the public 843,884 611,624 Loan payments (903,007) (291,164) Payments of obligations with the public (83,585) (600,000) Payments of finance lease liabilities (37,987) (1,934) Interest paid (171,970) (165,388) Other inputs in cash (10,211) 11,065

Cash flows used in financing activities 297,914 19,871 Net increase in cash and cash equivalents, before the effect of changes in the exchange rate 26,835 (34,230)

Effects of variation in the exchange rate on cash and cash equivalents Effects of variation in the exchange rate on cash and cash equivalents (1,443) (13,253) Increase in cash and cash equivalents of the year 25,392 (47,483) Cash and cash equivalents at the beginning of the year 66,104 113,587 1 Cash and cash equivalents at the end of the year 8 91,496 66,104 The accompanying notes are an integral part of these consolidated financial statements

ENAP AND SUBSIDIARIES

Contents Page

1. General information 1 2. Description of the business 1 3. Summary of significant accounting policies 2 4. Financial risk management and hedge definition 18 5. Critical accounting estimates and judgments 23 6. Business combination 25 7. Financial assets 27 8. Cash and cash equivalents 28 9. Other financial assets current and non-current 28 10. Other non-financial assets current and non-current 29 11. Trade receivables and other receivables 30 12. Balances and transactions with related companies 31 13. Inventories 34 14. Current assets and liabilities, deferred tax and income tax benefit 34 15. Investments recorded using the equity method 39 16. Property, plant and equipment 41 17. Available-for-sale assets 44 18. Right-of-use assets and lease liabilities 45 19. Impairment loss and provisions 46 20. Participation in joint operation 48 21. Other business 55 22. Investment properties 56 23. Financial liabilities 57 24. Trade debtors and other accounts payable 67 25. Other accruals 67 26. Employee benefits accruals 68 27. Equity 71 28. Non-controlling interest 74 29. Operating segments 75 30. Revenues from ordinary activities 78 31. Cost of sales 78 32. Distribution costs 79 33. Other expense by function 79 34. Financial costs 80 35. Personnel costs 80 36. Other income (loss) 81 37. Exchange differences 81 38. Foreign currency 82 39. Environments activities 83 40. Lawsuits and commercial commitments 84 41. Guarantees committed with third parties 90 42. Consolidation scope 92 43. Subsequent events 92

ENAP AND SUBSIDIARIES Notes to the consolidated financial statements (In thousands of US dollars – ThUS$)

1. GENERAL INFORMATION

Empresa Nacional del Petróleo (hereinafter “ENAP” or the “parent company”) is the parent entity of the group of companies (hereinafter the “ENAP Group”) referred to in these consolidated financial statements. ENAP was created through Law 9,618, dated June 19, 1950 and is 100% owned by the Republic of Chile. The addresses of ENAP are Av. Apoquindo 2929 Floor 5, Las Condes, in Santiago and José Nogueira 1101, en Punta Arenas. On October 04, 2002, ENAP was registered in the Register of Securities of the Commission for the Financial Market, formerly known as Superintendency of Securities and Insurance, under No. 783. In accordance with the foregoing, the Company is subject to the rules and oversight of the aforementioned commission.

ENAP's corporate purpose is the exploration, production and marketing of hydrocarbons and their derivatives; it may also participate in companies whose activities are related to geothermal energy and the production, transportation and marketing of electric energy and power. ENAP is related to the Chilean government through the Ministry of Energy.

The Company’s consolidated financial statements for the year ended December 31, 2017, were approved by its Board of Directors at Ordinary Meeting held on January 29, 2018.

2. DESCRIPTION OF THE BUSINESS

The main activity of ENAP, in accordance with the law 9.618 and its subsequent amendments, is the exploration, exploitation or benefit from sites that contain hydrocarbons, activity that it is empowered to develop inside and outside the national territory; it also can participate in companies with activities related to geothermal energy and the production, transportation and marketing of energy and electric power. Its main subsidiary ENAP Refinerías S.A. (“ERSA”) is a private company, which officially began operating in January 2004. It was created according to an agreement that was approved at the general meeting of shareholders of Petrox S.A. Refinería de Petróleo (Petrox), on December 23, 2003, under which this subsidiary of ENAP merged with Refinería de Petróleo de Concón S.A. (RPC). Petrox, now ERSA, was organized as a private company on July 16, 1981, before the notary Raúl Undurraga Laso, from Santiago, and its registered address is Avenida Borgoño 25,777, Concón. Its line of business is the import, processing, storage and marketing of hydrocarbons and its derivatives and all other activities that are directly or indirectly related and which are expressed in detail in the third article of its statutes. The direct subsidiary ENAP Sipetrol S.A. performs one or more of the upstream activities abroad. ENAP Sipetrol S.A. has a branch in Ecuador and subsidiaries in Argentina, Ecuador and Uruguay. Through the subsidiary in Uruguay, it participates in production activities through joint ventures in Egypt. The subsidiaries ENAP Refinerías S.A. and ENAP Sipetrol S.A. are privately held corporations, voluntarily registered in the Special Register of Reporting Entities of the Commission for the Financial Market, formerly known as Superintendency of Securities and Insurance, under numbers 95 and 187 respectively, which are regulated by the General Standard No. 364.

ENAP AND SUBSIDIARIES

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Accounting policies

These consolidated financial statements are stated in thousands of US dollars and were prepared from the accounting records kept by ENAP and its subsidiaries. The Company’s consolidated financial statements for the year ended December 31, 2017 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).

Preparation of these consolidated financial statements under IFRS requires the use of estimates and assumptions by the Management of the ENAP Group. These estimates are based on the best knowledge of Management on the amounts reported, events or actions. The detail of significant accounting estimates is shown in Note 5.

The following describes the main accounting policies adopted in the preparation of these consolidated financial statements. These policies have been developed in accordance with International Accounting Standards and International Financial Reporting Standards (“IFRS”) and have been applied consistently over the years over which these consolidated financial statements are presented, except for the early application of IFRS 15 “Revenue from Contracts with Customers” and IFRS 16 “Leases” as of January 1, 2017 (see note 3.2, 3.3 and note 18). a. Bases of preparation – These consolidated financial statements of the ENAP Group include the statement of financial position as of December 31, 2017 and 2016, the statement of comprehensive income, changes in equity and cash flows for the year ended December 31, 2017 and 2016. The accompanying consolidated financial statements reflect the financial position of the ENAP Group and its subsidiaries at December 31, 2017 and December 31, 2016 and the results of its operations, changes in equity and cash flows for the years ended December 31, 2017 and 2016. These consolidated financial statements have been prepared on the basis of historical cost, except for financial instruments which are measured at fair value, cash and cash equivalents and assets acquired through a business combination, as explained in the policies described. The historical cost is based on the fair value of the consideration delivered in an asset exchange. b. Bases of consolidation – These consolidated financial statements of ENAP include all the assets, liabilities, revenues, expenses and cash flows of ENAP and ENAP–controlled entities, whether subsidiaries or structured entities, after eliminating intercompany transactions. The financial statements of controlled entities use US Dollars as their functional currency and presentation currency.

ENAP AND SUBSIDIARIES i) Subsidiaries Subsidiaries (including the Structured Entity - SE) are those companies over which ENAP directly or indirectly exercises control, control is achieved when the Company: i) has power over the investee, ii) is exposed, or has rights, to the variable returns from its involvement with this investee; and iii) has the ability to use its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of income or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary. Income or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Detailed in the following chart are the direct and indirect subsidiaries (including the Structured Entity – SE), which are included in the consolidation of the ENAP Group.

Relationship with the parent Shareholder Company Domicile company percentage 12.31.2017 12.31.2016 Enap Refinerías S.A. Chile Direct Subsidiary 99.98% 99.98% Enap Sipetrol S.A. Chile Direct Subsidiary 100.00% 100.00% Gas de Chile S.A. Chile Direct Subsidiary 100.00% 100.00% Enap Sipetrol Argentina S.A. Argentina Indirect Subsidiary 100.00% 100.00% Petro Servicios Corp. S.A. Argentina Indirect Subsidiary 100.00% 100.00% Petrofaro S.A. Argentina Joint venture (*) 100.00% Sipetrol International S.A. Uruguay Indirect Subsidiary 100.00% 100.00% EOP Operaciones Petroleras S.A. Ecuador Indirect Subsidiary 100.00% 100.00% Energía Concón S.A. Chile Indirect Subsidiary 100.00% 100.00% Petrosul S.A. Chile Indirect Subsidiary (*) 100.00% Productora de Diesel S.A. Chile Indirect Subsidiary (*) 100.00% Petropower Energía Ltda. Chile Indirect Subsidiary 100.00% 100.00% Compañía de Hidrógeno del Bío-Bío S.A. Chile Indirect Subsidiary 100% (*) 10.00% (*) See changes during year 2017.

ENAP AND SUBSIDIARIES

Changes during 2017:

Petrofaro S.A. On January 12, 2017, Enap Sipetrol Argentina S.A. transferred to YPF S.A. the 50% stake of Petrofaro S.A. for ThUS $ 5,355; after this operation the Group has joint control on that Company. Productora de Diesel S.A. On December 19, 2017, ENAP sold 2,219,987 shares of Productora de Diesel S.A. to its subsidiary ENAP Refinerías S.A., representing 10.00% ownership in the corporate capital, for ThUS$ 3,086, equivalent to the book value of the shares. Through this purchase, all of the shares of Productora de Diesel S.A. are now owned by ENAP Refinerías S.A. This resulted in the dissolution of the company in accordance with Article 103 No. 2 of the Law on Corporations.

Petrosul S.A. On October 30, 2017, ENAP sold 1,579 shares of Petrosul S.A. to its subsidiary Enap Refinerías S.A., representing 15.79% ownership in the corporate capital, for ThUS$ 1,786, equivalent to the book value of the shares. Through this purchase, all of the shares of Petrosul S.A. are now owned by Enap Refinerías S.A. This resulted in the dissolution of the company in accordance with Article 103 No. 2 of the Law on Corporations.

Compañía de Hidrógeno del Bío-Bío S.A. On December 29, 2017, S.K. Inversiones Petroquímicas S.A. sold Enap Refinerías S.A. 900,000 shares of Compañía de Hidrógeno del Bío-Bío S.A., representing 90% ownership in the corporate capital, for ThUS$ 8,514, equivalent to the book value of the shares. As a result of this operation, Enap Refinerías S.A. now owns 95% of ownership in Compañía de Hidrógeno del Bío-Bío SA. ENAP parent company still owns 5% of ownership. Both companies have a consolidated ownership of 100% in said company.

Changes during 2016:

ENAP Sipetrol (UK) Limited As of March 31, 2016, Enap Sipetrol (UK) Limited, was dissolved through an administrative decision of the Register of Companies of UK for being without operations. Enap Sipetrol S.A. maintained a 100% interest. Petrofaro S.A. On May 19, 2016, Enap Sipetrol Argentina S.A. subsidiary of ENAP acquired ArPetrol International Financial Company, which controls 100% of the shares of ArPetrol Argentina S.A. with an amount of ThUS$ 10,716. This purchase implied an increase in the statement of financial position of ThUS$ 4,818 in current assets, ThUS$ 8,896 in non-current assets, ThUS$ 1,234 in current liabilities and ThUS$1,395 in non-current liabilities. Petrofaro S.A. is holder of the Faro Virgenes concession granted by the province of Santa Cruz and of the gas treatment plant Faro Virgenes located in such concession area.

Petropower Energía Ltda. During December 2016, the Group acquired 100% of the related company Petróleo Energía Limitada, through the purchase of an additional 85% stake held by Enap Refinerías S.A. As a result of this operation, the Group acquired control over this company. See detail of business combination in Note 6.

ENAP AND SUBSIDIARIES The entry of Petropower Energía Limitada into the scope of consolidation of the Enap Group as of December 31, 2016, resulted in an increase in the consolidated financial position of ThUS$ 188,797 in total assets, and ThUS$ 5,552 in total liabilities. ii) Joint Operation: A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. The Group as a joint operator recognizes in relation to its interest in a joint operation: (i) its assets, including its share of any assets held jointly; (ii) its liabilities, including its share of any liabilities incurred jointly; (iii) its revenue from the sale of its share of the output arising from the joint operation; (iv) its share of the revenue from the sale of the output by the joint operation; and (v) its expenses, including its share of any expenses incurred jointly.

See note 20. c. Business Combination - Consolidation of the operations of the parent company and subsidiaries has been carried out in accordance with the following basic principles: At the date of the acquisition of control, assets acquired and liabilities assumed from the subsidiary are recorded at fair value, except for certain assets and liabilities that are recorded in accordance with the valuation principles established under IFRS. In the event of a positive difference between the fair value of the consideration transferred plus the amount of any non-controlling interest and the fair value of the subsidiary's assets and liabilities, including contingent liabilities, corresponding to the parent's interest, the resulting difference is recorded as goodwill. If the difference is negative, the resulting gain is recorded as a credit to results, after reassessing whether all assets acquired and liabilities assumed have been correctly identified and a review of the procedures used to measure these amounts has been performed. For each business combination, the Group chooses whether to value the non-controlling interests of the acquiree at fair value or by the pro rata share of the identifiable net assets of the acquiree. If it is not possible to determine the fair value of all assets acquired and liabilities assumed at the acquisition date, the group will report the provisional values recorded. During the measurement period, one year from the date of acquisition, the provisional amounts recognized will be retroactively adjusted and additional assets or liabilities will also be recognized to reflect new information obtained on facts and circumstances that existed at the date of acquisition, but which were not known by the administration at that time. The value of non-controlling interest in equity and comprehensive income of subsidiaries is presented under "Total Equity: Non-controlling interests" in the consolidated statement of financial position and the "Gain (loss) Attributable to non-controlling interests" and the "Comprehensive income attributable to non-controlling interests " in the consolidated statement of comprehensive income. d. Functional Currency - The functional and presentation currency of the ENAP Group is the US Dollar. The functional currency, dollar, for each entity of the ENAP Group is determined as the currency of the main economic environment in which it operates. Transactions other than those performed in the entity’s functional currency will be converted at the exchange rate in effect on the date of the transaction. Monetary assets and liabilities denominated in currencies other than the functional one will be converted at the year-end exchange rates. Net equity is kept at the historical exchange rate at the date of acquisition or contribution. Gains or losses from the conversion will be included in net income or losses for the year.

ENAP AND SUBSIDIARIES e. Foreign currency translation and indexation - Assets and liabilities denominated in Chilean pesos, in Unidades de Fomento (UF) and other currencies are translated into US dollars at the closing rates of exchange, as per the following detail: 12.31.2017 12.31.2016 US$ US$ Chilean Peso 614.75 669.47 Argentinian Peso 18.57 15.84 Egyptian Pound 17.74 18.11 UF 0.02 0.03 Swiss Franc 0.97 1.02 EURO 0.83 0.95 f. Offsetting balances and transactions - As a general standard, assets and liabilities, income and expenses, are not offset in the financial statements, except for those cases in which offsetting is required or is allowed by some standard or based on management intention, and the presentation is a reflection of the substance of the transaction. Income or expenses originating in transactions, which, for contractual or legal reasons, consider the possibility of offsetting and which the ENAP Group intends to liquidate for their net value or realize the assets and pay the liabilities simultaneously, are stated net in the statement of comprehensive income and the Consolidated Statement of Financial Position. The financial statements do not present net income and expenses in their consolidated statement of comprehensive income. At the level of balances in the Statement of Financial Position, the following entries have been offset:  The assets and current tax liabilities are presented net at the level of subsidiary, when the latter has a legally applicable right to offset current tax assets with current tax liabilities when they relate to taxes demanded by the same taxation authority, and the latter allows the entity to liquidate or receive a single net payment. As a result, deferred tax assets and liabilities are offset if, and only if, they relate to income taxes corresponding to the same tax administration, provided that the entity has the legally enforceable right to offset current tax assets, with current tax liabilities.  Derivative instruments are respective contract when (a) they provide for Exchange for offsetting of differences upon liquidation of the operation; and (b) Managements intents to offset such differences. g. Foreign currency - Transactions in a currency other than a company’s functional one are considered to be foreign currency transactions and they are converted at the exchange rate in effect on the date of the operation. At each period end, the balance sheet amounts of monetary items in a foreign currency are valued at the year-end exchange rate, and the exchange rate differences arising from such valuation are recorded in the statements of comprehensive income, in the item “Exchange differences”. h. Property, plant and equipment - Property, plant and equipment are recorded at cost, excluding regular maintenance costs and less accumulated depreciation and impairment losses. The cost of property, plant and equipment includes their purchase price plus all costs directly related to placing the asset in service and bringing it into an operating condition, as provided by management, and the initial estimate of any cost involved in dismantling and removing the asset or restoring the physical site where it is located.

Financing interest costs directly attributable to the purchase or construction of assets requiring a substantial period of time before being ready for use or sale will also be capitalized as a property, plant and equipment cost. 6

ENAP AND SUBSIDIARIES Repair and maintenance expenses are charged to income during the period in which they occur. Some ENAP Group property, plant and equipment elements require regular inspections. In this regard, elements subject to replacement are recognized separately from the rest of the asset (componentization), detailed at such a level that they can be depreciated in the period between the current replacement to the next one. Whenever there is an indication that there might be an impairment of the value of the assets, their recoverable value is compared to their net book value. Any impairment or reversal of impairment arising as a result of such a comparison will be recorded and charged or credited to net income for the year, as appropriate. i. Exploration and production of hydrocarbons - The exploration operations are recorded in conformity with the standards established in IFRS 6 “Exploration for and Evaluation of Mineral Resources”. The Hydrocarbon Exploration and Production operations are recorded in conformity with the successful-efforts method. The accounting treatment of the various costs incurred under this method is as follows: i) Costs from the acquisition of new rights or interests in areas with proven or unproven reserves. ii) Costs involved in acquiring interests in exploration areas are capitalized at purchase cost and amortized with a charge to income in “Exploration costs”, in accordance with the criterion indicated in exploration costs below, if no reserves are found, these previously capitalized expenses are expensed in the statement of income. If the exploration produces positive results, leading to a commercially workable discovery, the costs are presented in Property, Plant and Equipment. iii) The exploration costs, as for example geology and geophysics expenses, costs associated with maintaining unproven reserves and other exploration-related costs, prior to drilling are charged to income when incurred. iv) Drilling costs incurred in prospecting campaigns, including stratigraphic test wells, are capitalized and presented in the item Properties, Plant and Equipment, pending the decision as to whether proven reserves justifying their commercial development are discovered. If no proven reserves have been found, these initially capitalized costs are charged to profit or loss. v) The drilling costs of wells leading to a positive discovery of commercially workable reserves are capitalized and presented in Property, Plant and Equipment. vi) Development costs incurred in extracting proven reserves and treating and storing the oil and gas (including the drilling costs of production wells and developing dry wells, platforms, recovery improvement systems, etc.) are capitalized and presented in Property, Plant and Equipment. vii) Costs for the future abandonment and dismantling of oil fields are calculated on a field by field basis and capitalized at present value. This capitalization is credited to Non-current accruals

Investments capitalized according to the above criteria are amortized as follows: . Investments involved in the acquisition of proven reserves are amortized using the units of production method. . Investments related to unproven reserves or fields in the process of being evaluated are not amortized. These investments are analyzed at least once a year, or earlier if there is any indication of impairment, and in case of impairment, this is recognized and charged to income for the period. . Costs from drillings and subsequent investments made to develop and extract the reserves of hydrocarbons are amortized using the units of production method.

Changes in estimates of reserves are considered in calculating the amortization on a prospective basis. j. Depreciation - Property, plant and equipment, except those related to hydrocarbon exploration and production activities, are depreciated using the straight line method by distributing the acquisition cost of the assets less the estimated residual value over the estimated useful life of the assets. The main components of property, plant and equipment and their useful lives are presented below:

ENAP AND SUBSIDIARIES Years of useful life Buildings Between 30 - 50 Refining and adjacent plants Between 10 - 30 Industrial equipment Between 10 - 18 Computer equipment of technology information Between 4 - 6 Fixed facilities and accessories Between 10 - 20 Motor vehicles 7 Improvements to leased assets - buildings Between 5 - 10 Investments in exploration and production Depletion Rate Other property, plants and equipment Between 3 - 20

Property, plant and equipment related to hydrocarbon exploration and production activities are amortized using the unit of production amortization method (depletion rate). The residual value and useful life of the fixed assets are reviewed every year and their depreciation begins when the assets are in a condition to be used. Land is recorded separately from any buildings or facilities that may be constructed on it, and has an indefinite useful life; therefore, it is not subject to depreciation. ENAP Group evaluates, when there are factors of indication of impairment, the existence of possible impairment in the value of the assets of property, plant and equipment. During the year 2017, the Management identified indications of impairment in Pampa del Castillo - La Guitarra (Argentina) and Campamento Central Cañadón Perdido oil fields. This gave rise to the recording of impairment for ThUS$ 56,189.

In case of impairment, ENAP Group calculates the "recoverable amount" for each cash generating unit through the methodology of discounting future cash flows based on a real discount rate before tax and projections that consider a horizon of 5 years plus the perpetuity for the R&C line and a 23-year horizon without perpetuity for the E&P line. The last analysis was made in December 2017. This analysis concluded that the investments of the R&C line and the E&P line do not require additional adjustments in this regard. k. Investment property - The item “Investment property” includes mainly buildings and land assets that are used for earning income through leases or held in anticipation of appreciation in their value over time. Investment properties are stated at their acquisition value net of their corresponding depreciation and the impairment losses that they have experienced. Investment properties, excluding land, are depreciated by distributing the cost of their components using the straight-line method over their useful life. l. Associates - Associates are companies over which the ENAP Group has significant influence; significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Under the equity method of accounting an investment in an associate is initially recognize in the consolidated statements of financial position at cost and adjusted thereafter to recognize the Group’s share of the income or loss and the other comprehensive income of the associate.

When ENAP's participation in the losses of an associate or joint venture exceeds its participation in these, the entity discontinues recognizing its participation in further losses. The participation in an associate or joint venture will be the

ENAP AND SUBSIDIARIES carrying amount of the investment in the associate or joint venture determined according to the equity method together with any long-term involvement that, in fact, is part of the net investment of the entity in the associate or joint venture.

An investment is an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group´s share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Group´s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after a reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.

When the Company reduces its participation in an associate and continued using the equity method, the effects that had been previously been recognized in other comprehensive income must be reclassified to profit or loss according to the proportion of the decrease of participation in such associate. m. Non-current assets or groups of assets to dispose of – Non-current assets are classified as held for sale if it is considered that their carrying amount will be recovered through a sale transaction rather than continued use. This condition is considered fulfilled only when the sale is highly probable, it is available for immediate sale in its current condition and is expected to be completed within one year from the date of classification. The total of these assets is recorded on a single line and valued at the lower of book value and fair value less costs to sell. n. Impairment of other non-financial assets – At the end of each reporting period, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). When a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash- generating units for which a reasonable and consistent allocation basis can be identified. The recoverable amount of an asset is the highest between the fair value less the cost required for its sale and the value in use. When evaluating the value in use, the estimated future cash flows are discounted using a pre-tax interest rate that reflects the current market valuations with respect to the time value of money and the risks that are specific to the asset, for which the estimated future cash flows have not been adjusted. Also, the fair value less the costs of selling the asset is usually calculated for operating assets based on a discounted cash model, considering a number of variables such as investment projections and price projections.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized immediately in income or loss. When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in income or loss. o. Other financial assets – The ENAP Group classifies its financial assets in the following categories: at fair value with changes taken to net income, loans and accounts receivable, financial assets held to maturity and financial assets available for sale. The classification depends on the purpose for which the financial assets are acquired and it is determined at the time of initial recognition.

ENAP AND SUBSIDIARIES . Financial assets at fair value with changes taken to net income: Financial assets at fair value with changes taken to net income are financial assets held for trading. A financial asset is classified in this category if it is acquired mainly with the purpose of selling it in the short-term.

. Loans and accounts receivable: Loans and accounts receivable are non-derivative financial assets with fixed or determinable payments, which are not quoted on an active market. They are included in current assets, except for maturities over 12 months as of the date of the balance sheet that are classified as non-current assets. Loans and accounts receivable include commercial debtors and other accounts receivable.

. Financial assets held to maturity: Financial assets held to maturity are non-derivative financial assets with fixed or determinable payments and fixed maturities, which the ENAP Group has the positive intent and ability to hold to maturity.

. Financial assets available for sale: Financial assets available for sale are non-derivative financial assets designated specifically in this category, or not classified in any other category. They are included in non-current assets, unless the Management intends to dispose of the investment within 12 months after the date of the Statement of Financial Position. i) Impairment of financial assets: Financial assets, other than those valued at fair value with changes taken to net income, are assessed for indicators of impairment at the date of each statement of financial position. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected negatively.

The financial investments of the ENAP Group are carried out in institutions of the highest credit quality and maintained in the short term, and therefore they do not present indicators of impairment in relation to their carrying value.

For financial assets carried at amortized cost, the impairment loss is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

To determine whether equity securities classified as available for sale have suffered impairment losses, the Company will consider if there has been a significant or long-term decrease in the fair value of the securities below their cost. If there is any evidence of this type, for financial assets available for sale, the accumulated losses, determined as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in retained earnings, are reversed from equity and recognized in the income statement under "Other expenses by function". These impairment losses, recognized in the income statement by equity instruments, are not reversed.

ii) Valuations at the time of initial recognition and sale: The acquisition and sale of financial assets are recognized on the trade date, which is the date when the ENAP Group promises to acquire or sell the asset. Investments in financial assets not classified at fair value with changes taken to net income are initially recognized at fair value, plus transaction costs. Financial assets at fair value with changes taken to net income are initially recognized at their fair value and the transaction costs are carried to income. Investments are derecognized from the books when the rights to receive cash flows from the investments have expired or have been transferred and the Group has substantially transferred all risks and benefits resulting from holding them. iii) Subsequent valuation: Financial assets available for sale and financial assets at the fair value with changes taken to net income are subsequently recorded at their fair value. Loans and accounts receivable and financial assets held to maturity are recorded at their amortized cost using the effective interest rate method.

ENAP AND SUBSIDIARIES

Losses and earnings from changes in the fair value of financial assets at fair value with changes taken to net income are included in the statement of income under “Other income / losses” in the period in which they occur. Income from dividends on financial assets at fair value with changes taken to net income are recognized in the statement of income under “Other income / losses” when the right of the Group to receive the payment is established.

When a security classified as available for sale is sold or its value becomes impaired, the cumulative adjustments for fluctuations in the fair value recognized in equity are recognized in the statement of income under “Other income / losses.”

Interest on securities available for sale calculated using the effective interest method is recognized in the statement of income under “Other income by function.” Dividends earned by instruments available for sale are recognized in the statement of income under “Other income by function” when the right of the Group to receive the dividend payment has been established.

The ENAP Group sets the fair value using valuation techniques that include using reported prices in recent open market transactions, references to other substantially similar instruments, an analysis of discounted cash flows and option pricing models, with maximum use of market information and minimum use of specific internal information of the ENAP Group. If no such technique can be used to set the fair value, the investments are recorded at their acquisition cost, net of any impairment loss, if any. p. Derivative and hedging financial instruments – The ENAP Group usually holds derivative financial instruments, such as cross currency swap and interest rate swaps, to hedge risks associated with fluctuations in interest rates and exchange rates. Also it enters into time spread swaps (TSS), to cover the risk associated with the time elapsed between the purchase of crude oil and the sale of its refined products and oil mark spread swaps that cover the risk associated with the spread between the WTI and Brent markers. All of them are hedging contracts; therefore, the effects that arise as a result of changes in the fair value of this type of instruments will be recorded in hedge assets and liabilities, as long as the hedging of this item has been declared as effective according to its hedging purpose.

The Company also carries out currency exchange hedging operations designed to hedge the variations, with respect to the dollar, of other currencies, in which it must carry out its operations of selling products in the local market. In accordance with the Board's policies, these operations are carried out only when there is a highly probable underlying cash flow that supports this, and not for investment or speculative reasons. The results of the exchange insurance operations are recorded at the date of maturity or settlement of the respective contracts.

Such derivative financial instruments are initially recognized at fair value on the date on which the derivative contract is signed, and they are then marked to market to fair value. The method to recognize the loss or gain depends on whether the derivative has been designated as a hedge instrument and, if so, the nature of the item that is being hedged. The ENAP Group currently only has instruments designated as hedges for a risk associated with a recognized liability or a highly probable forecast transaction (cash flow hedges).

The fair value of forward currency contracts is calculated in reference to other current forward exchange rates of contracts with similar maturity profiles. The fair value of interest rate swap contracts is calculated based on the market values of similar instruments. The fair value of TSS contracts is calculated taking as a reference the market values of the Brent marker for the ICE Brent Crude Futures in London.

ENAP AND SUBSIDIARIES The total fair value of hedge derivatives is classified as a non-current asset or liability if the remaining maturity of the hedged item is higher than 12 months and as a current asset or liability if the remaining maturity of the hedged item is lower than 12 months. i) i) Cash flow hedges: The effective portion of the changes in fair value of derivatives that are assigned and which qualify as cash flow hedges are recognized in equity through the statement of comprehensive income. The income or loss related to the ineffective portion is recognized immediately in the statement of net income.

The amounts accumulated in net equity are reclassified in the statement of income when the hedged item affects net income (for example, when the hedged forecasted sale occurs or when the hedged flow is executed). However, when the hedged forecast transaction results in the recognition of a non-financial asset (for example inventories), the gains or losses previously recognized in net equity are reclassified as part of the initial cost of the asset. Deferred amounts are recognized in the costs of goods sold, in case of inventories, where applicable.

When a hedge instrument matures or when it is sold, or when it does not comply with the criteria to be recognized as a hedge, any accumulated loss or gain in net equity to this date stays in the net equity and is recognized when the expected transaction affects the statement of net income. When a forecast transaction is not expected to occur, the accumulated gain or loss in equity is transferred to the statement of net income. ii) Embedded derivatives: ENAP assesses the existence of embedded derivatives in contracts of financial instruments to determine whether their characteristics and risks are closely related to the host contract, provided that the host contract is not recorded at fair value. Embedded derivatives are separated from the host contract (except in the case of a hybrid contract valued in its entirety at fair value) when the analysis shows that the financial characteristics and risks of the embedded derivatives are not closely related to the main contract. q. Recognition of revenue – Revenue is recognized by ENAP Group, considering the price established in the transaction for the compliance with each of the performance obligations. ENAP Group recognizes revenue when performance obligations have been fulfilled for the transfer of the goods and services committed to the customer.

The following is a description of principal activities – separated by reportable segments – from which the Group generates its revenue. For more detailed information about reportable segments, see Note 29.

R&C segment: The R&C segment principally generates revenue from the sale of refined products. This usually occurs: when the customer obtains control of the products sold, and there is no pending obligation to be fulfilled. The sales of refined products are covered by annual sales contracts establish commitments for both parties annual delivery schedule; fines in case of non-compliance. Control takes place when the products have been sent to the place indicated by the client, risk of loss have been transferred to the customer, and it has accepted the products. The time in which a customer obtains the control, for the deliveries of tank to tank, takes place at the time in which the products go through the flange at the entrance of the facilities of the buyer’s plant and, in case of deliveries of tank to oil pipeline, in the exit flange of the seller's plant. In both cases the flange is the point where the delivery of the products, the transfer of title and the transfer of risk to the customer take place. There is no financing component, as the sales are performed with a reduced average collection period, which is in line with the normal practices of the market.

E&P segment: The E&P segment principally generates revenue from the sale of crude Oil & natural Gas. This occurs when the company transfers the risks and control of the products sold to the customer, and there is no pending obligation to be fulfilled. 12

ENAP AND SUBSIDIARIES The sales of Oil & Gas are covered by annual or spot sales contracts, which establish commitments for both parties (i.e. sales price calculation usually based on international price bases; quality discount or bonus; delivery schedule; fines in case of non-compliance). The time in which a customer obtains control is when the products are delivered in the indicated place in accordance with the agreed conditions. In the sales by means of pipelines it takes place with the delivery in the unit of measurement. And in the case of marine terminals, it takes place with the disconnection of the cargo hose. In all the cases, surveyors certify the delivery. There are no financing components, as the sale is made with an average collection period of 60 days. This period is in line with the normal practices of the market. The risks of loss have been transferred to the customer and the customer has accepted the products.. There is no financing component, as the sales are performed with a reduced average collection period, which is in line with the normal practices of the market. G&E segment: The G&E segment principally generates revenue from the sale of LNG through pipeline, among which power generation client and industries. This usually occurs when the customer obtains control of the products sold, and there is no pending obligation to be fulfilled. The sales of LNG are covered mainly by sales contracts, which establish commitments for both parties (i.e. Price, Quantity, annual delivery schedule; penalties in case of non-compliance). The specific time in which a customer obtains control takes place when the products have been shipped to the delivery point, which is Quillota reception station for Santiago customers, and the receiving station in the Satellite Plant for Regasification of ENAP in the town of Pemuco (8th Region) for customers in the south of Chile. There is no financing component, as the sales are performed with a reduced average collection period, which is in line with the normal practices of the market.

Other operating income: i) Income from dividends: Dividends are recognized when the right of the ENAP Group to receive payment is established. ii) Interest income: Interest income is recognized using the effective interest rate method. r. Inventories – Raw materials, work in progress, finished goods and materials are valued initially at cost. After initial recognition, they are valued at the lesser of net realizable value and cost. The ENAP Group uses the first-in first-out (FIFO) method for all the inventory items, except for materials which are valued using the Weighted Average Cost method. The net realizable value represents the estimated price of sale at year-end less all estimated finishing costs and costs that will be incurred in the marketing, selling and distributing processes. s. Provision for employee benefits – Costs associated with employees’ contractual benefits, related to services rendered by employees during the year, are charged to income for the respective year. Actuarial gains and losses are recognized in “Actuarial reserves on defined benefit plans” in Equity reserves. The obligations recognized for the concept of severance payments arise as a consequence of the collective agreements signed with the employees of the Group, which states the commitment agreed to by the company. The ENAP Group recognizes the cost of employee benefits according to an actuarial calculation, as required by IAS 19 "Employee benefits”, which includes variables such as life expectation, salary increases, etc. To determine this calculation as of December 31, 2017 an annual discount nominal rate of 6.02% has been used (5.91% at December 31, 2016). The Company recognizes a liability and an expense related to the Variable Remunerations System (VRS) that is applicable to all its executives, with the sole exception of the General Manager. This system is based on the annual net income of the Company, departmental results and goal accomplishment for each management area. A provision is recorded when the company is contractually obliged or when an implicit obligation arises.

ENAP AND SUBSIDIARIES t. Provisions and contingent liabilities – Provisions are recorded for current, legal or assumed obligations arising as a result of a past event, whose payment is expected to involve a disbursement of resources and whose amount and time of payment can be reliably estimated.

Contingent liabilities are possible obligations arising from past events and whose existence can only be confirmed when one or more uncertain future events occur that are not entirely under the Company’s control; or a present obligation arising from past events that has not been accounted for because it is not probable that an outflow of resources will be required to settle the obligation and incorporate economic benefits; or because the amount of the obligation cannot be reliably measured.

The ENAP Group does not record contingent assets or liabilities, except for those stemming from onerous contracts, which are recorded as a provision and then reviewed at each balance sheet date and, if necessary, adjusted to reflect the best estimate at the time. u. Income taxes and deferred taxes – The Parent Company and its Chilean subsidiaries determine the tax base and calculate their income taxes in conformity with the legal provisions in force during each period. In the case of the foreign subsidiaries, these submit their tax returns individually, in conformity with current tax standards in their respective countries.

The deferred taxes generated by temporary differences and other events giving rise to differences between the accounting and tax base of assets and liabilities are recorded in accordance with IAS 12 “Income Taxes”. Current and deferred income tax is recorded in the income statement unless related to an item recognized in Other comprehensive income, directly in equity or resulting from a business combination. In that case, the tax is also recognized in other comprehensive income or directly in net income, or with a credit to goodwill, respectively.

The company does not record deferred taxes on the temporary differences arising from investments in subsidiaries and associates, provided that the timing in which temporary differences are reversed is controlled by the Company and the temporary difference will not be reversed in the foreseeable future.

Income tax is recorded in the Consolidated Net Income Statement or in the net equity of the Consolidated Statement of Financial Position according to the nature of the underlying transaction. The differences between the accounting value of assets and liabilities, and their tax basis generates deferred tax assets or liabilities which are calculated using the tax rates that are expected to be in force when the assets and liabilities are realized.

The variations generated in the year in deferred tax assets or liabilities are recorded in the income statement or directly in the net equity of the financial statement, as appropriate.

Deferred tax assets are recognized only when it is expected that the Company will have sufficient future taxable income to recover the temporary differences. v. Other financial liabilities – Loans accruing interest, bonds payable and financial liabilities of a similar nature are recognized initially at their fair value, net of any transaction costs incurred. Subsequently, they are valued at amortized cost and any difference between the funds obtained (net of the costs necessary to obtain them) and the repayment value is recognized in the income statement over the life of the debt in accordance with the effective interest rate method. Financial obligations are classified as current liabilities unless the ENAP Group has the unconditional right to defer its liquidation for at least 12 months after the balance sheet date.

ENAP AND SUBSIDIARIES w. Leases – The Group has early adopted IFRS 16 – Leases, for which it measured current lease liabilities and right-of- use assets derived from leases previously classified as operating leases, by reference to the lease payments for the remainder of the term of the lease using the option to record the asset at an amount equal to the liability to the extent allowed by IFRS 16 – Leases: C8 (b). It also determined the incremental interest rate at the date of the initial application (January 1, 2017) in accordance with the term of the lease and the nature of the right-of-use asset. The right-of-use asset recorded at the date of initial measurement will trigger depreciation expense throughout the shortest of the period of the contract or the useful life of the asset. x. Issued capital – Issued capital is contributions and/or capitalized profits, authorized through rulings and/or decrees issued by the Ministry of Finance, which constitute the legal obligation that gives rise to its registration. y. Distribution of dividends – The dividend distribution policy used by ENAP is the one established through official letters and/or decrees issued by the Ministry of Finance, which constitutes the legal obligation that gives rise to its registration. z. Environment – The accounting policy of ENAP Group related to the recognition of environmental commitments establishes that when these are part of a capital project they are capitalized as part of the project, and when they are not part of a capital project, they are recognized with charge to income for the year. aa. Commercial creditors and other accounts payable – Commercial creditors and other accounts payable are recognized initially at fair value and subsequently at amortized cost. ab. Cash and cash equivalents – The cash flow statement recognizes cash movements throughout the year, determined by the direct method. In these cash flow statements the following expressions are used:

. Cash and cash equivalents: The ENAP Group considers liquid financial assets, deposits or liquid financial investments, which may be easily converted into cash within no more than three months and where the risk of a change in their value is insignificant, to be cash equivalents. . Operating activities: these are the activities that constitute the main source of ordinary income of the ENAP Group, as well as other activities that cannot be classified as investment or financing activities. “Other payments for operating activities” includes ThUS$ 2,330,489 for the payment of specific tax on fuel in subsidiary ENAP Refinerías S.A., for the year 2017 and ThUS$2,154,996 for the year 2016. . Investing activities: these correspond to activities of acquisition, sale or disposal through other methods of long- term assets and other investments not included in cash and cash equivalents. . Financing activities: these are the activities that cause variations in the composition of the net equity, and of the financial liabilities.

Changes in liabilities arising from financing activities are shown in the following table:

ENAP AND SUBSIDIARIES

Non-cash changes Balance as Saldo al Cash flows of financing of 01/01/2017 activities Other Other Liabilities generated from financial activities 12/31/2017 (1) Fair Value Exchanges New financial Changes cash flows From Used Changes differeces instruments (2) (3) (1) ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Banks loans (Note 23.b.ii) 1,057,855 660,790 (903,007) - 1,844 - (3,290) - 814,192 Public bonds - non guarantee (Note 23.b.iii) 2,752,095 843,884 (83,585) - 91,999 - 20,152 - 3,624,545 Leasing liabilities (Note 18 & Note 23.b.iv ) - - 19,057 - - 105,573 6,397 - 131,027 Derivatives instruments (Note 23.a) 197,360 - (10,211) 7,891 (99,969) 7,533 (22,779) - 79,825

Total 4,007,310 1,504,674 (977,746) 7,891 (6,126) 113,106 480 - 4,649,589

(1) Balance corresponding to the current and non-current portion (2) Includes interest accrual (3) Settlements for oil and product hedges are included in the Cash Flow used in operating activities

3.2 Application of new and revised International Financial Reporting Standards (IFRS) a) New and revised IFRS effective in the current year: New Standards Effective date Recognition of Deferred Tax Assets for Unrealized Annual periods beginning on or after January 1, 2017 Losses (Amendments to IAS 12) Disclosure Initiative (Amendments to IAS 7) Annual periods beginning on or after January 1, 2017 Annual Improvements to IFRS Standards 2014-2016 Annual periods beginning on or after January 1, 2017 Cycle

The application of these amendments has not had a significant effect on the amounts reported in these financial statements, however could affect the accounting for future transactions or agreements. Certain disclosures required by IAS 7 additions have been included in note 3.1 ab). b) The following IFRSs have been early adopted in these financial statements:: Amendments to Standards Effective date IFRS 15 Revenue from Contracts with Customers Annual periods beginning on or after January 1, 2018 IFRS 16 Leases Annual periods beginning on or after January 1, 2019 The implementation of IFRS 15 has not had effect on the amounts reported in these interim consolidated financial statements, however, the application of IFRS 16 has had impact on the amounts reported in these interim consolidated financial statements, as described in note 3.3 and note 18.

ENAP AND SUBSIDIARIES c) New and revised IFRS in issue but not yet effective: New Standards Effective date IFRS 9 Financial Instruments Annual periods beginning on or after January 1, 2018 IFRS 17 Insurance contracts Annual periods beginning on or after January 1, 2021 Amendments to IFRS Mandatory Effective Date Sale or Contribution of Assets between an Investor and Effective date deferred indefinitely its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) Classification and Measurement of Share-based Payment Annual periods beginning on or after January 1, 2018 Transactions (Amendments to IFRS 2) Applying IFRS 9 “Financial Instruments” with IFRS 4 Overlay approach to be applied when IFRS 9 is first “Insurance Contracts” (Amendments to IFRS 4) applied. Deferral approach effective for annual periods beginning on or after 1 January 2018 and only available for three years after that date Transfers of Investment Property (Amendments to IAS Annual periods beginning on or after January 1, 2018 40) Annual Improvements to IFRS Standards 2014-2016 Annual periods beginning on or after January 1, 2018 Cycle (amendments to IFRS 1 and IAS 28)

New Interpretations Effective date IFRIC 22 Foreign Currency Transactions and Advance Annual periods beginning on or after January 1, 2018 Consideration IFRIC 23 Uncertainty over Income Tax Treatments Annual periods beginning on or after January 1, 2019

Management is evaluating the impact of the application of IFRS 9, IFRIC 22 and IFRIC 23, nevertheless it is not possible to provide an accurate estimation of the effects that these Standards will have prior to completing a detailed analysis.

3.3 Adoption of IFRS 16 – Leases

In January 2016 the international accounting standards board (IASB), issued IFRS 16 – Leases. IFRS 16 – Leases replaces the IAS 17 – Leases, the interpretation of the Committee's Interpretations of International Standards of Financial Reporting (IFRIC) 4 "Determining whether an arrangement contains a lease", the interpretation of the Committee's Interpretations of International Accounting Standards (SIC) 15 "Operating Leases- Incentives" and SIC-27 "Evaluation of the essence of the transactions that adopt la form legal of a lease". IFRS 16 lays down the principles for the recognition, measurement, presentation and information disclosure leases.

IFRS 16 applies to annual periods beginning on or after January 1, 2019. Early application is permitted for entities that apply IFRS 15 - Revenue from Contracts with Customers before the date of initial application of IFRS 16.

The company has early adopted on January 1, 2017, IFRS 16 – Leases, in accordance with the requirements of transition (as explained below). The initial application date is January 1, 2017. The change in accounting policy has been made in accordance with the guidelines of the transition, with the exception of the fact that the company has not followed such transition guidance or included proper disclosure based on such guidance as of and for the three month period ended March 31, 2017. 17

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The standard establishes three options for the transition during the adoption of IFRS 16 – Leases. The options are the following: 1) retrospective - initially to retrospectively apply the standard with the cumulative effect recognized in accumulated profits and losses opening balance on the date of the initial application; 2) Cumulative catch - up - recognize liabilities for lease at the date of initial application for leases previously classified as operating leases applying IAS 17 – Leases. The tenant should measure liabilities for lease at the present value of the remaining payments discounted using the incremental interest rate of indebtedness of the tenant on the initial date of application; ( 2a) measurement of assets at the beginning of the lease - recognizing an right-of-use asset at the date of initial application of leases previously classified as an operating lease applying IAS 17 – Leases; ( 2b) measurement of assets equal to liabilities for lease - recognizing the right of use on asset in an amount equal to liabilities for lease of the lease at the date of initial application adjusted for any payment of rental accrued or prepaid.

The ENAP Group chose the option 2b), and measured current lease liabilities and right-of-use asset derived from leases previously classified as operating leases by reference to the lease payments for the remainder of the term of the lease using the option record the asset at an amount equal to the liability to the extent allowed by IFRS 16 : C8 (b) (ii) and also determined the incremental interest rate indebtedness at the date of the initial application (January 1, 2017) in accordance with the term of the lease and the nature of the right to use asset; In addition, the right to use assets recorded at the date of initial application will incur costs of depreciation through the shortest of the period of the contract or the useful life of the asset.

The weighted average incremental interest rate applied to the recognized lease liabilities are January 1, 2017: 3 - 5 yeas 8 - 10 years UF 1.82% 2.05% US$ 3.53% 3.97%

4. FINANCIAL RISK MANAGEMENT AND HEDGE DEFINITION

During the normal course of its business and financing activities, ENAP is exposed to different financial risks that could have a significant effect on the economic value of its cash flows and assets and, therefore, on its net income.

The Group has organization and information systems, managed by Corporate Financial Management, to identify such risks, calculate their magnitude, propose mitigating measures to the Board, implement such measures and control their effectiveness.

A definition of the risks faced by the Company is presented, including their features and value for ENAP, and a description of the mitigating measures currently being used by the Company, if applicable. a) Market risk

This is the possibility that the fluctuations of market variables, such as interest rates, foreign currency exchange rates, prices or indices of crude oil and by-products, etc., may cause financial losses due the devaluation of cash flows or assets or the revaluation of liabilities, as a result of their being denominated in, or indexed to, such variables.

ENAP AND SUBSIDIARIES a.1) Interest rate risk - ENAP’s financing structure considers a mixture of sources of funds subject to a fixed rate (mainly bonds) and variable rate (bilateral loans, syndicated loans, notes payable or forfeiting, short-term bank loans and suppliers credit).

The portion of financing subject to a variable interest rate, usually consisting of the 3 or 6 month LIBOR floating rate plus a spread, exposes the company to changes in its financial expenses due to fluctuations in the LIBOR rate.

ENAP's total financial debt as of December 31, 2017 is summarized in the table below, separating the fixed rate debt from the floating rate debt – Previous hedge:

In millions of US dollars Fixed Rate Floating Rate Total

Current bank debt - 489 489 Non-current bank debt 25 230 255 International bonds 2,821 - 2,821 Local bonds 883 - 883

Total 3,729 719 4,448

Note: The data in the attached table corresponds solely to the principal, not to any accrued interest or other concepts. The international and local bonds are presented at face value, and not on an amortized cost basis as on the balance sheet. Since the interest rate is applied to the face value of the bonds, this amount allows to correctly quantify the exposure of ENAP Group to the fixed or variable rate, which the subject of this section. The local bonds denominated in UF are presented at their face value equivalent to US$ as of December 31, 2017.

Risk mitigating instruments: In order to reduce the variability of its financial expenses, ENAP obtained several hedging instruments for some of the debt items in the above table. Interest rate swaps were obtained to swap floating rate of ThUS$ 124,517 of the long-term bank debt.

Residual risk exposure:

Considering the existence of the hedge instruments indicated above, the net balance of obligations of the Group whose financing cost is fully subject to fluctuations in the LIBOR rate is ThUS$ 594,983, which amounts to 13.38% of the total. As such, a 1% increase in the applicable LIBOR rate (quarterly or half yearly, depending on the type of debt) would generate an annual increase of about ThUS$ 5,950. a.2) Exchange rate risk: The functional currency of the ENAP Group is the US dollar. However, there are some relevant items of the interim financial statements denominated in local currency (Chilean pesos or UF - inflation index-linked unit of account), such as sales invoicing and financial obligations, and in Swiss Francs (CHF). These are exposed to exchange rate fluctuations as a result of fluctuations in the Chilean peso/USD, UF/USD or CHF/USD parities.

ENAP AND SUBSIDIARIES

Mitigating measures: The exposure of the exchange rate variations from invoicing is minimized basically via a product pricing policy, based on import parity pricing, a mechanism whereby the local sale price for products is recalculated on a weekly basis in accordance with the current exchange rate. Other main balance sheet items exposed are local bonds (denominated in UF - inflation index-linked unit of account) and accounts receivable relating to local sales (denominated in pesos). The ENAP Group carries out hedging operations to mitigate the exchange rate risk associated with both items. The principal owed under ENAP’s local bonds as of December 31, 2017 was UF 22.25 million (equivalent to ThUS$ 969,920 as of December 31, 2017). Based on that amount and the CLP/USD and CLP/UF parities in effect on that date, a change of $50 in the CLP/USD exchange rate would produce the following effects on the bond’s value measured in dollars: Variation in Exchange rate Bond valuation ThUS$

Increase $50 ($664.75) 72,954 Decrease $50 ($564.75) (85,872)

In order to mitigate this risk, ENAP has entered into cross-currency swap contracts, whereby the company receives cash flows in UF from the other parties equal to the cash flows payable to the bond holders and pays them fixed cash flows in US dollars, thereby being free from the above exchange rate risk. The notional amount covered is ThUS$ 1,103,476.

The balance of accounts receivable from local sales as of December 31, 2017 was ThUS$ 529,092. As such an increase of CLP $50 in the exchange rate would produce a reduction of ThUS$ 39,796 in the dollar value of the accounts receivable.

In order to minimize this risk, ENAP has a hedging policy in place, which consists of entering into weekly forward exchange rate contracts for an amount equivalent to 100% of the estimated sales for the corresponding week and for terms based on the estimated collection dates of the respective invoicing. a.3) Commodities price risk: ENAP’s Downstream business line consists mainly of buying crude oil in the international markets for refining and the subsequent sale of its by-products in the domestic market, based on import parity prices.

The refining margin obtained by ENAP is subject to the fluctuation in the international prices of crude oil of refined products and the difference between them (international margin or “crack spread”). Considering an average level of refining of 66 million barrels per year, a variation of USD 1/barrel in the crack spread all things being equal, would have a quarterly effect on net income of ThUS$ 65,000.

The central strategy of the ENAP Group in confronting the risk of a variation in the refining margin is to orient its investments toward increasing its flexibility in production and the quality of its products. Until now, no derivative contracts have been signed to set the refining margin, but market price levels are constantly being monitored.

ENAP AND SUBSIDIARIES Moreover, due to the time elapsing between the purchase of crude oil and the sale of refined products, ENAP is also exposed to a time spread or risk that prices at the time of sale of the products are below the price prevailing at the time of purchase of the crude oil. Earnings or losses for this reason increase the volatility of ENAP’s Group operating income.

On average, ENAP imports about 5.5 million barrels of crude oil per month. A drop of US$ 1/barrel in the price of the by-product during the refining inventory cycle has an immediate effect of ThUS$5,500 on refining margin per month.

The hedging policy to mitigate the risk of inventory devaluation (crude oil shipments) consists of entering in time-spread swap hedge contracts, which are intended to move the financial pricing window of a crude oil shipment (which is usually during the days that are near the loading date) and adjust it to the dates when the refined products made from that crude oil are priced. This will bring inventory costs in line with the prices of the products that will be sold. This mitigates quite well the time spread to which the company is naturally exposed. However, it should be mentioned that these instruments, by their nature and mode of operation, protect against the fluctuation in the crude oil prices but do not fully ensure the full elimination of effects on income as a result of the volatility in the prices of raw material.

At this time, Brent crude oil is the most relevant marker in the oil market and has direct effects on the prices of the products that ENAP uses as a reference to determine the sales prices of the products that we produce, because these sales prices are strongly correlated to this marker. For that reason, when the trading area awards purchases of crude oil priced on the WTI (West Texas Intermediate), a “differential swap” is contracted to financially transfer a WTI position to an ICE Brent position and thus maintain the standard of optimization that prevailed at the time the purchase of that crude oil was awarded.

Furthermore, the E&P business Line consists mainly in the exploration and exploitation activities of hydrocarbon reserves and their sales in the international market. Consequently, its results are directly related with international oil and gas prices.

In order to mitigate such risk, ENAP centers its efforts on constant operational improvements in order to maintain a cost efficient structure. The Company does not systematically use derivatives as a hedging mechanism for the sales of its own production, although certain specific operations of this kind have been performed. b) Liquidity risk

This risk arises from the funds required to meet capital expenditure commitments and the normal operation of the business, debt maturities, derivatives settlement etc. The Group has a financial policy with guidelines to manage this risk, consisting in long-term committed credit facilities and temporary financial investments, for amounts sufficient to meet projected requirements for a period which requirements correlate with the situation and the expectations of the debt and capital markets.

The Market Risk Management and Financial Transactions Department and the Corporate Finance Department, both reporting to Financial Management, continuously monitor the Group’s funding requirements.

In addition to the balance sheet balances, the Group has additional liquidity resources currently available: (i) a committed credit line for US$ 100 million with Santander Bank, NA (ii) a committed credit line for Ch$ 25,000 million with Banco de Chile (iii) a committed credit line for Ch$ 15,000 million with Banco Santander and (iv) uncommitted credit lines for approx. US$ 1,000 million with different domestic and foreign banks.

ENAP AND SUBSIDIARIES The projected needs mentioned above include net financial debt maturities, i.e., after financial derivatives. The table below shows the balance of financial obligations at December 31, 2017, according to their maturity dates: 2023 In millions of U.S. dollars 2018 2019 2020 2021 2022 onwards Total Current bank debt 489 - - - - - 489 Non-current bank debt 58 69 69 54 5 - 255 International bonds 221 115 175 410 - 1,900 2,821 Local bonds - 425 - - - 458 883 Total 768 609 244 464 5 2,358 4,448 For more details on the features and conditions of financial debts and derivatives, see note 23.

The following table shows the maturity profile of the financial obligations (additional to those presented in the above table) of the ENAP Group as of December 31, 2017: 2023 In millions of U.S. dollars 2018 2019 2020 2021 2022 onwards Total Trade payables 875 1 - - - - 876 Accouts payable to related entities 19 - - - - - 19 Hedging derivatives 83 14 19 - 21 3 140 Total 977 15 19 - 21 3 1,035 c) Credit risks

This risk refers to the ability of third parties to fulfill their financial obligations towards ENAP. There are three different categories: c.1) Financial assets - These are the balances of cash and cash equivalents, time deposits, operations with repurchase agreements and marketable securities as a whole. ENAP’s ability to recover these funds at maturity depends on the creditworthiness of the bank in which they are deposited. In order to mitigate this risk, ENAP has a financial policy specifying the creditworthiness parameters that must be met by financial institutions in order to be considered eligible as a depositary of the above products, as well as each institution’s concentration ceilings. c.2) Obligations of counter-parties in derivatives - These are the ENAP market values of current derivative contracts with banks. In order to mitigate this risk, ENAP has a derivative management policy specifying creditworthiness parameters that must be met by financial institutions in order to be considered eligible as counter-parties to derivative contracts. c.3) Trade debtors - The risk of uncollectibility of Group trade debtors is significantly low, insofar as nearly all local sales (>95%) are invoiced to the 4 main fuel distributors or liquefied petroleum gas distributing companies.

Meanwhile, the incorporation of new clients is subject to an analysis of their financial creditworthiness and their approval by ENAP’s Credit Committee. This committee coordinates the collection actions required, if payments are delinquent.

As of December 31, 2017, the total exposure of the Group to accounts receivable amounts to ThUS$ 711,153 as indicated in Note 11. 22

ENAP AND SUBSIDIARIES

There are no guarantees for significant amounts to cover such exposure, because as indicated above, almost all sales correspond to distributing companies of fuel or liquefied petroleum gas, with whom the Group operates based on credit sales without guarantees. The estimation of the doubtful accounts as of December 31, 2017 amounts to ThUS$ 15,145.

Information regarding capital management is included in Note 27.

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Responsibility for the information and estimates

Corporate Management of the ENAP Group is responsible for the information contained in these consolidated financial statements.

In these consolidated financial statements the Corporate Management of the ENAP Group and its consolidated entities have used estimates to quantify some of the assets, liabilities, income, expenses and commitments recorded therein.

Regardless of the fact that these estimates were made with the best information available at the time, they may possibly need to be revised in future years as a result of future events (upwards or downwards). This would be done prospectively, as stipulated in IAS 8, by recognizing the effect of the change in the estimate if the review affects this year only, or in the year of review and future years if the change affects both.

In applying the accounting policies of the ENAP Group, which are described in Note 3, management makes future estimates and judgments regarding the book values of its assets and liabilities. The estimates and associated assumptions are based on past experience and on other factors considered relevant. The results could differ from these estimates.

Management has made estimates and judgments that have significant effects on the figures presented in the financial statements. Any changes in assumptions and estimations could have a significant impact on the consolidated financial statements.

Critical accounting estimates and judgments made by Management are detailed below:

1. Impairment of assets – At year-end or on such date on which it is considered necessary, we analyze the value of assets to determine whether there is any sign that such assets have suffered an impairment loss. In case such evidence exists, an estimate of the recoverable amount of such asset is performed to determine, in each case, the amount of the necessary adjustment. In case of identifiable assets that do not generate independent cash inflows, the recovery of the cash generating unit to which the asset belongs is estimated. As of December 31, 2017, the subsidiary in Argentina carried out an impairment test on the investments in Pampa del Castillo-La Guitarra and Cañadón Perdido Central Camp oil fields. The subsidiary calculated gross impairment charged to other expenses for ThUS$ 34,389 and ThUS$ 21,800, respectively.

2. Useful lives of Property, Plant and Equipment – ENAP Group Management estimates the useful lives that are used to calculate the respective depreciation charges for its fixed assets. This estimate is based on technical studies prepared by internal and external experts. Where there are indications which recommend changes in the useful lives of these assets, it must be done using technical estimates for this purpose. Management will increase the charge for depreciation when the useful lives are less than the estimate or write off technically obsolete assets that are abandoned or sold. The ENAP Group reviews the estimated useful lives of its property, plant and equipment assets at the end of each annual financial reporting year. 23

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3. Provision for obsolescence of materials and spare parts – Materials and spare parts presented under Inventories and Property, plant and equipment can be affected by various factors such as technological changes, abandonment, environmental exposure, among others, for which the ENAP Group makes estimates and judgments in order to determine obsolescence provision with the most updated information available. These estimates are regularly reviewed on the basis of additional information and greater experience which may possibly affect the values determined.

4. Reserves of crude oil and gas - Estimates of reserves of crude oil and gas are an integral part of the ENAP Group's decision-making process. The volume of reserves of crude oil and gas is used for calculating the depreciation, using the production unit ratios, and also for evaluating the recoverability of the investment in Upstream assets (E&P). The determination of the oil and gas reserve is made through the appropriate use of the principles and techniques of geological evaluation and petroleum engineering that agree with the recognized practices in the industry and in accordance with the definitions established by the PRMS in 2007 ( Petroleum Resources Management System). These studies carried out by our specialists are regularly audited by specialized and world-renowned companies.

5. Fair value of derivative instruments and other financial instruments – The fair value of the financial instruments not traded in an active market is determined using valuation techniques. The ENAP Group uses its judgment to select a variety of methods and make assumptions based mainly on existing market conditions at each balance sheet date. The assumptions for derivative financial instruments are based on market rates quoted and adjusted to the specific characteristics of the instrument. Other financial instruments are valued using the discounted cash flow analysis based on assumptions supported, whenever possible, by observed market prices or rates.

6. Provisions for litigation and other contingencies – The final cost for claims and lawsuits could vary due to estimates based on different interpretations of the regulations, opinions and final evaluations of the amount of damages. Therefore, any change in the circumstances involved could have a significant effect on the amount of the contingency provision recorded.

7. Provisions for environmental remediation – The ENAP Group makes estimates and relies on its judgment when recording costs and stipulating provisions for environmental remediation and clean-up. These estimates and judgments are based on current information about expected remediation costs and plans, the timing of disbursements, the interest rate used for discounting future flows, etc., in order to calculate their fair value. The costs of environmental provisions could differ from the estimates due to changes in laws and regulations, the discovery and analysis of the conditions at the location, and also changes in clean-up technology. Therefore, any change in the factors or circumstances involved in this provision, and also in the standards and regulations, could have a significant effect on the provisions recorded for such costs.

8. Calculation of income tax and deferred tax assets – Tax assets and liabilities are reviewed regularly and balances are adjusted as appropriate. The ENAP Group considers that an adequate provision has been made for future tax effects, based on facts, circumstances and current tax laws. Also, tax loss carryforwards of Chilean companies at the date of these consolidated financial statements have been estimated as totally recoverable by management. However, the tax position might change, creating different results with an impact on the amounts reported in these consolidated financial statements.

ENAP AND SUBSIDIARIES

6. BUSINESS COMBINATION

During the year ended December 31, 2017 no business combinations, have been made. During the year ended in December 31, 2016 was carried out the following operation of business combination:

On December 7, 2016, the subsidiary Enap Refinerías S.A. acquired an additional 85% of the voting rights of Petropower Energía Limitada (PPW). PPW was incorporated in 1993, and its main focus is the production of energy and steam. PPW includes a cogeneration unit for electricity and steam, a diesel hydro-treatment plant and a delayed coking plant.

The control of PPW allows us to fulfill two fundamental objectives: to ensure the operational continuity of the Bío Bío Refinery by supplying it with high pressure steam, demineralized water and electrical energy and to sell surplus energy to third parties, injecting it into the Central Interconnected System.

As of the date of acquisition, PPW has not contributed to the Group's operating results, since for financial-accounting purposes the acquisition date was considered to be December 31, 2016. If the business combination have occurred on January 1 2016, revenues from consolidated ordinary activities would haved amounted to ThUS$ 5,228,608 and the pre- tax gain to ThUS$ 244,471. a) Transferred consideration: This increase in PPW participation meant a total cash outlay of ThUS$ 50,300. b) Costs related to the acquisition, recognized as an expense: Costs associated with the acquisition of PPW recognized as an expense amounted to ThUS$ 518. These costs are mainly composed of fees for financial, tax and legal advice and were recognized in the consolidated statement of comprehensive income under administrative expenses. c) Identified acquired assets and liabilities assumed: The amounts recognized for assets acquired and liabilities assumed at the acquisition date (December 31, 2016) are as follows:

(1) See Note 16.

Considering the nature of PPW's business and assets, the measurement of the fair value of assets acquired and liabilities assumed was made using the following valuation approaches:

ENAP AND SUBSIDIARIES i.- Market approach, by means of the comparison method, based on quoted market prices for identical or comparable items when these are available. ii.- Income approach, which by means of valuation techniques that convert future amounts (for example, cash flows or income and expenses) into a single present amount (that is, discounted). The measurement of fair value is determined on the basis of the value indicated by the market expectations present with respect to such future amounts. iii.- Cost approach, or depreciated replacement cost, which reflects the adjustments related to the physical deterioration as well as the functional and economic obsolescence, used for the property, plant and equipment item. This was complemented with the realization of a survey of the fair value of the assets of Petropower Energía Ltda., using the Discounted Cash Flow method, with a Free Cash Flow approach. Both methods supported the fair values of the assets acquired.

Reconciliation of values Fair values arise as a result of an evaluation and reconciliation of the results of the selected methods, based on the nature of each of the assets acquired and liabilities assumed. d) Recognition at fair value of pre-existing participation At the date of acquisition, the Company recognized its pre-existing participation, as follows: 12.31.2016 ThUS$ Fair value of pre-existing participation 27,487 Book value of pre-existing participation and other (13,314) Total 14,173 e) Positive impact on results from PPW purchase The net amount of the identifiable liabilities acquired and the assumed liabilities of PPW and the consideration transferred plus the fair value of the pre-existing participation are presented as part of the “Other gains (losses)” heading and are as follows:

(1) The positive effect on results from the business combination, results from AMEC Foster Wheeler's determination to put its share of the Petropower Energía Ltda. business for sale. In this way, the Administration carried out an economic evaluation considering the option to acquire they maintained as partners over the assets at the end of 2018. Once the company was acquired, Management, through specialists in this type of valuation, carried out the process of measuring 26

ENAP AND SUBSIDIARIES the identifiable net assets acquired according to IFRS 3 "Business combination." The value thus determined was higher than the price paid for the equity interest in the business of Petropower Energía Ltda.

7. FINANCIAL ASSETS

The ENAP Group classifies its financial assets using the following categories: at fair value with changes through profit or loss, financial assets held to maturity, loans and accounts receivable, assets available for sale and hedge derivatives, as itemized below as of December 31, 2017 and 2016:

Financial Financial As of December 31, 2017 assets at fair Investment Loans and assets value through held to accounts available for Hedge profit or loss maturity receivable sale derivatives ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Cash and cash equivalents 91,496 - - - - Other current financial assets 807 - - - - Trade and other receivables - - 822,299 - - Due from related companies - - 33,137 - -

Total current assets 92,303 - 855,436 - -

Other financial assets - 13,788 961 - - Non-current receivable - - 30,578 - -

Total non-current assets - 13,788 31,539 - -

Financial Financial assets at fair Investment Loans and assets As of December 31, 2016 value through held to accounts available for Hedge profit or loss maturity receivable sale derivatives ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Cash and cash equivalents 66,104 - - - - Other current financial assets 11,678 - - - 55 Trade and other receivables - - 644,062 - - Due from related companies - - 48,636 - -

Total current assets 77,782 - 692,698 - 55

Other financial assets - 13,788 127 - Non-current receivable - - 23,117 - - Due from related companies - - 1,066 - -

Total non-current assets - 13,788 24,310 - -

ENAP AND SUBSIDIARIES

8. CASH AND CASH EQUIVALENTS

As of December 31, 2017 and 2016 this item is composed of: 12.31.2017 12.31.2016 Detail: ThUS$ ThUS$

Cash 372 281 Bank 71,719 55,671 Time deposits 19,405 10,152

Total 91,496 66,104

Cash and cash equivalents by currency of origin is as follows: 12.31.2017 12.31.2016 Detail: Currency ThUS$ ThUS$

Cash and cash equivalents US$ 62,949 36,970 Cash and cash equivalents Ch$ 12,126 12,360 Cash and cash equivalents AR$ 10,352 5,451 Cash and cash equivalents EG £ 6,069 11,323

Total 91,496 66,104

Time deposits and repurchase agreement expire in a period of less than three months from the date of acquisition and accrue market interest for this type of investment. In cash and cash equivalents there are no cash flows subject to restrictions. As of December 31, 2017 and 2016 there are no bank overdrafts presented as cash and cash equivalents.

9. OTHER FINANCIAL ASSETS CURRENT AND NON-CURRENT

As of December 31, 2017 and 2016 the detail is as follows: Current Non-Current 12.31.2017 12.31.2016 12.31.2017 12.31.2016 Detail: ThUS$ ThUS$ ThUS$ ThUS$

Hedging derivatives (a) - 55 - - Investments in other companies (b) - - 13,762 13,762 Argentine National Bonds (c) 807 11,678 - - Other receivable - - 987 153

Total 807 11,733 14,749 13,915

(a) See detail in Note 23 a).

(b) The detail of investment in other companies at December 31, 2017 and 2016 is as follows: 28

ENAP AND SUBSIDIARIES

Ownership % 2017 2016 12.31.2017 12.31.2016 Details: Country % % ThUS$ ThUS$

Terminales Marítimos Patagónicos S.A. Argentina 13.79 13.79 7,664 7,664 Electrogas S.A. Chile 15.00 15.00 6,091 6,091 Asociación Gremial de Industriales Químicos C.P.A. Chile N/A N/A 7 7 Total 13,762 13,762

(c) On July 6, 2015, the Argentine Government, through Decree 1330 invalidated the Program named as “Petróleo Plus”. On August 29, 2015 the subsidiary Enap Sipetrol S.A. gave its approval and accepted the incentives pending settlement paid through the delivery of public debt securities named as “Bonos de la Nación Argentina”. The financial instruments are detailed as follows:

Maturity Nominal Market Current Non-current Instrument Country date rate % rate % 12.31.2017 12.31.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ ThUS$ ThUS$ BONAD 2020 Argentina 01.10.2020 8.00 8.00 807 - - - BONAR 2024 Argentina 07.05.2024 8.75 8.75 - 11,678 - -

Total 807 11,678 - -

BONAR 2020, Securities in dollar with nominal value amount to the ThUS$ 765, being settled in 2010 these securities include sale restrictions, so that up until December 2017, Enap Sipetrol Argentina S.A. cannot sell more than 3% per month. From 2018 onwards, there will be no restrictions on the sale of the 2020 BONAR.

BONAR 2024, titles of value in US dollars with an annual rate of 8.75%, were settled during the first half of 2017, once lifted the restrictions of sale.

10. OTHER NON-FINANCIAL ASSETS CURRENT AND NON- CURRENT

As of December 31, 2017 and 2016 the detail of this is as follows:

Current Non-Current 12.31.2017 12.31.2016 12.31.2017 12.31.2016 Details: ThUS$ ThUS$ ThUS$ ThUS$

Prepaid vessel lease 5,075 4,085 - - Prepaid expenses of Torquemada Substation 582 582 2,812 3,392 Prepaid insurance 16,867 12,431 - - Catalyst and platinum incorporated in catalyst - - 23,978 32,519 Other 1,804 217 917 918

Total 24,328 17,315 27,707 36,829

ENAP AND SUBSIDIARIES

11. TRADE RECEIVABLES AND OTHER RECEIVABLES

As of December 31, 2017 and 2016 this item is composed as follows:

Current Non-Current 12.31.2017 12.31.2016 12.31.2017 12.31.2016 Details: ThUS$ ThUS$ ThUS$ ThUS$

Trade debtors 711,154 555,570 - - Sundry debtors 65,464 66,418 15 14 Other receivables 60,826 37,251 30,563 23,103 Allowance for doubtful accounts (15,145) (15,177) - - Total 822,299 644,062 30,578 23,117

The fair values of trade receivables, sundry debtors and other receivables approximate to their book value. a) Age of overdue accounts receivable but not impaired: The maturity of non-impaired overdue accounts receivable, is detailed below: 12.31.2017 12.31.2016 ThUS$ ThUS$

Over 1 day to 5 days 17,992 1,208 Over 6 days to 30 days 3,888 27,568 Over 31 days to 60 days 6,557 5,329 Over 61 days to 90 days 12,593 6,742 Over 91 days to 1 year 32,836 69,604 Over 1 year 15,531 3,572 Total 89,397 114,023

The amounts included bear interest, calculated using the maximum conventional rate published in the Official Newspaper of Chile (Diario Oficial de Chile).

The average collection period from customers at December 31, 2017 and 2016 is around 20 days for the R&C segment, the G&E segment has an average collection of 15 and 20 days and between 60 and 90 days for the E&P segment. b) Allowance for doubtful accounts: The allowance for doubtful accounts by aging of receivables as of December 31, 2017 and 2016 is as follows: 12.31.2017 12.31.2016 ThUS$ ThUS$ Up to 90 days - (13,895) Over 1 year (15,145) (1,282) Total (15,145) (15,177)

Considering the creditworthiness of debtors and historical collection performance, the ENAP Group has estimated that the provision for doubtful accounts at December 31, 2017 and 2016, is sufficient.

ENAP AND SUBSIDIARIES 12. BALANCES AND TRANSACTIONS WITH RELATED COMPANIES

The accounts receivable, accounts payable and transactions with related parties are the following: a) Accounts receivable, current and non-current:

Current: 12.31.2017 12.31.2016 Tax Number Company Country Relationship Currency ThUS$ ThUS$

61.979.830-9 Ministerio de Energía Chile Indirect US$ 21,252 28,611 76.418.940-K GNL Chile S.A. Chile Associate US$ 6,687 14,745 0-E Gasoducto del Pacífico Argentina S.A. Argentina Associate US$ 510 632 96.762.250-8 Gasoducto del Pacífico Chile S.A. Chile Associate US$ 2,933 2,933 96.861.390-1 Innergy Soluciones Energéticas S.A. Chile Associate US$ 801 560 78.889.940-8 Norgas S.A. Chile Associate US$ - 188 96.655.490-8 Oleoducto Trasandino (Chile) S.A. Chile Associate US$ - 140 81.095.400-0 Sociedad Nacional de Oleoductos S.A. Chile Associate US$ 954 827

Total 33,137 48,636

Non-current: 12.31.2017 12.31.2016 Tax Number Company Country Relationship Currency ThUS$ ThUS$ 96.861.390-1 Innergy Soluciones Energeticas S.A. Chile Associate US$ - 674 76.418.940-K GNL Chile S.A. Chile Associate US$ - 392 Total - 1,066

The non-current balances receivables from Innergy Soluciones Energéticas S.A. and from GNL Chile S.A., have Libor 360 + 3% established as a base interest rate and Libor 180 + 3% respectively. b) Current accounts payable: 12.31.2017 12.31.2016 Tax Number Company Country Relationship Currency ThUS$ ThUS$

81.095.400-0 Sociedad Nacional de Oleoductos S.A. Chile Associate US$ 2,350 1,913 76.418.940-K GNL Chile S.A. Chile Associate US$ 12,050 8,036 61.704.000-k Codelco Chile Indirect US$ 5,680 2,550 96.655.490-8 Oleoducto Trasandino (Chile) S.A. Chile Associate US$ - 105 - Others US$ 2 396

Total 20,082 13,000

ENAP AND SUBSIDIARIES

At each year-end, the balances receivable from and payable to related companies, current, originate mainly from transactions in the consolidated lines of business. They are agreed in Chilean pesos and dollars, their terms for collection and/or payment do not exceed 60 days and, in general, they have no indexation adjustment or interest clauses. c) Transactions with related companies: Effect in income 01.01.2017 01.01.2016 (Debit) / Credit Description of the 12.31.2017 12.31.2016 12.31.2017 12.31.2016 Tax Number Company Country Relationship transaction ThUS$ ThUS$ ThUS$ ThUS$

76.418.940-K GNL Chile S.A. Chile Associate Purchase of natural gas 338,698 316,353 - - Advances on gas purchases 54,055 47,845 - - Loans payments - 1,700 - - Interest accrued - 22 - 22 Dividend received 1,100 - - - Dividend accrued 1,500 - - 78.889.940-8 Norgas S.A. Chile Associate Dividend received - 625 - - 81.095.400-0 Sociedad Nacional de Oleoducto S.A. Chile Associate Purchase of services 45,770 42,807 - - Sale of services 1 8 1 7 Dividend received 3,809 3,389 - - Accrued dividend 1,099 824 - - 96.856.650-4 Innergy Holding S.A. Chile Associate Purchase of natural gas 2,304 2,303 - - Sale of products 10,611 7,772 1,273 844 Interests - 1 - 1 96.861.390-1 Innergy Soluciones Energéticas S.A. Chile Associate Subscription promissory notes - 633 - - Partial payment promissory notes 675 - - - Interest accrued - 24 - 24 96.856.700-4 Innergy Transportes S.A. Chile Associate Plant operation 1,339 1,543 - - 76.788.080-4 GNL Quintero S.A. Chile Associate Dividend received 5,745 6,083 - - 96.655.490-8 Oleoducto Trasandino (Chile) S.A. Chile Associate Purchase of services 4,156 3,879 - - Dividend received 1,176 - - - Dividend accrued - 657 - - 61.979.830-9 Ministerio de Energía Chile Indirect Gas subsidy 95,292 95,549 95,292 95,549 61.704.000-k Codelco Chile Indirect Purchase of energy 8,259 5,588 (8,259) (5,588)

d) Remuneration of the Board of Directors

Actual members of the Board Tax 01.01.2017 01.01.2016 identification 12.31.2017 12.31.2016 Name number Position ThUS$ ThUS$

Andrés Ignacio Rebolledo Smitmans (1) 8.127.608-0 President - - Eduardo Bitrán Colodro 7.950.535-8 Vice president - - Jorge Fierro Andrade 9.925.434-3 Director 12 11 María Isabel González Rodríguez 7.201.750-1 Director 15 12 Carlos Carmona Acosta 9.003.935-0 Director 15 12 Bernardita Piedrabuena Keymer 10.173.277-0 Director 13 12 Paul Schiodtz Obilinovich 7.170.719-9 Director 13 10 Alberto Salas Muñoz 6.616.223-0 Director 8 - Subtotal 76 57

ENAP AND SUBSIDIARIES Former members of the Board Tax 01.01.2017 01.01.2016 identification 12.31.2017 12.31.2016 Name number Position ThUS$ ThUS$

Alejandro Jadresic Marinovic 7.746.199-k Director 10 6

Subtotal 10 6

Total 86 63 OK 1) By virtue of the effective date of Law No. 21,025 on December 1, 2017, which establishes new corporate governance for ENAP, the Minister of Energy, Mr. Andrés Rebolledo Smitmans, ceased to chair and be a member of the Company's Board of Directors on November 30, 2017.

Board compensation bears no relationship to the Company’s performance.

Key management personnel – The executive area’s gross remuneration, paid during the year 2017, amounts to ThUS$ 2,973 and takes into account the executive positions of ENAP Group; the gross remuneration paid during the year 2016, amounted to ThUS$ 2,839. The positions considered in the reported amounts are those executives who have authority and responsibility to plan, direct and control the entity activities.

The company has no accrued obligations for the Executives under the concept of long and short-term benefits and share- based payments.

Incentive plans for executives – ENAP has a Variable Remunerations System (VRS) that is applicable to all its executives, with the sole exception of the General Manager, and at the end of each year it provisions an estimate of such disbursement during the first quarter of the following year.

The purpose of this bonus plan is to encourage them to add value to the company, improve teamwork and individual performance. The incentive factors considered in this model are the following:

- The financial results obtained by the company. - The results per area, including the goals achieved for each management area. - Individual performance results.

On July 27, 2017, Law No. 21,025 was enacted. This law will become effective on December 1, 2017. Law 21,025 changed the corporate governance of ENAP and provides ENAP with a new governance system for the Company, clearly establishing the roles of decision-making, supervision and implementation of decisions.

ENAP AND SUBSIDIARIES

13. INVENTORIES

As of December 31, 2017 and 2016 this item was composed as follows: 12.31.2017 12.31.2016 Detail: ThUS$ ThUS$

Crude oil in inventories 365,851 228,045 Crude oil in transit 64,383 61,249 Finished products 492,122 340,256 Products in transit 39,833 25,994 Material in warehouse 76,796 72,346 Total 1,038,985 727,890

01.01.2017 01.01.2016 12.31.2017 12.31.2016 Additional Inventory Information ThUS$ ThUS$

Inventory costs recognized as cost of sales during the year (5,257,404) (4,138,761)

As of December 31, 2017 and 2016, an obsolescence provision of ThUS $ 20,000 was included as part of the supplies in the warehouse.

14. CURRENT ASSETS AND LIABILITIES, DEFERRED TAX AND INCOME TAX BENEFITS a) Current tax assets and liabilities: The detail as of December 31, 2017 and 2016 is as follows:

12.31.2017 12.31.2016 Current tax assets: ThUS$ ThUS$ VAT fiscal credit 193,766 118,838 Recoverable tax, foreign 13,895 5,410 Specific tax on fuel 1,237 2,491 Customs duties 1,423 1,187 Monthly provisional payments, net 4,015 2,415 Recoverable taxes, other 3,397 4,415 Other taxes - 504

Total 217,733 135,260

ENAP AND SUBSIDIARIES 12.31.2017 12.31.2016 Current tax liabilities: ThUS$ ThUS$

Specific tax on fuel 63,630 53,575 Withholding taxes 5,054 4,989 Royalties and exploitation rights 7,115 2,589 Income tax payable 28,412 11,064 Other taxes 1,471 2,063

Total 105,682 74,280 b) Deferred tax assets and liabilities: The origin of the deferred taxes recorded as of December 31, 2017 and 2016 is as follows: Net assets for deferred taxes 12.31.2017 12.31.2016 Assets Liabilities Assets Liabilities Temporary differences: ThUS$ ThUS$ ThUS$ ThUS$

Related to tax loss carryforwards 923,440 - 837,910 - Related to provisions 77,948 - 57,640 - Related to property, plant and equipment 51,904 72,980 50,478 69,837 Related to right of use 43,972 - 2,014 2,685 Related to financial lease - 43,457 - - Related to reserves for cash flow hedges 19,071 - 20,828 - Related to material accruals 22,430 - 21,978 - Related to deferred expenses - 85,929 - 78,012 Related to obligations for severance benefits - 1,998 - 5,583

Subtotal 1,138,766 204,364 990,848 156,117 Total 934,402 - 834,731 -

Net liabilities for deferred taxes Temporary differences: 12.31.2017 12.31.2016 Assets Liabilities Assets Liabilities ThUS$ ThUS$ ThUS$ ThUS$

Related to tax loss carryforwards 13,505 - 27,887 - Related to provisions 14,991 - - - Related to depreciations - 43,725 - 98,084 Related to others - 7,627 - - Subtotal 28,496 51,352 27,887 98,084 Total - 22,856 70,197

ENAP AND SUBSIDIARIES Movements in deferred taxes: 12.31.2017 12.31.2016 ThUS$ ThUS$ Amount recognized in income of the year 142,295 74,193 Amount recognized in other comprehensive income 594 2,631 Acquisitions under business combinations, deferred taxes - (57,353) Related to other 4,123 (1,038) Changes in deferred taxes assets and liabilities 147,012 18,433 c) Current tax expenses

All companies of the ENAP Group individually submit their tax returns, in compliance with the tax laws in their countries.

The current tax and deferred tax benefit (expense) for the years ended December 31, 2017 and 2016 is the following:

01.01.2017 01.01.2016 12.31.2017 12.31.2016 (Expense) benefit for income taxes: ThUS$ ThUS$

(Expense) benefit - current tax (38,706) (17,481) Other (expense) benefit for current taxes (1,449) (1,290)

(Expense) benefit for current taxes, net, total (40,155) (18,771)

Deferred (expense) benefit for taxes related to the creation and reversal of temporary differences 142,295 74,193

Benefit (expense) for deferred taxes, net, total 142,295 74,193

Benefit (expense) for income taxes 102,140 55,422

(Expense) benefit for deferred and income taxes by source (Expense) benefit for current taxes, net, foreign (10,565) (9,730) (Expense) benefit for current taxes, net, national (29,589) (9,041)

(Expense) benefit for current taxes, net, total (40,154) (18,771)

(Expense) benefit for deferred taxes, net foreign 29,523 1,100 (Expense) benefit for deferred taxes, net, national 112,772 73,093

(Expense) benefit for deferred taxes, net, total 142,295 74,193

ENAP AND SUBSIDIARIES d) Reconciliation of the income tax rate

The reconciliation from the statutory tax rate in Chile to the effective tax rate applicable to the ENAP Group is as follows: 01.01.2017 01.01.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ (Expense) income for taxes using the legal rate 19,621 (30,518) Tax effects of rates in other jurisdictions 15,514 6,869 Tax effect of ordinary income, not taxable (16,204) 18,428 Tax effect of expenses, not deductible from taxes (2,082) 798 Tax effect of change in the tax rate 2,745 - Tax decree Law N°2398 72,937 65,864 Other increase (decrease) in charge for legal taxes 9,609 (6,019) Adjustment to tax expenses using the legal rate, total 82,519 85,940

Income tax benefit for the year 102,140 55,422

e) Results and tax rates 01.01.2017 01.01.2016 12.31.2017 12.31.2016 Subtotal Total Subtotal Total Income ThUS$ ThUS$ ThUS$ ThUS$

Income before taxes (78,485) 127,158

Income taxes 29,203 (10,442) Income tax - current (17,309) (1,392) Deferred tax 27,867 (420) Foreign tax 18,645 (8,630) Income after income taxes (49,282) 116,716

Special Tax - decree Law N°2398 - Rate 40% 72,937 65,864 Income tax (7,609) (5,995) Deferred tax 80,546 71,859

Net income 23,655 182,580

Income non - controlling Interest 948 1,284

Income controlling Interest 22,707 181,296

Additional information:

The legal rate used in Chile is 25.5% in 2017 and 24% in 2016. Tax rates for other jurisdictions are: Argentina, 35% both years; Ecuador, 22% both years; since the Uruguayan subsidiary is not operating in that country, it is subject to a special regime without tax; Egypt, the joint operation agreement with EGPC grants a special regime without tax for ENAP.

ENAP AND SUBSIDIARIES

ENAP Parent is subject, additionally, to a 40% rate corresponding to a single tax imposed on the companies of the Chilean State, in accordance with Decree Law N° 2.398. Tax Reform in Chile

On September 29, 2014, the law was published in the official gazette N ° 20,780 "tax reform that modifies income taxation system and introduces different adjustments in the tax system".

Among these, a progressive increase in the rate of first category tax was introduced for the fiscal years 2014, 2015 and 2016, increasing the rate to 21%, 22.5% and 24% respectively. From 2017 onwards, the increase in this tax rate will depend on the regime chosen by the taxpayer, i.e., if the attributed income regime has been chosen, the rate will be 25% from 2017 onwards; and if the partially integrated regime has been chosen, the rate will be 25.5% in 2017 and 27% from 2018 onwards.

Among the main changes, these laws specify, in Article 14, two systems of taxation: the attributed income system and the partially integrated system. In the case of taxpayers that are corporations, these may only benefit from the partially integrated income system mentioned above. Similarly, through Circular No. 66 issued in 2015, the Internal Revenue Service instructed that of public companies are excluded from the application of Article 14 due to the lack of a direct or indirect link with people who have the quality of owners, community members, partners or shareholders and are taxed with final taxes, as all of their income is subject to taxation under Article 2 of the DL No. 2,398. While, as a rule, public companies are required to determine their actual income through full accounting, such obligation is for the sole purpose of determining the income subject to the First Category Tax, under the rules contained in Title II of the Income Tax Law relating to such tax, whose rate in these cases is 25%.

Regarding other increases (decreases) made to the legal tax rate, these are permanent differences for the year, arising mainly from the accrued income in subsidiaries and related entities and associates, and to ENAP´s single tax rate mentioned above, in accordance with Decree Law N° 2.398.

Tax Reform in Argentina

On December 29, 2017, the Congress of the Republic of Argentina enacted the Tax Reform Law No. 27,430. The main changes in income taxes are: i) The tax rate for capital companies will be 30% for the years beginning on January 1, 2018 until December 31, 2019, and 25% for years beginning on January 1, 2020 and onwards. Also, the dividends that are distributed will be taxed at a rate of 7% and 13% for the aforementioned periods, respectively. ii) The application of the equalization tax is eliminated for the profit or loss generated for the years beginning on January, 2018, continuing in force for the prior years. iii) A cost price-level restatement mechanism is established for assets acquired or investments made in business years beginning on or after January 1, 2018.

ENAP AND SUBSIDIARIES

15. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Below is a description of the investments accounted for using the equity method and their movement as of December 31, 2017 and 2016: a) Detail of the investments:

Functional Ownership % Companies Main Activity Country Currency 2017 2016 A&C Pipeline Holding Investment and financing in general. I.Cayman USD 36.25 36.25 Compañía Latinoamericana Petrolera S.A. Exploration and exploitation projects related to oil, gas and derivatives. Chile CLP 40.00 40.00 Empresa Nacional de Geotermia S.A. Exploration and exploitation of geothermal energy. Chile USD 49.00 49.00 Forenergy S.A. Biodiesel production and comercialization. Chile CLP 40.00 40.00 Gasoducto del Pacífico (Chile) S.A. Transport natural gas. Chile USD 25.00 25.00 Gasoducto del Pacífico (Argentina) S.A. Transport natural gas. Argentina USD 22.80 22.80 Gasoducto del Pacífico (Cayman) Ltd. Investing and financing in general. I.Cayman USD 22.80 22.80 Geotermica del Norte S.A. Exploration and exploitation of geothermal energy. Chile USD 15.41 18.30 GNL Chile S.A. Storage, processing and regasification capacities of liquid natural gas. Chile USD 33.33 33.33 GNL Quintero S.A. Operation and maintenance of a LNG regasification terminal. Chile USD 20.00 20.00 Innergy Holding S.A. Exploit and operate all kinds of transport networks of natural gas. Chile USD 25.00 25.00 Norgas S.A. Import, export and purchase of LPG and its sale. Chile CLP 42.00 42.00 Oleoducto Trasandino (Argentina) S.A. Construction and exploitation of an oil pipeline between Argentina and Chile. Argentina USD 35.79 35.79 Oleoducto Trasandino (Chile ) S.A. Construction and exploitation of an oil pipeline between Argentina and Chile. Chile USD 35.83 35.83 Sociedad Nacional de Oleoducto S.A. Transport fuels and their derivatives. Chile CLP 10.06 10.06 b) Movement of investments:

As of December 31, 2017 Opening Equity in Final balance earnings Dividends Translation Other Increase balance 01.01.2017 Addition (loss) received Difference (Decrease) 12.31.2017 Companies ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

A&C Pipeline Holding 152 - - - - - 152 Compañía Latinoamericana Petrolera S.A. 243 - (10) - 22 - 255 Empresa Nacional de Geotermia S.A. 1,518 - (180) - - - 1,338 Forenergy S.A. 239 - - - (228) 16 27 Gasoducto del Pacífico (Chile) S.A. 2,578 - 294 - - - 2,872 Gasoducto del Pacífico (Argentina) S.A. 8,025 - 1,745 - - - 9,770 Gasoducto del Pacífico (Cayman) Ltd. 1 - 5 - - (5) 1 Geotérmica del Norte S.A. 73,543 - 836 - - 951 75,330 GNL Chile S.A. 5,956 - 1,298 (2,600) - - 4,654 GNL Quintero S.A. 6,529 - 7,146 (6,614) - 2,651 9,712 Innergy Holding S.A. 5,646 - 3,084 - - - 8,730 Norgas S.A. 1,835 - 168 - (25) 186 2,164 Oleoducto Trasandino (Argentina) S.A. 2,479 - 5 - - - 2,484 Oleoducto Trasandino (Chile ) S.A. 2,106 - 533 (479) - 3,770 5,930 Sociedad Nacional de Oleoducto S.A. 10,782 - 3,773 (3,992) 1,178 - 11,741

Total 121,632 - 18,697 (13,685) 947 7,569 135,160

ENAP AND SUBSIDIARIES As of December 31, 2016 Opening Equity in Final balance earnings Dividends Translation Other Increase balance 01.01.2016 Addition (loss) received Difference (Decrease) 12.31.2016 Companies ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

A&C Pipeline Holding 152 - - - - - 152 Compañía Latinoamericana Petrolera S.A. 235 - (6) - 14 - 243 Empresa Nacional de Geotermia S.A. 1,432 - 246 - - - 1,678 Forenergy S.A. 225 - - - - 14 239 Gasoducto del Pacífico (Chile) S.A. 2,711 - (134) - - 1 2,578 Gasoducto del Pacífico (Argentina) S.A. 6,882 - 1,143 - - - 8,025 Gasoducto del Pacífico (Cayman) Ltd. 1 - - - - - 1 Geotérmica del Norte S.A. 69,716 - 3,667 - - - 73,383 GNL Chile S.A. 3,751 - 2,205 - - - 5,956 GNL Quintero S.A. 24,144 - 5,619 (6,083) - (17,151) 6,529 Golfo Guayaquil Petroenap Compañía de Economía Mixta 10 - - - - (10) - Innergy Holding S.A. 5,052 - 594 - - - 5,646 Norgas S.A. 2,184 - 263 (625) 13 - 1,835 Oleoducto Trasandino (Argentina) S.A. 2,643 - (164) - - - 2,479 Oleoducto Trasandino (Chile ) S.A. 2,769 - (9) (657) - 3 2,106 Petropower Energía Ltda. (See Note 5) 14,646 - 1,284 (3,473) 857 (13,314) - Sociedad Nacional de Oleoducto S.A. 10,165 - 3,445 (3,477) 649 - 10,782

Total 146,718 - 18,153 (14,315) 1,533 (30,457) 121,632

c) Additional information on investments accounted by the equity method:

Fair Value

None of the investments accounted by the equity method is traded publicly, so the fair value is not presented.

Interest below 20% in Sociedad Nacional de Oleoductos S.A.

The ENAP Group exercises a significant influence over Sociedad Nacional de Oleoductos S.A. even though it holds less than 20%. The reason is the relatively important transactions between the investor and the investee. It also is involved in commercial and financial decisions.

Regarding the investment in the company Geotérmica del Norte S.A., even though it holds less than 20%, the Group maintains one director, out of a total of four.

Investments in ThUS$1

The interests in Gasoducto del Pacífico Cayman Ltda. is shown at ThUS$1 since it had negative equity on the closing date.

Changes and/or modification in share in associates

- In the year ended December 31, 2017, in Geotérmica del Norte S.A. capital increases were made for ThUS$ 80,000. ENAP was not involved in these contributions, decreasing its ownership to 15.41%. During 2016, capital increases were made for ThUS$ 170,000. ENAP was not involved in these contributions, decreasing its ownership to 18.30% that year.

ENAP AND SUBSIDIARIES On December 7, 2016, Enap Refinerías S.A. acquired 85% of the shareholding of Petropower Energía Limitada, obtaining control over this company and thus consolidating this entity. (See Note 6). d) Detail of financial information

The summary of the financial statements of the equity method investees is as follows:

As of December 31, 2017 Current Non-current Current Non-current Income / Companies Ownership Revenues Assets Assets Liabilities Liabilities (Loss) % ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Geotérmica del Norte S.A. 15.41 69,092 446,221 26,068 415 12,718 5,421 Gnl Chile S.A. 33.33 115,907 242 102,185 - 1,059,970 3,895 Gnl Quintero S.A. 20.00 352,336 899,672 35,759 1,167,692 196,260 35,731 Sonacol S.A. 10.06 8,534 306,222 67,180 130,884 80,932 37,501 Other investments - 81,279 109,647 17,498 51,719 35,204 22,035 Total 627,148 1,762,004 248,690 1,350,710 1,385,084 104,583

As of December 31, 2016 Current Non-current Current Non-current Income / Companies Ownership Revenues Assets Assets Liabilities Liabilities (Loss) % ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Geotérmica del Norte S.A. 18.30 59,315 385,433 43,747 - 3,650 8,040 Gnl Chile S.A. 33.33 135,001 176 117,309 - 910,420 6,616 Gnl Quintero S.A. 20.00 281,577 928,817 35,496 1,142,251 188,294 28,093 Sonacol S.A. 10.06 7,112 278,910 55,735 123,133 74,037 34,240 Other investments - 86,142 51,160 14,962 28,975 33,664 7,416 Total 569,147 1,644,496 267,249 1,294,359 1,210,065 84,405

16. PROPERTY, PLANT AND EQUIPMENT

Changes in property, plant and equipment items as of December 31, 2017 and 2016 are presented below:

Plant and Investment in Works in Buildings, Equipment, Installa- Exploration & Progress Current year Land Net Net tions Production Other Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Initial balance as of January 1, 2017 230,342 11,593 1,313,078 48,381 326,887 1,166,774 40,584 3,137,639 Additions - - 21,607 - 207,828 482,988 13,610 726,033 Exploratory dry holes and exploratory campaigns - - - - - (40,479) - (40,479) Withdrawals and write-offs - - (856) - - (63,328) - (64,184) Impairments - - - - - (56,189) - (56,189) Depreciation expenses - (1,356) (218,789) (8,170) - (186,251) (11,476) (426,042) Geological studies and unabsorbed costs - - - - - (1,896) - (1,896) Transfers - 1,441 96,819 4,696 (99,684) (5,477) 2,205 - Other increases (decreases) - - 11,493 - 4 (45,336) (371) (34,210) Change, Total - 85 (89,726) (3,474) 108,148 84,032 3,968 103,033

Ending Balance as of December 31, 2017 230,342 11,678 1,223,352 44,907 435,035 1,250,806 44,552 3,240,672

ENAP AND SUBSIDIARIES Plant and Investment in Buildings, Equipment, Installa- Works in Exploration & Prior Year Land Net Net tions Progress Production Other Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Initial balance as of January 1, 2016 230,342 11,210 1,246,042 54,491 175,844 1,029,436 50,296 2,797,661 Additions - - 49,442 132 182,808 377,054 14,457 623,893 Business combinations - - 208,822 - - - - 208,822 Exploratory dry holes and exploratory campaigns - - - - - (62,642) - (62,642) Withdrawals and write-offs - - 575 - (12,184) (3,175) (37) (14,821) Depreciation expenses - (1,277) (199,385) (7,471) - (168,038) (16,233) (392,404) Geological studies and unabsorbed costs - - - - - (5,201) - (5,201) Transfers - 1,660 15,851 1,229 (13,681) (9,330) 4,271 - Other increases (decreases) - - (8,269) - (5,900) 8,670 (12,170) (17,669) Change, Total - 383 67,036 (6,110) 151,043 137,338 (9,712) 339,978

Ending Balance as of December 31, 2016 230,342 11,593 1,313,078 48,381 326,887 1,166,774 40,584 3,137,639

The balances of the items as of December 31, 2017 and 2016 are presented below: Property, Plant and Equipment, Gross 12.31.2017 12.31.2016 ThUS$ ThUS$ Land 230,342 230,342 Buildings 72,026 70,586 Plant and Equipment 3,468,808 3,396,514 Installations 130,128 125,785 Works in Progress 435,035 326,887 Investment in Exploration and Production 4,756,728 4,489,164 Other 154,609 171,137

Total 9,247,676 8,810,415

Property, Plant and Equipment, Acumulated Depreciation 12.31.2017 12.31.2016 ThUS$ ThUS$ Buildings 60,348 58,993 Plant and Equipment 2,245,456 2,083,436 Installations 85,221 77,404 Investment in Exploration and Production 3,505,922 3,322,390 Other 110,057 130,553 Total 6,007,004 5,672,776

Property, Plant and Equipment, Net 12.31.2017 12.31.2016 ThUS$ ThUS$ Land 230,342 230,342 Buildings 11,678 11,593 Plant and Equipment 1,223,352 1,313,078 Installations 44,907 48,381 Works in Progress 435,035 326,887 Investment in Exploration and Production 1,250,806 1,166,774 Other 44,552 40,584

Total 3,240,672 3,137,639

No assets included in property, plant and equipment have been encumbered, whether by mortgage or as pledge.

ENAP AND SUBSIDIARIES

Additional information a) Works in progress: As of December 31, 2017, works in progress correspond mainly to adaptation works of the plant for refining of heavy crudes in the Biobío refinery, construction of the Co-generating Plant in the Aconcagua Refinery and maintenance of tanks and pipes. b) Assets under financial lease: In October 2016, the H. Board authorized the sale of the Enap´s corporate offices, acquired through a lease contract, which included a purchase option with Banco Santander (Chile), thus to the December 31, 2016, these facilities are classified under the heading "Assets held for sale current". The sale of the real estate was made in the first half of 2017. c) Decommissioning, withdrawal or restoration costs: As part of its fixed asset costs the Group has included decommissioning costs of platforms and oil fields, for a net amount as of December 31, 2017 of ThUS$ 9,494 and December 31, 2016 of ThUS$ 9,226. d) Interest capitalization: The ENAP Group during the year ended December 31, 2017 has capitalized interest in the amount of ThUS$ 11,162 from the financing used in the construction of the Aconcagua Refinery Cogeneration Plant and the PIAM Project in Argentina (ThUS$ 3,629 for the year ended December 2016). e) Insurance: The Group has insurance policies to cover any potential risks to property, plant and equipment, as well as any potential claims that could be filed in connection with their use. These insurance policies are sufficient to cover any pertinent risks. Additionally, the loss that might occur as a consequence of business interruption is covered. f) Depreciation expense: The charge to income for depreciation included in cost of sales, distribution costs and administrative expenses is as follows: 01.01.2017 01.01.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ In cost of sales 411,458 379,338 In distribution cost 13,553 11,723 In administrative expenses 1,032 1,343

Total 426,042 392,404 g) Asset impairment: See Note 19. h) Other increases (decreases): As of December 31, 2017, the reclassification of catalysts from the item "Other non- current financial assets", as well as the reclassification to "Non-current assets classified as held for sale" of investments of the subsidiary Sipetrol Argentina in the Pampa del Gastillo-La Guitarra oilfields, were mainly included. As of December 31, 2016, the acquisition of the assets in the subsidiary of Petrofaro S.A., as well as the reclassification to "Non-current assets classified as held for sale" of the corporate offices of ENAP, the sale of which was made in the first half of 2017, were included. i) Business combination: As of December 31, 2016, it corresponds to the assets from the business combination between our subsidiary Enap Refinerías S.A. and Petropower Energía Ltda. on December 7, 2016. See note 6 "Business combination".

ENAP AND SUBSIDIARIES j) Investment in exploration and production through joint operations and operating contracts

Exploration and production includes investments in foreign countries through direct subsidiary ENAP Sipetrol S.A. as of December 31, 2017 and 2016, as follows:

Net amount of the Less: Net amount of the Ownership investment, before Cumulative investment in percentage impairment losses impairment losses joint operations Joint operations 12.31.2017 12.31.2016 12.31.2017 12.31.2016 12.31.2017 12.31.2016 12.31.2017 12.31.2016 % % ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ a. Exploitation Área Magallanes (*) 50.00 50.00 365,835 214,397 - - 365,835 214,397 Campamento Central Cañadón Perdido (*) 50.00 50.00 87,374 85,908 42,700 20,900 44,674 65,008 Cam 2A Sur (*) 50.00 50.00 119 118 - - 119 118 East Rast Qattara (*) 50.50 50.50 22,037 28,245 - - 22,037 28,245 Petrofaro S.A. (*) 50.00 - 2,567 - - - 2,567 - b. Exploration E2 (ex CAM3 y CAM1) (*) 33.33 33.33 ------Bloque 2 - Rommana 40.00 40.00 8,447 8,571 8,447 8,447 - 124 Bloque 8 - Sidi Abd El Rahman 30.00 30.00 ------Bloque Mehr (*) 33.00 33.00 27,262 27,262 27,262 27,262 - - Consorcio Bloque 28 (*) 42.00 42.00 ------

Total 513,641 364,501 78,409 56,609 435,232 307,892

In addition to the above, at December 31, 2017 and 2016, the subsidiaries of Enap Sipetrol S.A., in Argentina and Ecuador, operate the following businesses: Net amount of the Less: Net amount of the Ownership investment, before Cumulative investment in percentage impairment losses impairment losses joint operations Other Business 12.31.2017 12.31.2016 12.31.2017 12.31.2016 12.31.2017 12.31.2016 12.31.2017 12.31.2016 % % ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Pampa el Castillo (*) 100.00 100.00 - 76,995 - - - 76,995 Paraíso, Biguno, Huachito (*) 100.00 100.00 37,317 61,221 - - 37,317 61,221 Mauro Dávalos Cordero (*) 100.00 100.00 77,201 60,596 - - 77,201 60,596 Intracampos (*) 100.00 100.00 45,157 20,553 - - 45,157 20,553 El Turbio Este 100.00 2,057 - - - 2,057 - Petrofaro 100.00 - 8,647 - - - 8,647

Total 161,732 228,012 - - 161,732 228,012 (*) Note 20 and 21 explain and provide the status of each of these projects.

17. AVAILABLE – FOR – SALE ASSETS

On April 18, 2017, the ENAP Board of Directors authorized Management to begin the sale process of the exploitation concession Pampa del Castillo-La Guitarra in Argentina.

On October 3, 2017, the subsidiary in Argentina began a process of selling the investments, by signing a promise contract with CAPEX S.A. for the transfer of 88% of the exploitation concession Pampa del Castillo- La Guitarra, located in the province of Chubut. The price amounts to ThUS$ 33,000 (net of inventories) and is subject to the occurrence of certain precedent conditions that must be met before February 14, 2018.

The balance of non-current assets and groups in expropriation held for sale as of December 31, 2017, corresponds to the net investment in Pampa del Castillo - la Guitarra, according to the following details:

ENAP AND SUBSIDIARIES 12.31.2017 ThUS$ Investment before impairment in Pampa del Castillo - la Guitarra 75,380 Less: Impairment loss (34,389) Net investment in Pampa del Castillo - la Guitarra 40,991

As of December 31, 2016, ENAP's corporate offices are shown in this item. The property was sold in the first half of 2017.

18. RIGHTS-OF-USE AND LEASE OBLIGATIONS

The Group has early adopted, from January 1, 2017, IFRS 16 "Leases" opting for the measurement of assets equal to liabilities for lease and determined the incremental interest, according to the lease term and the nature of the right of use asset. The right of use asset recorded at the date of initial application triggers depreciation expenses through the shortest of the period of the contract or the useful life of the asset. a) Right of use assets - on December 31, 2017, the movement of the right-of-use assets under IFRS 16, is as follows

Land Shipping Air Operation operation Operation Contracts contracts Contracts Buildings Other Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Net balance as of 01.01.2017 24,843 39,800 10,733 - 13,734 89,110 Amortization of the year (4,697) (27,140) (1,643) (135) (6,084) (39,699) Additions 2,481 62,746 - 14,677 1 79,905

Final balance as of December 31, 2017 22,627 75,406 9,090 14,542 7,651 129,316 b) Leases liabilities: The following is a breakdown of expiration of lease liabilities:

As of December 31, 2017 Current Non - current Total + 1 to 3 year + 3 to 5 year + 5 year Total Leases associated with ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Land Operation Contracts 4,406 6,157 2,250 10,263 18,670 Shipping operation contracts 28,622 37,988 9,761 - 47,749 Air Operation Contracts 1,528 3,242 3,459 1,036 7,737 Buildings Contracts 1,467 3,041 3,190 6,858 13,089 Other 6,155 1,604 - - 1,604

Total 42,178 52,032 18,660 18,157 88,849

As of December 3!, 2017, the liquidity risk associated with these maturities is covered with the operational flow of the company.

The company has no restrictions associated with leases.

ENAP AND SUBSIDIARIES ENAP group holds certain agreements, which contain renewal options and for which there is reasonable certainty that such option would be exercised (either indefinitely or for a fixed period), the lease period used for measuring the liability and corresponding asset correspond to the contract term plus the period over which the renewal option is considered reasonable certain of being exercised, unless the useful life of the asset involved is shorter, in which case the useful life of the asset is considered to be the term of the contract.

There are no conventions incorporated into lease agreements to be fulfilled by the company through the life of these contracts.

The company does not have any other cash flow that is exposed with regard to previously reported lease liabilities.

The following table shows the continuity of the period of our lease liabilities and cash flows:

Total cash flows for the year ended December 31, 2017 Leasing liabilities ThUS$

Net balance as of January 01, 2017 89,110 Liabilities incurred 79,904 Interest expense 4,168 Principal payments (37,987) Interest payments (4,168) Balance as of December 31, 2017 131,027

Total cash outflow for the year ended December 31, 2017 (37,987)

19. IMPAIRMENT LOSS AND PROVISIONS i) Asset impairment

During 2017, impairment was recorded in the Pampa del Castillo and Campamento Central Cañadón Perdido blocks, both in San Jorge Gulf Basin of ENAP’s subsidiary Sipetrol Argentina S.A., areas with exclusively oil production. The Pampa del Castillo area has a net impairment for ThUS$ 22,393, which is shown as part of the assets for sale for a net mount of US$ 40,991; and in the area of Campamento Central Cañadón Perdido, in December 2017 a net impairment for ThUS $ 14,170 was recorded as a result of the asset recovery test. ii) Accruals

Mehr Block - In the item Investment in Exploration and Production, there is a decrease related to the investment made in the Mehr block, Iran, which ended in 2010 and is 100% provisioned.

Through its subsidiary Sipetrol International S.A., ENAP participates in a consortium integrated by Sipetrol International S.A., Repsol S.A. (Spain) and OMV (Austria), the latter company being the operator. Between 2001 and 2007 the consortium carried out exploration works in the referred block according to a contract with the National Iranian Oil Company (“NIOC”), a state-owned company. However, at the end of the exploration stage, it was not possible to establish an agreement with NIOC in relation to a development plan for the exploitation of the reserves discovered by the consortium (Band-e-Karkhehf oil field).

ENAP AND SUBSIDIARIES Consequently, on January 24, 2009 OMV, as the block’s operator, notified the NIOC Director of Exploration of the consortium’s unanimous decision not to continue with the negotiations relating to the development of the oil field. Given that the contractual obligations have been complied with, NIOC was also notified of the activation of the clause that gives the consortium the right to recover the exploration expenses and to the receipt of a Remuneration Fee, under the terms established in the Exploration Service Agreement signed between the parties.

On October 21, 2010, NIOC informed the block’s operator (OMV) about the acceptance of the exploratory expenses incurred by the consortium.

Notwithstanding the preceding paragraph, and taking into account the management’s judgment and estimates, in December 2008 the subsidiary Sipetrol International S.A. recorded a provision for the total value of the net investment made during the exploration works, amounting to ThUS$ 27,262.

After multiple negotiations to obtain the refund of the exploratory expenses invested in NIOC, the consortium agreed to sign an agreement to obtain the payment in kind (in crude) by the Iranian government. The payment in kind includes a discount on the Iranian crude purchase invoice, subject to compliance with certain variables, on which the amount of each invoice will depend. This agreement is an annual renewable contract until the total payment of the debt. It should be noted that this agreement was approved by the Board of Directors of ENAP. From an accounting point of view, recognition of the recovery of exploratory expenses will be made as the Company assigns the vessels that are subject to the transaction. iii) Abandonment of dry exploratory wells with no commercially exploitable reserves

Exploration and Production Investments within property, plant and equipment, shows decreases as of December 31, 2017 and 2016 due to the abandonment of dry exploratory wells with no commercially exploitable reserves. They are itemized below: 01.01.2017 01.01.2016 12.31.2017 12.31.2016 MUS$ MUS$

Exploratory dry holes and exploratory campaigns 40,479 62,642

Total 40,479 62,642

The charges mentioned above are included in the statements of comprehensive income under the section “other expenses by function” (see Note 33).

ENAP AND SUBSIDIARIES

20. PARTICIPATION IN JOINT OPERATION

Detail of the main joint exploitation and exploration operations through which revenues are obtained and expenses are incurred, is presented below. The assets and liabilities of each of the joint operations are detailed below at December 31, 2017 and 2016:

Current assets Non-current assets Current liabilities Non-current liabilities in joint operations in joint operations in joint operations in joint operations Joint operations 12.31.2017 12.31.2016 12.31.2017 12.31.2016 12.31.2017 12.31.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ a. Exploitation Área Magallanes (a) 92,235 56,230 371,585 219,795 236,999 76,066 196,747 155,445 Campamento Central Cañadón Perdido (b) 37,485 8,839 47,541 67,522 35,443 22,847 13,623 16,956 Cam 2A Sur (c) 44 143 134 304 5,556 12,759 11,527 11,173 East Rast Qattara (d) 41,519 81,146 22,066 28,266 2,291 4,119 - - Petrofaro ( e) 10,480 - 2,858 - 6,135 - 1,664 -

b. Exploration E2 (ex CAM3 y CAM1) (a) 19 61 (78) 6 (107) 543 (96) 14 Bloque 2 - Rommana - 177 - 124 4 34 15,838 - Bloque 8 - Sidi Abd El Rahman - - - - 229 229 26,229 - Bloque Mehr (b) ------Consorcio Bloque 28 (c) ------

Total 181,782 146,596 444,106 316,017 286,550 116,597 265,532 183,588

The amounts specified below detail the ordinary revenue, costs of sales and net income (loss) of each of the joint operations at December 31, 2017 and 2016:

Ordinary Revenue Cost of sales Net income (loss) Joint operations 12.31.2017 12.31.2016 12.31.2017 12.31.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ a. Exploitation Área Magallanes (a) 90,622 105,694 82,716 91,878 605 6,116 Campamento Central Cañadón Perdido (b) 48,715 41,931 68,551 44,739 (14,183) (6,523) Cam 2A Sur (c) - - (64) 3,258 (632) (5,619) East Rast Qattara (d) 58,859 61,135 15,499 21,670 42,347 38,668 Petrofaro ( e) ------

b. Exploration ------E2 (ex CAM3 y CAM1) (a) - - 321 418 (196) (362) Bloque 2 - Rommana - - - - (126) 62 Bloque 8 - Sidi Abd El Rahman - - - - - 6 Bloque Mehr (b) ------Consorcio Bloque 28 523 506 - - - -

Total 198,719 209,266 167,023 161,963 27,815 32,348

a) Exploitation

(a) Magallanes area

On January 4, 1991, ENAP Sipetrol Argentina S.A. and YPF S.A. entered into a Temporary Company Union (joint operation) contract, for hydrocarbon development and drilling activities in the Magallanes Block Area, located in the eastern mouth of the Magallanes Strait, Argentina.

ENAP AND SUBSIDIARIES

On November 17, 2014, the Company, represented by its General Manager and by YPF’s president and CEO, signed a private agreement that extends the relationship between both companies until November 14, 2027, with the possibility of a new extension until the year 2042. This agreement allows extending the depreciation period of the proven reserves. As a result of this agreement, the depreciation of the proven reserves is extended by the new term of the agreement.

ENAP Sipetrol Argentina S.A., as operator of this contract, is responsible for performing all operations and activities in this area.

(b) Campamento Central - Cañadón Perdido

In December 2000, ENAP Sipetrol S.A. (later ENAP Sipetrol Argentina S.A.) signed an agreement with YPF S.A. whereby the latter assigns and transfers to ENAP Sipetrol Argentina S.A. 50% of the concession that YPF S.A. holds for exploiting hydrocarbons in the areas known as Campamento Central - Cañadón Perdido in the province of Chubut, Argentina, which is subject to Law 24,145 and its regulations. YPF S.A. operates this concession.

On December 26, 2013, YPF S.A. and Enap Sipetrol Argentina S.A. obtained from the province of Chubut the extension of this exploitation concession for an additional period of 10 years until 2027, which may be extended for an additional period of 20 years, until 14 November 2047.

A regulatory decision 14 dated January 29, 1999, awarded YPF and ENAP Sipetrol Argentina S.A. the right to explore the area known as CAM 2A Sur. On October 7, 2002, ENAP Sipetrol Argentina S.A. and YPF S.A. entered into a Temporary Company Union (joint operation) in the Tierra del Fuego Province.

The exploitation concession’s term is 25 years (expires in 2028), which can be extended for an additional period of 10 years.

(d) East Rast Qattara - Egypt

As part of the bidding process opened in 2002 by the Egyptian General Petroleum Company (EGPC) for tenders to be submitted for various blocks in the Western Desert, the East Rast Qattara block was awarded to the subsidiary Sipetrol International S.A., together with the Australian company Oil Search Ltd., on April 16, 2003.

The contract was signed on March 30, 2004 in the presence of the Egyptian Oil Ministry, with an ownership interest of 50.5% for Sipetrol International S.A., Egyptian branch, as the operator, and 49.5% for Oil Search Ltd. In December 2007 the exploitation stage started.

ENAP AND SUBSIDIARIES

(e) Petrofaro - Faro Vírgenes Area

On May 19, 2016, the subsidiary, Enap Sipetrol Argentina S.A. acquired Arpetrol International Financial Company, parent company and controller of 100% of the shares of Petrofaro S.A. (Ex Arpetrol Argentina S.A.), which is the owner of the CA-11 Área Faro Vírgenes, in the Austral basin concession, granted by the province of Santa Cruz until 2026. The gas treatment plant Faro Virgenes is located within the concession, forming part of the PIAM, located next to the reservoir Area Magallanes project and pipeline General San Martín.

On January 12, 2017 Enap Sipetrol Argentina S.A. transferred to YPF S.A. 50% of the shares of that company for US$5.4 million, obtaining joint control of the company acquired from this date. b) Exploration

(a) E2 (Ex CAM 3 y CAM 1) - Argentina

The CAM-1 (Cuenca Austral Marina 1) area was awarded on September 4, 2003 to ENAP Sipetrol Argentina S.A. and Repsol-YPF S.A.. The area is located in the Atlantic Ocean in southern Argentina and is adjacent to other concessions where ENAP Sipetrol Argentina S.A. is currently exploring and producing hydrocarbons.

On September 26, 2006, ENARSA, ENAP Sipetrol Argentina S.A. and YPF S.A. signed a joint operation agreement, whereby the parties agreed to enter into a Temporary Company Union with each party holding a 33.33% interest. ENARSA, as the owner of CAM 1 (hereinafter E2), contributed this block, and ENAP Sipetrol Argentina S.A., jointly with YPF S.A., contributed the CAM 3 block. ENAP Sipetrol and Repsol YPF expressly reverted CAM-3 to the Energy Secretariat, so that the latter could then award it to the new consortium.

Within the framework of the agreement signed, the Energy Secretariat accepted the transfer of the CAM-3 area to ENARSA, which, together with the former CAM-1 area, now make up the E2 area that is the subject of the agreement.

On March 31, 2008, the parties signed the E2 Area Hydrocarbon Exploration and Exploitation Temporary Company Union (joint operation), with the purpose of regulating the rights and obligations of ENAP Sipetrol Argentina S.A., YPF S.A. and Energía Argentina S.A. (ENARSA) as partners and co-participants in exploring and exploiting the E2 area. The exploration permit finishes in 2018, which can be extended for an additional period of 5 years, until September 25, 2023.

(b) Mehr Block - Iran

In 2001, through its subsidiary Sipetrol International S.A., Enap acquired a 33% share in the Exploration Service Agreement of the Mehr Block located in Iran, as a partnership with Repsol S.A. and OMV, with the latter being its operator.

On June 30, 2007, National Iranian Oil Company (NIOC) declared the marketability of a finding made in the Block named as Band-e-Karkheh, which started the negotiation of the development plan and respective agreement. In December 2008, given that the terms and conditions of the development plan negotiated with NIOC were not economically viable for the companies, it was unanimously decided not to continue with the development stage of the finding, but reserving the right to require disbursement of the expenses incurred in the exploration stage plus a fee for the services, as set forth in the exploration service agreement. 50

ENAP AND SUBSIDIARIES

As described in Note 19. ii), the refund of the exploratory expenses incurred, as well as the payment of a fee for the exploration services associated with the Mehr Block has not taken place yet; consequently a 100% provision has been made.

Besides the arrangements for the recovery of the account receivable from NIOC, since 2008 the consortium does not perform operating or commercial activities in the Mehr Block or in Iran.

On April 16, 2014, EOP Operaciones Petroleras S.A. (42%), Petroamazonas (51%) y Belorusneft (7%), hereon the Block 28 Consortium, and the Ministry of Oil of Ecuador, subscribed to service contract for the exploration and exploitation of hydrocarbons (crude oil) at Block 28, located in the central west part of eastern Ecuador which is in the sector called Zona Subandina (foothill) and which comprises the provinces of Napo and Pastaza which extends over an area of 1,750 km2. EOP Operaciones Petroleras S.A. is the Consortium Operator.

For the exploratory phase a minimum investment was agreed upon and this consisted of 2 phases ((US$17.35 and US$8.15 million), the risk of this investment to be borne exclusively by the private partners of the Consortium (Enap: 85.71% and Belorusneft: 14.29%), with an option to cancel their participation depending on the results of each phase. In the event of success at the exploratory stage, in the first years of the development stage Petroamazonas must pay the partners the portion taken on by them in the exploratory stage by means of the production percentage rights of the Block. The negotiated fee amounts to US$ 52.9 / barrel.

The minimum investment commitment includes all of the geoscience studies, environmental studies, permits, licensing, civil works, as well as the perforation in the Prospecto Mirador. At this date the geoscience studies are ongoing, as well as environmental studies prior to obtaining the environmental license. c) Agreements of ENAP in Chile – CEOP (Special Operation Contract):

In addition to the participation of Enap Sipetrol Argentina S.A. in exploration and exploitation operations, ENAP in Chile, in the Magallanes area, developed in conjunction with private companies Special Contracts of Oil Operation (CEOP), operations which are detailed below. Dorado Riquelme Block: On August 26 2009, the Special Operations Contract was signed for the exploration and exploitation of the Bloque Dorado Riquelme hydrocarbon reservoirs, between the government of Chile and Methanex Chile S.A. and the Empresa Nacional del Petróleo (ENAP). The Joint Operating Agreement between the parties involved in the block operation was endorsed, with 50% participation from Methanex and 50% from ENAP, the latter operating the concession. At a meeting on July 23, 2014 it was decided not to continue with the exploration stage, thus continuing with the block’s exploitation stage only. In 2017 a hydraulic fracturing operation was carried out and Cahuil ZG-1 well flow line was built unsuccessfully. During July and August the construction of the location for the next Cahuil D well was tendered. Cahuil ZG flow line was built with an extension of approximately of 2,500 meters. At the end of December 2017, the accumulated investment in the Dorado Riquelme Block was US$ 286.1 million and accumulated production was 879,1 million cubic meters of gas.

ENAP AND SUBSIDIARIES Lenga Block

On July 28, 2008 the Special Operations Contract (CEOP) for the exploration and exploitation of the hydrocarbon reservoir, Lenga block, was signed between the government of Chile and the companies Apache Chile Energía Spa and the Empresa Nacional del Petróleo (ENAP). On June 15, 2009, the Joint Operating Agreement was signed between the parties partaking in the Block with a 50% participation of ENAP and 50% from Apache Chile Energía Spa, the latter operating the concession. At the end of 2011, Apache Chile Energía SpA transferred its interest in the CEOP for the Lenga Block to Methanex, and the transfer the role of Concession Operator in the CEOP for the Lenga Block, from Apache Chile Energía SpA to ENAP. These were then approved by the Ministry of Energy and General Comptroller of the Republic of Chile.

At the end of 2014 a letter was sent to the Minister of Energy communicating the contractor’s decision to terminate the agreement with the State and return the oil field exploitation area of the CEOP Lenga Block, which was accepted on January 8, 2015, thus terminating the agreement.

There is no activity in the year 2017.

Coirón Block

On July 28, 2008, the Special Operations Contract (CEOP) for the exploration and exploitation of the hydrocarbon reserve Coirón Block was signed between the government of Chile and the companies Pan American Energy Chile Limitada and ENAP. Subsequently, on November 10, 2008, the Joint Operating Agreement was signed between the parties involved in the block operation with a 50% participation from ENAP and 50% from Pan American Energy Chile Ltda., the latter being the concession operator.

On September 14, 2015 ENAP transferred part of its interests in the CEOP to Conocophillips South America Ventures LTD. (Conocophillips), with the interests of the participants remaining as follows a) PAE, 50%; b) ENAP, 45%; and c) Conocophillips, 5%. Then, on September 17, 2015 ENAP acquired the total interest of PAE in the CEOP, with the current interests of the participants remaining as follows a) ENAP, 95%; and b) Conocophillips, 5%.

Finally, in the context of the assignment contracts, ENAP ceded 44% of the Contractor's rights, interests and obligations to COP Chile, which was approved by the Ministry of Energy and the Taking of Reason by the General Comptroller of the Republic (November 17, 2016). After this process, the participation of the partners was as follows: ENAP 51% and COP Chile 49%.

On December 13, 2016, both partners signed the Joint Operating Agreement (JOA) for the Coirón Block operation. The CEOP Coirón Block includes a maximum term of 35 years, counted from the date of its entry into force.

The net cumulative investment of the Ceop Coiron to December 31, 2017 is ThUS$ 86,924, of which ENAP has invested ThUS$ 33,824.

ENAP AND SUBSIDIARIES Caupolicán Block.

On April 28, 2009, the Special Operations Contract (CEOP) for the exploration and exploitation of the hydrocarbon reserve Caupolicán Block was signed between the government of Chile and the companies Petro Magallanes Operaciones Ltda. (Concession Operator) and ENAP. In March 2012, Methanex Chile S.A. was incorporated into the CEOP with a 20% interest, which was formalized by the Ministry of Energy.

Currently, ENAP’s investment for the second exploratory period is US$12.4 million. For the first exploratory period, ENAP’s investment was US$11.3 million. During the year 2017 no operating activities were conducted on the block.

Flamenco Block

On November 7, 2012 the Special Operations Contracts (CEOP) for the exploration and exploitation of the Flamenco Block hydrocarbon field was signed by the State of Chile, Geopark (Concession Operator) and the Empresa Nacional del Petróleo (ENAP), both with a 50% interest. Afterwards, as of December 3, 2012, the Joint Operating Agreement (JOA) was signed between both parties in order to operate the Block.

In October 2015, the Geopark Operator proposed CEOP to pass to the second exploratory stage. ENAP decided not to pass to that stage, given the results of the drilled wells. During November, Geopark sent a letter to the Ministry of Energy indicating the moving on to the second exploratory stage as well as the ENAP’s decision.

During the last quarter of the year 2016 and the period 2017, ENAP was not active in this CEOP. The cumulative annual net investment made by ENAP as of December 31, 2016 is US $ 4 million, associated with activity in 2015 (back payments).

Currently in production are the Chirihue x-1, Chercán X-1 and X-2 wells. As of December 31, 2017 no operating activities or new investments have taken place.

Isla Norte Block

On November 7, 2012 the Special Operations Contract (CEOP) for the exploration and exploitation of the Isla Norte Block hydrocarbon field was signed by the State of Chile, Geopark TdF(Concession Operator) with a 60% interest and the Empresa Nacional del Petróleo (ENAP) with a 40% interest. Afterwards, on December 3, 2012; the Joint Operating Agreement (JOA) was subscribed between both parties in order to operate the Block.

ENAP’s investment in this phase amounts to US$ 1.3 million. In August 2015, the Ministry of Energy accepted the Consortium’s request with regard to extending the first exploratory period for 18 months, in order to complete the block’s studies.

The Operator is currently working on the update of the geological and geophysical model which will allow defining more accurately the new well proposals.

In the Coordination Committee held in December 2016, the 2017 working plan was presented. As of December 31, 2017 no operational activities in the block have been conducted.

ENAP AND SUBSIDIARIES Campanario Block

On January 9, 2013, the Special Operations Contract (CEOP) for the exploration and exploitation of the Campanario Block hydrocarbon field was signed by the State of Chile, Geopark TdF(Concession Operator) with a 50% interest and the Empresa Nacional del Petróleo (ENAP) with the remaining 50% interest.

ENAP’s investment in this stage is US$ 2.9 million. In August 2015, the Ministry of Energy accepted the request of the Consortium regarding the extension of the first exploratory period for a 18-month term, in order to complete the block studies.

December 2016 Coordination Committee, presents the 2017 working plan where studies planned for 2016 will be completed and will continue with the analysis of the existing information. This is being done in order to evaluate new prospects in Terciario, Tobifera and Springhill. As of December 31, 2017 no operational activities in the block have been conducted.

San Sebastián Block

As of January 4, 2013, the Special Operations Contract (CEOP) for the exploration and exploitation of the San Sebastián Block hydrocarbon field was signed by the State of Chile,YPF Tierra del Fuego (Operator) with a 40% interest; Wintershall with a 10% interest and the Empresa Nacional del Petróleo (ENAP) with the remaining 50%.

In this CEOP, the partner bears 100% of the investment during the first exploratory period.

During December 2015, the status of the project up-to-date and the consortium move to the following period were reviewed. Wintershall and ENAP decided not to move on to the following stage. YPF moves on to the second exploratory stage with a minimum commitment of 1 well to be drilled during 2017 and the completion of two drilled wells during 2015.

To date, ENAP is in the process of block exit.

Marazzi – Lago Mercedes Block

On January 7, 2013 the Special Operations Contract (CEOP) for the exploration and exploitation of the Marazzi – Lago Mercedes Block hydrocarbon field was signed by the State of Chile, YPF Tierra del Fuego (Concession Operator) with a 50% interest and the Empresa Nacional del Petróleo (ENAP) with the remaining 50%.

In this CEOP, the partner bears 100% of the investment during the first exploratory period.

During December 2015, the status of the project up-to-date and the consortium move to the following stage were reviewed. YPF and ENAP decided not to move on to the following stage. The area is currently in the process of reverting to the State. There is no activity in the year 2017.

ENAP AND SUBSIDIARIES

21. OTHER BUSINESS

This is the information as of December 31, 2017 and December 31, 2016 on the financial statements of the Other Businesses that have been used in the consolidation process:

Current assets Non-current assets Current liabilities Non-current liabilities Projects 12.31.2017 12.31.2016 12.31.2017 12.31.2016 12.31.2017 12.31.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Pampa el Castillo (a) 39,460 13,775 - 81,530 21,052 27,623 - 13,303 Paraíso, Biguno, Huachito (b) 10,404 5,652 34,775 61,221 34,522 29,058 812 698 Mauro Dávalos Cordero (b) 45,143 24,522 150,887 95,786 149,790 126,082 3,525 3,029 El Turbio Este - - 2,057 - - - - - Petrofaro - 9,733 - 9,040 - 7,655 - 1,106

Total 95,007 53,682 187,719 247,577 205,364 190,418 4,337 18,136

Ordinary Revenue Net Income (loss) Net Income (loss) Projects 12.31.2017 12.31.2016 12.31.2017 12.31.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Pampa el Castillo (a) 51,837 73,930 60,172 63,114 (31,803) -1,098 Paraíso, Biguno, Huachito (b) 54,001 43,941 31,086 24,654 16,538 12,412 Mauro Dávalos Cordero (b) 69,428 53,303 29,888 32,337 29,355 9,379 Petrofaro - 5,815 - 5,550 - 291 Total 175,266 176,989 121,146 125,655 14,090 20,984

The main operations for exploitation activities are detailed next. a) Pampa del Castillo - La Guitarra

On September 25, 2001, Pecom Energía S.A. assigned to Enap Sipetrol Argentina S.A. 100% of the rights to the exploitation concession of the hydrocarbon area referred to as Pampa del Castillo - La Guitarra, located in the province of Chubut, Argentina. On May 15, 2015, the extension of the Concession for 10 more years was announced, with an additional extension option of 20 years. b) Paraíso, Biguno, Huachito y Mauro Dávalos Cordero e Intracampos

On October 7, 2002, a contract was signed with Empresa de Petróleos del Ecuador - PETROECUADOR and its subsidiary Empresa Estatal de Exploración y Producción de Petróleos del Ecuador - Petroproducción, to exploit and develop the oilfields Paraíso, Biguno, Huachito (PBH) and Mauro Dávalos Cordero (MDC), located in the eastern Ecuador basin. By means of this specific service contract, the Company committed to make investments in the development of these fields for an amount estimated in US$90 million, which include drilling 16 wells (9 in PBH and 7 in MDC), the construction of a production station in MDC, the adaptation of facilities and a camp. At the same time, it acquired the exploration and operations rights, assuming 100% of the operation and management costs of the fields.

On August 8, 2006, the MDC field contract with PETROECUADOR was modified, and ENAP SIPEC agreed to increase the investment program to include the drilling of 7 wells and expansion of production facilities. These new wells will certify additional reserves, increasing current reserves from 31.6 to 57.0 million barrels of crude oil.

These contracts stipulated that ENAP Sipetrol S.A. could exploit a maximum of 57 million barrels in MDC and 20.1 million barrels in PBH.

ENAP AND SUBSIDIARIES

On July 27, 2010, the Reform to the Hydrocarbon Law and the Internal Taxation Law was enacted in Ecuador. The first transitory provision provides that existing contracts, including for MDC and PBH, had to be amended within 180 days and the reformed model had to be adopted for hydrocarbon exploration and exploitation services contained in Article 16 of the Hydrocarbon Law.

According to the aforesaid first Transitory Provision, ENAP Sipetrol S.A. began the renegotiation of the MDC and PBH contracts, which concluded on November 23, 2010 with the signature of two amendments to the Service Contracts for the Exploration and Exploitation of Hydrocarbons (crude oil) in the Mauro Dávalos Cordero (MDC) Block and Paraíso, Biguno, Huachito and Intracampos (PBHI) Block in the Ecuadorian Amazon Region.

According to governing law, those amendments were registered with the Department of Hydrocarbons on December 15, 2010. The effective date of the amendment was January 1, 2011. Accordingly, the terms of the contracts signed on October 7, 2002 were in effect through December 31, 2010. The terms of the amendments governed became effective on January 1, 2011, effective for 15 years.

On April 2015, the Company signed two contracts with the Government of Ecuador. The first contract corresponds to an extension of the effectiveness of Bloque Paraíso Biguno Huachito e Intracampos (PBHI) until 2034, granted by the Ecuadorian Government. The second contract, signed in the form of Consortium, composed by ENAP SIPEC, the Ecuadorian state oil company Petroamazonas and Belorusneft, grants ENAP SIPEC the right to perform exploratory activities as operator sequentially, that is, to gradually commit more investments according to the results as they are obtained. c) El Turbio Este On September 5, 2017 by means of Decree 0774/2017, the Government of the Province of Santa Cruz awarded the Exploration Permit for the “El Turbio Este” area to Enap Sipetrol Argentina S.A. As it was established in the "Participation and Bid Group Agreement" signed with ConocoPhillips South America Ventures Ltd., the transfer of 50% of the ownership in the exploration permit and the investment commitments, and a joint operating agreement to carry out the exploratory activities associated with the area are being negotiated.

22. INVESTMENT PROPERTIES

The detail and movements in investment properties of the ENAP Group as of December 31, 2017 and 2016 are as follows: 12.31.2017 12.31.2016 ThUS$ ThUS$ Opening balance 7,461 7,551 Depreciation expense (91) (90) Final Balance 7,370 7,461

Investment properties of the ENAP Group are mainly land and properties held for operating leasing. The company has selected the cost method of accounting to measure its investment property after the initial recognition. The depreciation method in use is the straight-line method and the useful life period assigned to such items ranges between 10 and 20 years. 56

ENAP AND SUBSIDIARIES

23. FINANCIAL LIABILITIES

Details of the ENAP Group’s financial liabilities as of December 31, 2017 and 2016 are as follows:

As of December 31, 2017 Financial liabilities Financial liabilities classified as at fair value Loans and held for through profit and accounts Hedge Total other trading loss payable derivative financial liabilities As of December 31, 2017 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Other current financial liabilities - - 882,194 78,016 960,210 Current lease liabilities (Note 18) - - 42,178 - 42,178 Trade creditors and other accounts payable - - 866,214 - 866,214 Due to related companies - - 20,082 - 20,082

Total current financial liabilities - - 1,810,668 78,016 1,888,684

Other non-current financial liabilities - - 3,556,544 1,808 3,558,352 Non current lease Liabilities (Note 18) - - 88,849 - 88,849 Other accounts payable, non-current - - 756 - 756 Total non-current financial liabilities - - 3,646,149 1,808 3,647,957

Financial liabilities Financial liabilities classified as at fair value Loans and held for through profit and accounts Hedge Total other trading loss payable derivative financial liabilities As of December 31, 2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Other current financial liabilities - - 793,649 73,943 867,592 Trade creditors and other accounts payable - - 584,079 - 584,079 Due to related companies - - 13,000 - 13,000

Total current financial liabilities - - 1,390,728 73,943 1,464,671

Other non-current financial liabilities - - 3,016,301 123,417 3,139,718 Other accounts payable, non-current - - 1,681 - 1,681

Total non-current financial liabilities - - 3,017,982 123,417 3,141,399 a) Hedging derivatives

The ENAP Group, in compliance with financial risk management policy described in Note 4, acquires financial derivatives to cover its exposure to the interest rate variations, currency (exchange rate) and commodities (crude oil and imported products).

The interest rate derivatives are used to fix or limit the variable interest rate of the financial obligations and are interest rate swaps.

The currency derivatives are used to fix the exchange rate for the US dollars in comparison to the Chilean peso (CLP) and Unidad de Fomento (UF), due to investments or existing obligations in currencies other than the US dollar. These instruments are mainly in Forwards and Cross Currency Swaps.

ENAP AND SUBSIDIARIES Crude oil derivatives are intended to hedge against a negative variation in the price of crude oil shipments from the moment of purchase until the sale of the products refined from that crude oil.

The energy derivative is intended to limit the exposure to the variability of the marginal cost of the energy used in the refining process. i) Presentation of assets and liabilities

The detail of the hedging instruments, considering the nature of the operations, is as follows:

12.31.2017 12.31.2016 Derivative assets Current Non-Current Current Non-Current ThUS$ ThUS$ ThUS$ ThUS$ Exchange rate hedging Cash flow hedge - - 55 - Interest rate hedging Cash flow hedge (guarantees) - 953 Total - 953 55 -

12.31.2017 12.31.2016 Derivative liabilities Current Non-Current Current Non-Current ThUS$ ThUS$ ThUS$ ThUS$ Exchange rate hedging Cash flow hedge 31,843 1,808 2,541 120,440 Cross Currency Swap (guarantees) - (5,650) Interest rate hedging Cash flow hedge 1,675 3,972 2,422 8,627 Margin Call (guarantees) (1,675) (3,972) Electric Energy Price hedging Cash flow hedge - - 11,540 - Diferential Swap WTI / Brent hedging Cash flow hedge 46,173 - 57,440 - Total 78,016 1,808 73,943 123,417 ii) Fair value of hedging derivatives

The detail of the hedging instruments portfolio of ENAP is as follows:

Detail of hedge Description of hedge Description of instruments Fair value of instruments against instruments instruments against which is hedged which is hedged 12.31.2017 12.31.2016 ThUS$ ThUS$

Cross-Currency Swap Exchange rate and interest rate Obligations (bonds) (17,720) (117,801) Cross-Currency Swap Exchange rate and interest rate Leasing - 470 SWAP Interest rate swap Bank loans 953 (11,049) SWAP Purchase power forward Cost of Sales - (11,540) TSS Time spread swap Inventories (46,173) (57,350) SDI Diferential WTI - Brent Inventories - (90) Forward Exchange rate Trade receivables (15,931) 55

Total (78,871) (197,305)

ENAP AND SUBSIDIARIES iii) Effect in net income of hedging derivatives

The amounts recorded in comprehensive income as of December 31, 2017 and 2016 that were transferred from net equity to the income statement during the year were as follows: 01.01.2017 01.01.2016 12.31.2017 12.31.2016 ThUS$ ThUS$

Debits (credits) recognized in Other comprehensive income during the year 14,392 (44,594) Debits (credits) to results during the year (740) 41,944 iv) Other data on financial instruments

The maturities of hedges are detailed below:

As of December 31, 2017 Notional 2023 2018 2019 2020 2021 2022 Fair value onwards Total Financial derivatives ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Exchange rate hedging Cash flow hedge (33,651) 877,000 430,000 - 192,000 - 256,175 1,755,175 Electric Power hedging Cash flow hedge - - - Interest rate hedging Cash flow hedge 953 - - 303,706 - - - 303,706

Total (32,698) 877,000 430,000 303,706 192,000 - 256,175 2,058,881

Thousands of Fair value barrels ThUS$ MBbl

WTI/Brent and TSS hedging: Cash flow hedge (46,173) 20,350

As of December 31, 2016 Notional 2021 2017 2018 2019 2020 Fair value onwards Total Financial derivatives ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Exchange rate hedging Cash flow hedge (117,276) 597,836 238,262 110,000 - 192,000 1,138,098 Electric Power hedging Cash flow hedge (11,540) 11,540 11,540 Interest rate hedging Cash flow hedge (11,049) 36,991 39,150 41,363 44,005 - 161,509

Total (139,865) 646,367 277,412 151,363 44,005 192,000 1,311,147

Thousands of Fair value barrels ThUS$ MBbl

WTI/Brent and TSS hedging: Cash flow hedge (57,440) 22,290

ENAP AND SUBSIDIARIES The contractual notional amount of the contracts entered into does not represent the risk taken on by ENAP, as this amount is only the nominal basis on which the settlement of the derivative is calculated. v) Hierarchies of Fair Value The ENAP Group calculates the fair value for the financial derivatives by using market parameters, which are adjusted to the maturity profile of each operation.

The forward operations hedging the exchange rate exposure of the accounts receivable from sales invoices in Chilean pesos are recorded using as reference the forward peso-US dollar curve available in the market.

The cross currency swap operations hedging the exposure to the fluctuation of the US dollar of the financial liabilities denominated in UF are recorded at the present value of the future flows in UF (asset) and US dollar (liability). To calculate such present values the rate curves of the UF and market LIBOR are used, which are adjusted to the relevant dates of the flows included in each operation.

The interest rate swap operations hedging the exposure to the fluctuation of the LIBOR rate of the financial liabilities that accrue a variable rate based on LIBOR are recorded at the present value of future flows. To calculate such present values the rate curves of the market LIBOR are used, which are adjusted to the relevant dates of the flows included in each operation.

The operations with options on ICE Brent, hedging the exposure to the variation of the international price of the crude oil imports of ENAP, are recorded by using financial tools provided by well-known financial information platforms. Such tools use the future curves of the ICE Brent prices in the market, adjusting these to the maturity profile of each operation.

The financial instruments recognized at fair value in the statement of financial situation are classified according to the following hierarchies:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the assets or liability, either directly or indirectly; and Level 3 inputs are unobservable significant inputs for the asset or liability.

Total Financial instruments rank 12.31.2017 Level 1 Level 2 Level 3 Financial instruments measured at fair value ThUS$ ThUS$ ThUS$ ThUS$

Hedge assets - Cash flow hedge 953 - 953 -

Hedge Liabilities - Cash flow hedge 79,824 - 79,824 -

Total Financial instruments rank 12.31.2016 Level 1 Level 2 Level 3 Financial instruments measured at fair value ThUS$ ThUS$ ThUS$ ThUS$

Hedge assets - Cash flow hedge 55 - 55 -

Hedge Liabilities - Cash flow hedge 197,360 - 197,360 -

ENAP AND SUBSIDIARIES b) Loans accruing interest i) Summary of loans - The detail of the loans accruing interest as of December 31, 2017 and 2016 is the following: Current Non-current 12.31.2017 12.31.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ ThUS$ ThUS$ Non-guaranteed Borrowings from financial institutions 549,122 622,839 196,089 252,748 Bank overdrafts (a) 68,981 16,403 - - Bonds payable 264,091 113,060 3,360,455 2,639,035

Subtotal 882,194 752,302 3,556,544 2,891,783

Guaranteed Borrowings from financial institutions - 41,347 - 124,518

Subtotal - 41,347 - 124,518

Total 882,194 793,649 3,556,544 3,016,301

(a) Bank overdrafts: As of December 31, 2017 there are bank overdrafts for ThUS$ 68,981 in the parent company and as of December 31, 2016 the overdraft for ThUS$ 16,403 corresponds to the subsidiary Enap Sipetrol Argentina S.A. ii) Detail of loans accruing interest - The detail per currency and maturity of the loans from financial entities (guaranteed and not guaranteed) accruing interest as of December 31, 2017 and 2016, is the following:

As of December 31, 2017 Current Non-current

Nominal Up to 3 From 3 to From 1 to From 3 to 5 years Interests Nominal Effective value months 12 month Total 3 years 5 years and more Total Creditor name payment rate rate ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ BNP Paribas (Cesce)(3) Half-yearly 4.07% 5.19% 68,682 3,751 3,585 7,336 14,341 3,274 17,615 The Bank of New York Mellon (6) Quarterly 3.18% 3.18% 150,000 8,736 30,000 38,736 79,617 29,856 - 109,473 The Bank of Nova Scotia (7) Quarterly 2.73% 2.73% 80,000 1,344 10,667 12,011 42,462 26,539 69,001 Citibank NA At maturity 3.25% 2.50% 32,000 32,034 - 32,034 - - - - Banco Itaú Argentina S.A. At maturity 3.50% 2.30% 63,500 63,581 - 63,581 - - - - Banco Santander Río S.A. At maturity 5.00% 1.50% 9,000 9,015 - 9,015 - - - - BBVA - Banco Francés S.A. At maturity 2.90% 2.50% 25,000 25,047 - 25,047 - - - - BBVA Chile At maturity 1.48% 1.48% 100,000 101,133 - 101,133 - - - - Banco de Crédito e Inversiones At maturity 1.44% 1.44% 160,000 160,345 160,345 - - - - Scotiabank Chile At maturity 1.80% 1.80% 100,000 99,884 - 99,884 - - - - Total 344,525 204,597 549,122 136,420 59,669 - 196,089

As of December 31, 2016 Current Non-current + 3 meses + 1 año + 3 años Nominal Up to 3 From 3 to From 1 to From 3 to 5 years Interests Nominal Effective value months 12 month Total 3 years 5 years and more Total Creditor name payment rate rate ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ BNP - Paribas (1) Half-yearly 3.75% 3.75% 410,000 19,712 18,795 38,507 80,513 44,005 - 124,518 BNP - Paribas (Cesce) (2) Half-yearly 4.38% 4.38% 53,215 2,840 - 2,840 - - - - Société Générale (3) Half-yearly 2.49% 2.73% 100,000 - 16,082 16,082 - - - - BNP Paribas (Cesce)(3) Half-yearly 4.07% 5.19% 68,682 3,999 3,586 7,585 13,725 10,754 24,479 HSBC Bank USA (4) Quarterly 2.34% 2.53% 200,000 - 100,337 100,337 99,421 - - 99,421 YPF S.A. (5) Quarterly 8.00% 8.00% 73,600 879 26,796 27,675 - - - - The Bank of New York Mellon (6) At maturity 2.78% 2.89% 130,000 478 478 64,424 64,424 - 128,848 BBVA - Banco Francés S.A. At maturity 2.40% 2.40% 8,000 8,002 8,002 - - - - Banco ITAU Argentina S.A. At maturity 3.50% 3.50% 12,000 12,013 12,013 - - - - Banco de Crédito e Inversiones At maturity 1.04% 1.04% 100,000 - 100,583 100,583 - - - - Banco Santander Chile At maturity 1.36% 1.36% 100,000 - 100,603 100,603 - - - - Scotiabank Chile At maturity 1.11% 1.11% 100,000 - 100,449 100,449 - - - - Banco de Chile At maturity 1.75% 1.75% 150,000 149,032 149,032 - - - - Total 47,923 616,263 664,186 258,083 119,183 - 377,266 The nominal interest rates presented are annual.

Other information related to loans from financial entities as of December 31, 2017: 61

ENAP AND SUBSIDIARIES Tax Tax Creditor name Number Currency Country Company Number Country Guarantee BNP Paribas (Cesce)(3) 0-E US Dollar España ENAP 92604000-6 Chile No Guarantee The Bank of New York Mellon (6) 0-E US Dollar EE.UU. Enap Sipetrol Argentina S.A. 0-E Argentina No Guarantee The Bank of Nova Scotia (7) 0-E US Dollar Canadá Enap Sipetrol Argentina S.A. 0-E Argentina No Guarantee Citibank NA 0-E US Dollar Argentina Enap Sipetrol Argentina S.A. 0-E Argentina No Guarantee Banco ITAU Argentina S.A. 0-E US Dollar Argentina Enap Sipetrol Argentina S.A. 0-E Argentina No Guarantee Banco Santander Río S.A. 0-E US Dollar Argentina Enap Sipetrol Argentina S.A. 0-E Argentina No Guarantee BBVA - Banco Francés S.A. 0-E US Dollar Argentina Enap Sipetrol Argentina S.A. 0-E Argentina No Guarantee BBVA Chile 97032000-8 US Dollar Chile ENAP 92604000-6 Chile No Guarantee Banco de Crédito e Inversiones 97006000-5 US Dollar Chile ENAP 92604000-6 Chile No Guarantee Scotiabank Chile 97006000-6 US Dollar Chile ENAP 92604000-6 Chile No Guarantee

Other information related to loans from financial entities as of December 31, 2016:

Tax Tax Creditor name Number Currency Country Company Number Country Guarantee BNP - Paribas (1) 0-E US Dollar EE.UU. Enercón S.A. 99519820-7 Chile Guarantee BNP - Paribas (Cesce) (2) 0-E US Dollar España Prodisa S.A. 99548320-3 Chile Guarantee Société Générale (3) 0-E US Dollar Francia ENAP 92604000-6 Chile No Guarantee BNP Paribas (Cesce)(3) 0-E US Dollar España ENAP 92604000-6 Chile No Guarantee HSBC Bank USA (4) 0-E US Dollar EE.UU. ENAP 92604000-6 Chile No Guarantee YPF S.A. (5) 0-E US Dollar Argentina Enap Sipetrol Argentina S.A. 0-E Argentina No Guarantee The Bank of New York Mellon (6) 0-E US Dollar EE.UU. Enap Sipetrol Argentina S.A. 0-E Argentina No Guarantee BBVA - Banco Francés S.A. 0-E US Dollar EE.UU. Enap Sipetrol Argentina S.A. 0-E Argentina No Guarantee Banco ITAU Argentina S.A. 0-E US Dollar Argentina Enap Sipetrol Argentina S.A. 0-E Argentina No Guarantee Banco de Crédito e Inversiones 97006000-6 US Dollar Chile ENAP 92604000-6 Chile No Guarantee Banco Santander Chile 97036000-K US Dollar Chile ENAP 92604000-6 Chile No Guarantee Scotiabank Chile 97018000-1 US Dollar Chile ENAP 92604000-6 Chile No Guarantee Banco de Chile 97004000-5 US Dollar Chile ENAP 92604000-6 Chile No Guarantee

(1) BNP – PARIBAS

On June 15, 2005, Energía Concón S.A. signed a Loan Agreement with a bank syndicate, with BNP Paribas being the Administrative Agent Bank and Citibank the Guarantee Agent Bank (see note “Guarantee Commitments with Third Parties”); for an amount of ThUS$ 410,000 and a 15-year term. Annual interest rate ranging from Libor + 50 basis points to + 175 basis points. Loan prepaid in August 2017.

(2) BNP – PARIBAS

During 2005 and 2006, Productora de Diesel S.A., subscribed Credit Contracts with a syndicate of banks, with BNP Paribas being the Administrative Agent Bank and Citibank the Guarantee Agent Bank (see note “Guarantee Commitments with Third Parties”); amounting to US$ 102 million with semi-annual repayments until 2017. The interest rate for tranches A and B varies between Libor + 0.875% and Libor + 2.0%; and for tranche C it varies between 0.875% and Libor + 4.31%. Loan fully repaid in January 2017.

(3) BANCO BNP PARIBAS Y SOCIÉTÉ GÉNÉRALE

On 2010, ENAP entered into two loan agreements, with BNP Paribas and Société Générale for ThUS$ 78,258 and ThUS$ 100,000 where each hold 50% of the participation, in order to construct an alkylation plant for Refinería Aconcagua. Both credits function as revolving credit lines, from which they can make partial withdrawals when they comply with certain conditions. Annual interest rate is 4.07% and Libor + 150 basis points, with maturities in 2021 and 2017 respectively. The loan corresponding to Société Générale Bank was fully repaid in October 2017.

(4) HSBC BANK USA

ENAP AND SUBSIDIARIES On November 18, 2013, the Company signed a funding contract with HSBC Bank USA, National Association and Scotiabank & Trust (Cayman) Ltd., with the former acting as administrative agent. The contract amounts to ThUS 200,000 and has a 5-year term from December 3, 2013. The principal will be paid off in 4 semiannual installments in the 42nd, 48th, 54th and 60th months respectively. This loan will accrue interest calculated on the basis of LIBOR rate plus a margin or spread of 1.5% annually. The entire loan was repaid in advance on December 4, 2017.

(5) YPF S.A.

On November 17, 2014, ENAP Sipetrol Argentina S.A. submitted to YPF S.A. a proposed agreement for TCU (Temporary Company Union) Contract Extension in the Magallanes area. This proposal seeks to extend the rights and obligations of ENAP Sipetrol Argentina S.A. with the TCU Contract and its nature as operator, keeping its current 50% share until the end of the extensions.

In return for the extension, ENAP Sipetrol Argentina S.A. will pay YPF S.A., as contributions for the TCU, ThUS$ 100,000. This amount will be paid as follows: a) ThUS$ 8,000 at the agreement date, b) ThUS$ 6,000 until the final decision date of the incremental project, being 50% of bonuses, contributions and/or moneys incurred by YPF S.A. with State of Argentina, c) one year after the final decision date of the project, 50% of the balance, and d) the remaining 50% during the following year.

ENAP Sipetrol Argentina S.A. will pay YPF S.A. an 8% annual fixed interest rate, with quarterly payment periods. Loan fully repaid in March 2017.

(6) CITIBANK N.A. Y BANCO BILBAO VISCAYA ARGENTARIA

On July 6, 2016, ENAP Sipetrol Argentina S.A. signed a loan agreement to finance the Magallanes Incremental Project (PIAM) with Citibank, N.A. (Citi) and Banco Bilbao Viscaya Argentaria, S.A. (BBVA), with the Bank of New York Mellon as administrative agent. The contract is guaranteed by ENAP. The amount isUS$150 million , which will be disbursed in stages at the request of our Company for a year. The payment term is 5 years (with a unpaid period of 18 months) and the agreed rate is Libor quarterly plus 1.85% applicable margin.

(7) THE BANK OF NOVA SCOTIA

On March 3, 2017, Enap Sipetrol Argentina S.A. signed a credit agreement with The Bank of Nova Scotia, as second financing of the project Incremental Area Magallanes (PIAM) for US$ 80,000,000. The contract is guaranteed by ENAP. The credit has a period of availability of 6 months to make disbursements. The payment term is 5 years, with equal quarterly repayments from the 18th month, the agreed rate is quarterly LIBOR plus 1.4% of applicable margin.

ENAP AND SUBSIDIARIES iii) Detail of Bonds Payable

The detail and maturities of the bonds payable as of December 31, 2017 and 2016 classified as current and non-current is indicated in the following table:

As of December 31, 2017 Current Non-current Nominal Up to 3 From 3 to 12 From 1 to 3 From 3 to 5 5 years and Value Nominal Effective months month Total years years more Total Description Country Currency (Thousands) Rate Rate ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ B-ENAP - B ( a.1 ) Chile UF 9,750 4.55% 4.28% 9,043 - 9,043 425,400 425,400 Tipo 144 A ( b.1 ) EE.UU US$ 115,308 6.25% 6.58% 3,504 - 3,504 114,902 114,902 Tipo 144 A ( b.2 ) EE.UU US$ 174,411 5.25% 5.46% 3,564 - 3,564 173,475 173,475 Tipo 144 A ( b.3 ) EE.UU US$ 410,281 4.75% 5.12% - 1,384 1,384 405,231 405,231 B-ENAP - E ( a.2 ) Chile UF 4,000 3.70% 4.28% - 1,634 1,634 168,045 168,045 SIX Swiss ( b.4 ) Suiza CHF 215,000 2.88% 2.88% - 220,716 220,716 - - Tipo 144 A ( b.5 ) EE.UU US$ 600,000 4.38% 4.56% - 4,714 4,714 594,244 594,244 Tipo 144 A ( b.6 ) EE.UU US$ 700,000 3.75% 5.50% 10,570 - 10,570 618,309 618,309 B-ENAP - F ( a.3 ) Chile UF 6,500 2.05% 2.20% - 862 862 285,248 285,248 Tipo 144 A ( b.7 ) EE.UU US$ 600,000 4.50% 4.74% 8,100 - 8,100 575,601 575,601 Total 34,781 229,310 264,091 713,777 405,231 2,241,447 3,360,455 As of December 31, 2016 Current Non-current

Nominal Up to 3 From 3 to 12 From 1 to 3 From 3 to 5 5 years and Value Nominal Effective months month Total years years more Total Description Country Currency (Thousands) Rate Rate ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ B-ENAP - B ( a.1 ) Chile UF 9,750 4.55% 4.28% 8,491 - 8,491 384,691 384,691 Tipo 144 A ( b.1 ) EE.UU US$ 115,308 6.25% 6.58% 3,463 - 3,463 114,491 - 114,491 Tipo 144 A ( b.2 ) EE.UU US$ 174,411 5.25% 5.46% 3,558 - 3,558 172,828 172,828 Tipo 144 A ( b.3 ) EE.UU US$ 410,281 4.75% 5.12% - 1,384 1,384 403,956 403,956 B-ENAP - D ( a.2 ) Chile UF 2,000 3.40% 4.28% 671 78,284 78,955 - B-ENAP - E ( a.2 ) Chile UF 4,000 3.70% 4.28% 1,459 - 1,459 150,091 150,091 SIX Swiss ( b.4 ) Suiza CHF 215,000 2.88% 2.88% - 427 427 210,401 210,401 Tipo 144 A ( b.5 ) EE.UU US$ 600,000 4.38% 4.56% 4,693 - 4,693 593,434 593,434 Tipo 144 A ( b.6 ) EE.UU US$ 700,000 3.75% 5.50% 10,630 - 10,630 609,143 609,143 Total 32,965 80,095 113,060 709,583 576,784 1,352,668 2,639,035

Other information related to public obligations as of December 31, 2017:

Tax Com- Coun- Tax Interest Principal Creditor name number Local / Foreign pany try number payment payment Maturity Guarantee ( a.1 ) Banco de Chile 97.004.000-5 Local ENAP Chile 92.604.000-6 Semi-annually Al vencimiento 12-01-2019 Not guaranteed ( b.1 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually Al vencimiento 08-07-2019 Not guaranteed ( b.2 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually Al vencimiento 10-08-2020 Not guaranteed ( b.3 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually Al vencimiento 06-12-2021 Not guaranteed ( a.2 ) Banco de Chile 97.004.000-5 Local ENAP Chile 92.604.000-6 Semi-annually Al vencimiento 01-10-2033 Not guaranteed ( b.4 ) Credit Suisse AG 0-E Foreign ENAP Chile 92.604.000-6 Annually Al vencimiento 05-12-2018 Not guaranteed ( b.5 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually Al vencimiento 30-10-2024 Not guaranteed ( b.6 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually Al vencimiento 05-08-2026 Not guaranteed ( a.3 ) Santander Corredores de Bolsa Limitada 97.036.000-K Local ENAP Chile 92.604.000-6 Semi-annually Al vencimiento 08-05-2027 Not guaranteed ( b.7 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually Al vencimiento 14-09-2047 Not guaranteed

Other information related to public obligations as of December 31, 2016:

Tax Com- Coun- Tax Interest Principal Creditor name number Local / Foreign pany try number payment payment Maturity Guarantee ( a.1 ) Banco de Chile 97.004.000-5 Local ENAP Chile 92.604.000-6 Semi-annually At maturity 12-01-2019 Not guaranteed ( b.1 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually At maturity 08-07-2019 Not guaranteed ( b.2 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually At maturity 10-08-2020 Not guaranteed ( b.3 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually At maturity 06-12-2021 Not guaranteed ( a.2 ) Banco de Chile 97.004.000-5 Local ENAP Chile 92.604.000-6 Semi-annually At maturity 01-10-2017 Not guaranteed ( a.2 ) Banco de Chile 97.004.000-5 Local ENAP Chile 92.604.000-6 Semi-annually At maturity 01-10-2033 Not guaranteed ( b.4 ) Credit Suisse AG 0-E Foreign ENAP Chile 92.604.000-6 Annually At maturity 05-12-2018 Not guaranteed ( b.5 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually At maturity 30-10-2024 Not guaranteed ( b.6 ) Bank of New York Mellon 0-E Foreign ENAP Chile 92.604.000-6 Semi-annually At maturity 05-08-2026 Not guaranteed

ENAP AND SUBSIDIARIES a) Local bonds

1. On January 15, 2009, the Company registered at the Securities Register of the Commission for the Financial Market (formerly known as Superintendency of Securities and Insurance) under No. 303, the issuance of indexed UF bonds in the local market.

The placement of bonds in the local market was performed during January, 2009 and amounted to UF 9,750,000. The maturity period is 10 years, the payments of interests are semiannual, the annual interest rate is of U.F. + 4.33% and the repayment of principal is at the end of the period (bullet).

2. On January 17, 2013 the Company placed indexed bonds in “unidades de fomento” (U.F.) in the local market, chargeable to the line registered under No. 585 in the Securities Register of the Commission for the Financial Market (formerly known as Superintendency of Securities and Insurance) dated May 7, 2009.

The bond placement amounted to UF 6,000,000 and was performed in two subseries:

- D Class Bonds: for an amount of UF 2,000,000; the maturity period is 5 years, only with a single final repayment on October 1, 2017 and semi-annual interest payments. The coupon interest rate is 3.4% annually and the yield at issue was 3.75% annually.

- E Class Bonds: for an amount of UF 4,000,000, the maturity period is 21 years, only with a single final repayment on October 1, 2033 and semi-annual interest payments. The coupon interest rate is 3.7% annually and the yield at issue was 4.09% annually.

3. On May 18, 2017, the Company made a bond placement in Unidades de Fomento (UF), in the local market, against the corresponding line registered in the Commission for the Financial Market (formerly known as Securities Registry of the Superintendency of Securities and Insurance) under the No. 823, date October 16, 2015.

The bonds placement amounted to UF 6,500,000, for a 10-year term, with a single final repayment on May 8, 2027 and semi-annual interest payments. The coupon interest rate is 2.05% per annum, and the placement rate was 1.87% annual. b) International bonds:

1. On December 31, 2009, ENAP issued and placed 144 A-type bonds in the United States market at a 6.25% interest annually for ThUS$ 300,000.

The maturity period is 10 years. Interest is paid on a semiannual basis and the repayment of principal will be performed upon maturity (bullet). On August 5, 2016 a prepayment of principal was made for ThUS$ 184,692.

2. On August 5, 2010, the company issued and placed144 A type bonds in the US market, at a yearly interest rate of 5.25% for ThUS$ 500,000.

ENAP AND SUBSIDIARIES 3. On December 1, 2011, ENAP issued and placed a ThUS$500,000 144 A bond in the US market at an interest rate of 4.75% annually.

The bond issue expires in 10 years. Interest payments are semi-annual and the principal will be repaid at maturity. On August 5, 2016 a prepayment of principal was made for ThUS$ 89,719.

4. On December 5, 2013; ENAP issued and placed a bond on the public Swiss stock market (SIX Swiss Exchange AG, in Zurich) with an interest rate of 2.875% annually and a spread of 2.28% for ThCHF $215,000.

The maturity period is 5 years. Interest will be paid annually and principal will be repaid at maturity.

5. On October 27, 2014, ENAP issued and placed a 144 A bond in the United States market, a 4.375% per annum, for ThUS$ 600,000.

The bond matures within 10 years. Interest payments are semi-annual and principal repayment will be upon maturity.

6. On August 5, 2016, ENAP issued and placed a 144 A bond in the US market, at an interest rate of 3.75% per annum for ThUS $ 700,000.

The maturity is 10 years. Interest payments are semi-annual and the repayment of principal will be made on maturity.

The proceeds from this placement were mainly used to prepay bonds previously issued in international markets, maturing in 2019, 2020 and 2021 (see b.1, b.2 and b.3), and prepayment expenses related to the transaction.

7. On September 14, 2017, ENAP made the issuance and placement of a bond of type 144 A in the US market, at an interest rate of 4.50% per annum for ThUS$ 600,000.

The expiration term is 30 years. The interest payments are semiannual and the amortization of the capital will be made at maturity. iv) Financial leases

As of December 31, 2016, the finance leases associated with the lease of the corporate offices have been reclassified to "Non- current assets classified as held for sale", which were sold in the first half of 2017.

ENAP AND SUBSIDIARIES

24. TRADE CREDITORS AND OTHER ACCOUNTS PAYABLE a) The detail is as follows: Current Non-current 12.31.2017 12.31.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ ThUS$ ThUS$

Trade accounts payable 823,373 568,101 756 1,681 Other creditors 35,700 13,372 - - Other payables 7,141 2,606 - -

Total 866,214 584,079 756 1,681

b) Detail of future maturities:

12.31.2017 12.31.2016 ThUS$ ThUS$

Up to 30 days 860,026 577,711 Between 31 and 60 days 624 200 Between 61 and 90 days 930 2,363 Between 91 and 180 days 413 336 Over 180 days 4,221 3,469

Total 866,214 584,079

25. OTHER ACCRUALS i) Detail - As of December 31, 2017 and 2016 the detail is as follows:

Current Non-current Detail: 12.31.2017 12.31.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ ThUS$ ThUS$

Dismantling, restoration and rehabilitation costs (a) - - 117,781 112,068 Onerous contracts - - 9,723 13,919 Other provisions 1,165 1,944 1,686 1,710 Total 1,165 1,944 129,190 127,697

This provision covers the estimated disbursements which the ENAP Group should perform in the future for environmental remediation at its platforms and wells. At the end of concessions, the exploitation zones can then be used for other ends. this provision is calculated using the present value method. ii) Movement: Movement of provisions, described by concept, is as follows:

ENAP AND SUBSIDIARIES Dismantling restoration and Onerous Other rehabilitation costs contracts accruals Total ThUS$ ThUS$ ThUS$ ThUS$ Initial balance as of January 1, 2017 112,068 13,919 3,654 129,641 Additional provisions 12,300 - 197 12,497 Used provision (6,587) (4,196) (619) (11,402) Reversals of provisions - - (381) (381)

Ending balance as of December 31, 2017 117,781 9,723 2,851 130,355

Dismantling restoration and Onerous Other rehabilitation costs contracts accruals Total ThUS$ ThUS$ ThUS$ ThUS$ Initial balance as of January 1, 2016 94,391 16,419 9,306 120,116 Additional provisions 25,149 - 5,852 31,001 Used provision (7,471) (2,490) (8,138) (18,099) Reversals of provisions - - (3,724) (3,724) Other increase (decrease) of exchange rate - (10) (24) (34) Other increase (decrease) (1) - 382 381 Ending balance as of December 31, 2016 112,068 13,919 3,654 129,641

26. EMPLOYEE BENEFITS ACCRUALS

The detail of the provisions for employee benefits as of December 31, 2017 and 2016, is the following:

Current Non-current 12.31.2017 12.31.2016 12.31.2017 12.31.2016 Concept: ThUS$ ThUS$ ThUS$ ThUS$

Severance payments ( a ) 12,750 828 96,444 92,841 Share in profits and bonus for employees ( b ) 23,501 20,690 - - Vacation accrual 19,442 20,850 - - Others provisions ( c ) 4,151 6,517 - -

Total 59,844 48,885 96,444 92,841

(a) It refers to severance indemnities in any event due from the ENAP Group to employees, which are detailed in the collective contracts current at that date. The liability recognized in the balance sheet is the present value of the obligations on those defined benefits (severance indemnities) at the presentation date of the consolidated financial statements.

The severance indemnity obligation is estimated annually based on an actuarial model prepared by an independent actuary, following the Projected Credit Unit method. The present value of the severance indemnity obligations is determined by discounting the future estimated cash flows using the interest rate of the corporate bond class E denominated in the currency in which benefits will be paid and taking into consideration the obligations’ maturity dates. (b) This is the profit sharing scheme at the Ecuador branch, established by law and the variable bonus relating to production in refineries, which is established in the current collective agreements contracts, and participation in profits and other benefits established in collective agreements and labor contracts as the case may be. 68

ENAP AND SUBSIDIARIES

26.1 Current employee provisions continuity movement - The movement of current employee provisions continuity during the year detailed by item is as follows:

Al 31 de diciembre de 2017 Current Share in profits Severance and bonus Vacation Other payments for employees accruals accruals Total As of December 31, 2017 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Initial balance as of January 1, 2017 828 20,690 20,850 6,517 48,885 Additional accruals 2,799 51,323 19,097 12,812 86,031 Used accruals (3,643) (49,106) (22,020) (15,633) (90,402) Increase (decrease) in the foreign currency exchange 16 594 1,515 455 2,580 Reclassification from non - current 12,750 - - - 12,750

Ending balance as of December 31, 2017 12,750 23,501 19,442 4,151 59,844

Current Share in profits Severance and bonus Vacation Other payments for employees accruals accruals Total As of December 31, 2016 ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Initial balance as of January 1, 2016 884 14,042 18,134 8,738 41,798 Additional accruals 3,320 32,336 8,344 22,031 66,031 Used accruals (3,350) (25,990) (6,457) (24,620) (60,417) Increase (decrease) in the foreign currency exchange (26) 302 829 368 1,473

Ending balance as of December 31, 2016 828 20,690 20,850 6,517 48,885

Note: Part of the used accrual of “Share in profit and bonus for employee” in the mandatory share payable to the Ecuador State and subcontractors is included. Profit Sharing and Bond Plan - The entity recognizes a liability and an expense for bonds and profit sharing, based on a formula that takes into account the profit or loss for the year after making certain adjustments. A provision is recognized when the entity is obligated through the collective bargaining agreements of the personnel or contractually.

26.2 Movement of the non-current severance indemnities

The movement of the severance indemnities associated with past services and interest are immediately recognized in the income statement. Actuarial gains and losses from adjustments and changes in the actuarial assumptions are recognized in equity in the year they arise. Non-current severance indemnities are detailed as follows:

ENAP AND SUBSIDIARIES Non current 12.31.2017 12.31.2016 Movement: ThUS$ ThUS$

Opening balance 92,841 89,480 Service costs 1,536 812 Interest costs 6,096 5,166 Actuarial gain / loss 6,561 1,017 Paid benefits (6,997) (9,722) Increase (decrease) in foreign exchange rate 9,157 6,088 Reclassification to current portion (12,750) -

Totales 96,444 92,841

Severance and Termination Benefits – These indemnities are paid when the employment relationship is terminated before the normal date of retirement. Severance and termination benefits are recognized according to current collective agreements. Benefits that mature over 12 months after the year end are discounted to their present value.

26.3 Actuarial Assumptions

The actuarial assumptions used to calculate the non-current severance indemnities are as follows:

Assumptions: 12.31.2017 12.31.2016 Nominal discount rate Chile 6.02% 5.91% Real discount rate Ecuador 4.02% 3.50% Wages nominal increase estimate rate Chile 5.30% 3.67% Wages real increase estimate rate Ecuador 2.00% 3.00% Volunteer retirement rate Chile 2.29% 2.29% Volunteer retirement rate Ecuador 2.00% 2.00% Lay-offs turnover rate Chile 0.10% 0.10% Lay-offs turnover rate Ecuador 8.92% 9.19% Mortality index Chile RV-2014 RV-2004 Mortality index Ecuador IESS2002 IESS2002 Women retirement age 60 60 Men retirement age 65 65

On an annual basis, the Company has reviewed its actuarial assumptions in accordance with IAS 19 “Employee benefits”, changing the discount rate it applied in reference to new curves of market interest rates. See sensitivity effect in Note 26.4.-

Mortality assumptions were determined according to the actuarial advice provided by our independent actuary, according to the information available and representative of the country. The turnover assumptions arise from internal analysis by the Company’s management.

ENAP AND SUBSIDIARIES 26.4 Sensitivity Analysis The following detail shows the effects of sensitivity analysis of the discount rate used to determine the actuarial value of the severance indemnity provision: Carrying Chile amount Sensitivity analysis Actuarial value ThUS$ 107,141 113,889 101,157 Discount rate 6.02% 5.02% 7.02% Percentage sensitivity - -17.00% 17.00% Sensitivity in ThUS$ - 6,748 (5,984)

Carrying Ecuador amount Sensitivity analysis Actuarial value ThUS$ 2,053 2,194 1,924 Discount rate 4.02% 3.52% 4.52% Percentage sensitivity - -12.00% 12.00% Sensitivity in ThUS$ - 141 (129)

27. EQUITY a) Changes in equity:

Transitory Article 6 of Law No. 21,025 authorized the Ministry of Finance, by Supreme Decree No. 1639 of November 6, 2017, to make an extraordinary capital contribution to ENAP for ThUS$ 400,000. This contribution will be made through one or more deposits, in a period that cannot exceed August 6, 2018. This contribution will be financed with available funds in financial assets of the Public Treasury. This contribution was incorporated into the budget for the year 2018.

Once this contribution is made, the paid-in capital will be ThUS$ 1,632,332 and the Company's equity will be increased with the contribution received.

The dividend distribution policy that governs ENAP, established by Finance Ministry Resolution No. 25 of August 11, 2005, established that ENAP had to transfer a minimum amount of resources to the National Treasury, whether as income tax (40%) and/or as anticipated profits calculated as 14% of equity, using retained earnings from prior years.

By Order N° 1,292 dated June 15, 2012 the Finance Ministry authorized a policy of profit distribution in order to contribute to the equity company’s stability and recomposition, on the following terms: a) Authorized the subsidiary ENAP Sipetrol S.A. to capitalize the profits obtained in 2010. b) Authorized the subsidiary ENAP Sipetrol S.A. to capitalize 100% of the profits obtained in 2011, according to the audited financial statements. c) Reviewed the Company’s financial position, to decide whether authorizing the capitalization of the subsidiaries’ and parent’s profit is appropriate, as long as the tax losses continue. 71

ENAP AND SUBSIDIARIES

Point c) Order Officio N° 1,292, has been consistently applied for all the years since its enactment up to date. b) Paid-in capital

The detail of the paid in capital as of December 31, 2017 and 2016 is the following: 12.31.2017 12.31.2016 ThUS$ ThUS$ Paid-in capital 1,232,332 1,232,332 Extraordinary capital contribution - Supreme Decree No.1,639 - 06.11.2017 400,000 - Authorized capital 1,632,332 1,232,332 Capital increase yet to be paid (400,000) - Total 1,232,332 1,232,332

ENAP is a state-owned company (100% property of the Republic of Chile) and its capital is not divided into shares

Capital management The main purpose of capital management, referring to management of the company’s equity, is management of ENAP Group’s capital, according to the following detail:  Ensure the normal functioning of its operations and the continuity of its business in the long-term and secures the supply of liquid fuel for the country  Ensure the financing of new investments in order to maintain continuous growth in the future and full compliance with the specifications of the fuels authorized in Chile  Maintains an adequate capital structure according to the economic cycles that impact the business and the corresponding nature of the industry

For these purposes, and considering the current capital strengthening at ENAP, its value and evolution are controlled and reported to the Company’s Board of Directors every month. They decide in each case the steps to be followed, communication with the Ministry of Finance, and management of the Company.

On July 27, 2017, Law No. 21,025 was enacted. This law became effective on December 1, 2017. Law 21,025 changes the corporate governance of ENAP and grants a clear governance system to the company, clearly establishing the roles of decision-making, supervision and implementation of decisions.

ENAP AND SUBSIDIARIES c) Other Reserves

As of December 31, 2017 and 2016 this item is composed as follows:

12.31.2017 12.31.2016 ThUS$ ThUS$

Foreign exchange differences on translation (i) (76,141) (77,491) Cash flow hedge (ii) (46,093) (60,485) Actuarial reserves in defined benefit plans (11,498) (7,312) Available for sale 1,190 1,190 Other sundry reserves (iii) 3,592 (2,446) Total (128,950) (146,544)

i) Foreign exchange differences on translation 12.31.2017 12.31.2016 ThUS$ ThUS$

Balance at the beginning of the year (77,491) (79,282) Results of changes in investees with accounting in foreign currency 1,350 1,791 Total (76,141) (77,491)

ii) Cash flow hedging Total Movement Total 12.31.2016 2017 12.31.2017 ThUS$ ThUS$ ThUS$ Composition of other reserves in the cash flow hedge of: Cross-currency swap / Bonds and financial leases 2,964 (6,845) (3,881) SWAP and Option Zero Cost Collar interest rate bank loans (8,625) 4,654 (3,971) Forward of foreign exchange contracts (1,541) 1,138 (403) Electric power Swap (11,538) 11,538 - TSS y SDI (62,573) 5,666 (56,907) Deferred income tax derivatives 20,828 (1,759) 19,069 Total (60,485) 14,392 (46,093)

ENAP AND SUBSIDIARIES iii) Other sundry reserves 12.31.2017 12.31.2016 ThUS$ ThUS$ Opening balance (2,446) 27,270 Changes in GNL Quintero S.A. reserves 2,651 (17,151) Changes in Petropower Energía Ltda. reserves - (12,565) Changes in Geotérmica del Norte S.A. reserves 951 - Changes in Oleoducto Trasandino Chile S.A. reserves 3,895 - Changes in Cía.Hidrógeno de Bio Bio S.A. reserves, due to purchase (1,459) - Total 3,592 (2,446) d) Retained earnings (accumulated deficit)

12.31.2017 12.31.2016 ThUS$ ThUS$ Balance at the beginning of the year (287,612) (470,726) Income for the year 22,708 181,296 Other changes in retained earnings 5 1,818 Total (264,899) (287,612)

28. NON – CONTROLLING INTEREST

The detail by company of the participation of third parties in the equity and results of subsidiaries as of December 31, 2017 and 2016, is the following:

Non - controlling Income (loss) attributable interest in equity to non - controlling interest Entity 12.31.2017 12.31.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ ThUS$ ThUS$ Compañía de Hidrógeno del Bio-Bio S.A. - 9,019 933 1,258 Enap Refinerías S.A. 144 127 15 26 Total 144 9,146 948 1,284

ENAP AND SUBSIDIARIES

29. OPERATING SEGMENTS

Segment criteria

The segment structure used by ENAP and defined by the Board of Directors of ENAP, and in accordance of IFRS 8, is firstly related to its business lines and secondly, according to its geographical distribution.

Main segments of the consolidated group:

. E&P includes exploration for hydrocarbons (oil and natural gas) and geothermal resources, as well as their development, production and marketing, inside and outside Chile, in Argentina, Ecuador and Egypt. Abroad, ENAP operates through its subsidiary Enap Sipetrol S.A. and in Chile through ENAP in Magallanes Region where it manages hydrocarbon exploration and production assets in the XII Region. Furthermore, it conducts gas exploration through Special Operations Contracts (CEOP) on the Coirón, Caupolicán, Lenga and Dorado-Riquelme Blocks, in alliance with Pan American Energy LLC, Greymount and Methanex respectively, all located in the Magallanes Region.

. R&C includes Refining, Optimizing, Logistics, Trading, Market Development and Sales. ENAP’s Refining and Commercial activities are managed by the subsidiary ENAP Refinerias S.A.. Its business is purchasing crude oil on the international market and subsequently refining and selling the finished products. ENAP Refinerías S.A.’s crude oil supply is mostly obtained from South America and Europe. ENAP Refinerías S.A. is the only company in Chile that refines petroleum and the most important one on the Pacific coast of Central and South America. It has three refineries: Aconcagua Refinery located in the Valparaiso Region, Bio Bio Refinery in the Bio Bio Region and Gregorio Refinery in the Magallanes Region. These refineries have the facilities needed to receive and store the raw material, among them there are 5 seaport terminals located at Quintero, San Vicente, Easter Island, Cabo Negro and Gregorio, these last two in the Magallanes Region. Liquid and gas fuel storage and transport, its wholesale and export is the Storage and Pipeline Department’s responsibility (DAO, for its acronym in Spanish: Dirección de Almacenamiento y Oleoducto) which manages the logistics infrastructure. . Gas & Energy, among the measures taken by Management to adopt the implementation of the Government’s energy agenda, on July 14, 2014, a third segment in ENAP was constituted, intended to promote the use of Liquefied Natural Gas (LNG) in the national energy matrix, along with the addition of new electric power generation capacity. It includes gas marketing processes and activities through pipelines, virtual pipelines and GNL Móvil, management of new electric energy projects.

The Board of Directors and General Manager of ENAP are in charge of the decision making process regarding the administration, allocation of resources and regarding the performance assessment of each of the above described operating segments. The following is the information by segments regarding these activities as of December 31, 2017 and 2016:

ENAP AND SUBSIDIARIES As of December 31, 2017 E&P R&C G&E (1) Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Revenues 556,569 5,618,934 244,660 - 6,420,163 Revenues, intercompanies 73,542 141,071 79,832 (294,445) - Cost of sales (475,755) (5,189,370) (248,112) - (5,913,237) Cost of sales, intercompanies (30,411) (184,202) (79,832) 294,445 - Gross margin 123,945 386,433 (3,452) - 506,926 Other income by function 5,678 20,149 14,442 801 41,070 Distribution costs (46,742) (174,285) (3,419) (5,000) (229,446) Administrative expenses (31,055) (39,811) (4,683) (36,342) (111,891) Other expenses by function (104,852) (2,524) - (433) (107,809)

Income (loss) operating activities (53,026) 189,962 2,888 (40,974) 98,850 Other income (expenses) - (1,315) 2,300 6,748 7,733 Financial income 3,220 1,388 - (51) 4,557 Financial costs (13,198) (82,638) - (110,355) (206,191) Participation in the earnings of associates (5) 53 - 18,649 18,697 Exchange differences (10,722) (498) - 9,089 (2,131) Income (loss) before taxes (73,731) 106,952 5,188 (116,894) (78,485) (Expense) revenues for income taxes 20,531 (31,888) (2,620) 116,117 102,140 Income (loss) (53,200) 75,064 2,568 (777) 23,655 Income (loss) attributable to: Income (loss) attributable to owners of the parent company (52,958) 72,541 2,568 556 22,707 Income (loss) attributable to non-controlling interests (242) 2,523 - (1,333) 948 Income (Loss) (53,200) 75,064 2,568 (777) 23,655

As of December 31, 2016 E&P R&C G&E (1) Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Revenues 558,630 4,450,911 207,522 - 5,217,063 Revenues, intercompanies 57,200 117,835 73,112 (248,147) - Cost of sales (429,531) (4,021,047) (219,280) - (4,669,858) Cost of sales, intercompanies (53,945) (121,090) (73,112) 248,147 - Gross margin 132,354 426,609 (11,758) - 547,205

Other income by function 4,960 57,732 - 5,090 67,782 Distribution costs (46,828) (158,706) (887) - (206,421) Administrative expenses (32,756) (33,177) (2,433) (32,139) (100,505) Other expenses by function (83,039) (22,262) - (1,447) (106,748) Income (loss) operating activities (25,309) 270,196 (15,078) (28,496) 201,313 Other income (expenses) - 105,931 - - 105,931 Financial income 5,810 1,452 - (62) 7,200 Financial costs (20,311) (79,456) - (87,223) (186,990) Participation in the earnings of associates (3) 1,285 - 16,871 18,153 Exchange differences (17,068) (13,951) - 12,570 (18,449) Income (loss) before taxes (56,881) 285,457 (15,078) (86,340) 127,158

(Expense) revenues for income taxes 10,418 (50,259) 3,619 91,644 55,422

Income (loss) (46,463) 235,198 (11,459) 5,304 182,580

Income (loss) attributable to: Income (loss) attributable to owners of the parent company (46,417) 232,930 (11,459) 6,242 181,296 Income (loss) attributable to non-controlling interests (46) 2,268 - (938) 1,284 Income (Loss) (46,463) 235,198 (11,459) 5,304 182,580

ENAP AND SUBSIDIARIES

(1) This column contains the elimination adjustments on consolidation, the transactions of revenues and costs for the purchase/sale of products and raw material between the companies of the ENAP Group as the most relevant items. Also included are the costs not distributed to the segments such as administrative costs associated with corporate items, results of associates, other gains and losses and finance income and costs. A detail of income by products and geographical area is as follows:

12.31.2017 12.31.2016 Sale by products E&P R&C G&E Total E&P R&C G&E Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ Crude 185,582 - - 185,582 196,615 31,088 - 227,703 Gas 226,356 - 230,074 456,430 221,279 - 207,522 428,801 Liquefied petroleum gas - 143,157 - 143,157 - 78,602 - 78,602 Gasoline - 2,258,416 - 2,258,416 - 1,975,923 - 1,975,923 Kerosene - 476,732 - 476,732 - 369,817 - 369,817 Diesel - 2,202,782 - 2,202,782 - 1,564,871 - 1,564,871 Fuel Oil - 362,150 - 362,150 - 286,273 - 286,273 Petrochemical - 47,147 - 47,147 - 49,461 - 49,461 Other products - 95,307 14,586 109,893 - 80,078 - 80,078 Other sales 3,439 33,243 - 36,682 12,479 14,798 - 27,277 Sale of services 141,192 - - 141,192 128,257 - - 128,257

Total 556,569 5,618,934 244,660 6,420,163 558,630 4,450,911 207,522 5,217,063

12.31.2017 12.31.2016 Geographical sales E&P R&C G&E Total E&P R&C G&E Total ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

National 183,769 5,504,809 202,489 5,891,067 182,462 4,303,131 185,610 4,671,203 Foreign 372,800 114,125 42,171 529,096 376,168 147,781 21,912 545,860 Total 556,569 5,618,934 244,660 6,420,163 558,630 4,450,911 207,522 5,217,063

The marketing of refined products by ENAP Refinerias S.A. is channeled through wholesale distribution companies of fuels and other products. This subsidiary has contracts to supply its major clients, ensuring an adequate supply of fuel throughout the country. The ENAP Group’s main clients at a national level are Copec, Esmax, Enex, Lipigas, Abastecedora de Combustibles S.A. and Methanex.

Assets and liabilities for by Operating Segments Currently the ENAP Group does not control and record its assets by reportable segments in its internal reporting system; consequently such information is not used by the Board as part of the decision-making process and allocation of resources. The financial liabilities of ENAP are centralized and controlled at a corporate level and are not presented by operating segment.

ENAP AND SUBSIDIARIES

30. REVENUES FROM ORDINARY ACTIVITIES

The detail of this item as of December 31, 2017 and 2016 is as follows:

01.01.2017 01.01.2016 Detail: 12.31.2017 12.31.2016 ThUS$ ThUS$

Sale of crude oil 185,582 227,703 Sale of natural gas 361,138 333,252 Gas subsidy income (1) 95,292 95,549 Sale of refined products 5,600,277 4,405,025 Sale of oil services 141,192 121,948 Other operating income 36,682 33,586

Total 6,420,163 5,217,063

(1) The Ministry of energy is empowered to compensate ENAP for a maximum amount of ThCh$ 66,701,945 for 2017 and ThCh$ 64,759,170 for 2016, according to the Public-Sector Budget Act passed by the National Congress.

31. COSTS OF SALES

The detail of this item as of December 31, 2017 and 2016 is as follows: 01.01.2017 01.01.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ Crude oil and gas cost 552,738 558,106 Cost of refined products (1) 4,776,186 3,541,193 Cost on service sale 88,049 94,683 Other operating costs 496,264 475,876 Total 5,913,237 4,669,858

(1) As a part of the cost of refined products, the net effect (debit charge) of the TSS hedges settlement during the year ended to December 31, 2017 by ThU$71,520 (credit charge amounts to ThU$26,002 in year 2016), which were intended to financially move the price window of the crude oil shipments and adjust it to the dates on which the refined product prices are agreed, thus having inventory costs that are in line with the products to be sold, mitigating the time spread to which the Company is naturally exposed by means of the cost of sales hedging.

ENAP AND SUBSIDIARIES

32. DISTRIBUTION COSTS

As of December 31, 2017 and 2016, distribution costs are detailed as follows:

01.01.2017 01.01.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ Logistics services 11,124 8,929 Oil pipeline transportation 35,916 35,188 Maritime transportation 81,242 74,158 Ground products transportation 21,058 18,557 Personnel 25,642 23,192 Other 54,464 46,397 Total 229,446 206,421

33. OTHER EXPENSES BY FUNCTION

The detail of this item as of December 31, 2017 and 2016, is as follows: 01.01.2017 01.01.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ Cost of exploratory campaigns 17,099 11,754 Impairment of investment in E&P (see Note No. 19) 56,189 - Provisions - 19,732 Dry exploration and abandoned wells 23,340 50,888 Disposal of property, plant and equipment - 10,518 Differences in inventory - 4,161 Cost of sale internal energy 1,145 1,110 Exploration costs and others 10,036 8,585 Totales 107,809 106,748

ENAP AND SUBSIDIARIES

34. FINANCIAL COSTS

The detail of this item as of December 31, 2017 and 2016, is as follows: 01.01.2017 01.01.2016 12.31.2017 12.31.2016 Concepts: ThUS$ ThUS$

Interest from overdraft and bank borrowings 38,617 40,074 Interest from bonds payable 146,745 132,229 Interest from lease obligations 4,168 150 Expenses for interest account payable and other non financial liabilities 13,515 6,803 Other expense related to interests 2,866 1,212

Total expenses for interests 205,911 180,468

Loss (income) for swap derivatives 9,301 7,610 Accrued interests for swap 2,141 2,541 Less: Capitalized interest (11,162) (3,629)

Total 206,191 186,990

35. PERSONNEL COSTS

The detail of this item as of December 31, 2017 and 2016, is as follows: 01.01.2017 01.01.2016 12.31.2017 12.31.2016 ThUS$ ThUS$ Wages and salaries 183,198 170,622 Short term benefits for employees 138,257 125,304 Other personnel expenses 14,923 16,167 Other long-term benefits 29,811 29,617 Total 366,189 341,710

ENAP AND SUBSIDIARIES

36. OTHER INCOME (LOSS)

The detail of this item as of December 31, 2017 and 2016, is as follows:

01.01.2017 01.01.2016 12.31.2017 12.31.2016 ThUS$ ThUS$

Negative goodwill generated in excess of purchase price paid ( see Note 5) - 92,740 Adjustments for Fair value of pre-existing participation (see Note 5) - 14,173 Profit (loss) on sale of property, plant and equipment 5,433 - Profit on sale of conglomerate option GNL Quintero S.A. 2,300 - Otros - (982)

Total 7,733 105,931

37. EXCHANGE DIFFERENCES

As of December 31, 2017 and 2016, the detail of the assets and liabilities generating exchange differences which are (debited) credited to net income are as follows:

01.01.2017 01.01.2016 12.31.2017 12.31.2016 Concepts: ThUS$ ThUS$

Cash and cash equivalents (4,016) (12,734) Trade and other receivables 41,656 20,496 Forward income (loss) (41,973) (28,542) Due from related companies, current (256) (1,107) Income tax, net 8,071 10,457 Trade creditors and other accounts payable 982 (3,022) Current accruals (2,101) (2,159) Non-current accruals (7,778) (769) Other financial liabilities, current and non-current (96,163) (48,403) Income (loss) hedging other financial liabilities, current and non-current 101,633 45,736 Other (2,186) 1,598

Total (2,131) (18,449)

ENAP AND SUBSIDIARIES

38. FOREIGN CURRENCY

As of December 31, 2017 and 2016, the detail of the assets and liabilities in other currencies is as follows:

Functional 12.31.2017 12.31.2016 Assets Currency Currency ThUS$ ThUS$ Cash and cash equivalents Chilean Pesos Dólar 12,126 12,360 Argentinian Peso Dólar 10,352 5,451 Egyptian Pound Dólar 6,069 11,323 Trade and other receivables, current Chilean Pesos Dólar 595,505 449,317 UF Dólar 1,830 (227) Argentinian Peso Dólar 7,541 23,901 Current tax assets Chilean Pesos Dólar 95,144 80,926 UF Dólar 76,460 30,832 Argentinian Peso Dólar 38,224 16,019 Accounts receivable, non-current Chilean Pesos Dólar 15 13 UF Dólar 12,010 13,363 Investments recorded using the equity method Chilean Pesos Dólar 314 9,741 Deferred taxes assets UF Dólar - 492 Total 855,590 653,511

12.31.2017 12.31.2016 Functional Up to 90 91 days to 1 year up More than Up to 90 91 days to 1 year up More than days 1 year to 5 years 5 years days 1 year to 5 years 5 years Liabilities Currency Currency ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Other financial liabilities, current UF Dollar 9,316 2,496 - - 11,486 79,668 - - Argentinian Peso Dollar - - - - 16,405 - - - Swiss Franc Dollar 1,868 220,716 - - 2,129 427 - - Trade creditors and other accounts payable Chilean Pesos Dollar 92,350 - - - 13,669 - - - UF Dollar 3,681 - - - 16,912 - - - Argentinian Peso Dollar 50,235 - - - 19,775 - - - Euro Dollar 1,774 - - - 734 - - - Canadian Dollar Dollar 1 - - - 1 - - - Japanese Yen Dollar 406 - - - 2 - - - Libra esterlina Dollar 45 - - - 7 - - - Other short-term accruals Chilean Pesos Dollar ------305 - - Current tax liabilities Chilean Pesos Dollar 85,997 - - - 57,444 - - - UF Dollar 2,188 - - - 1,815 - - - Argentinian Peso Dollar 3,270 - - - 3,214 - - - Current accruals for employee benefits Chilean Pesos Dollar 30,672 - - - 18,687 - - - UF Dollar 12,697 - - - 4,814 10,229 - - Argentinian Peso Dollar 2,811 1,813 - - 2,679 2,678 - - Other non-financial liabilities, current Argentinian Peso Dollar 52 Other financial liabilities, non-current UF Dollar - - 437,289 426,720 - - 478,136 150,091 Argentinian Peso Dollar - - - - 2,167 - - - Swiss Franc Dollar - - 13,772 (8,179) - - 233,009 - Liabilities, non-current Chilean Pesos Dollar ------(70) - Other accruals, non-current Argentinian Peso Dollar - - 8,654 - - - 1,452 - Deferred tax liabilities Argentinian Peso Dollar - - 4,534 - - - 33,191 - Non-current accruals for employee benefits Chilean Pesos Dollar - - 12,696 33,347 - - 27,112 63,950 UF Dollar - - 15,471 32,876 - - - - Other non financial liabilities, non-current Argentinian Peso Dollar - - 2,364 - - - 293 - Total 297,363 225,025 494,780 484,764 171,940 92,697 773,123 214,041

ENAP AND SUBSIDIARIES

39. ENVIRONMENTAL INFORMATION

The following section contains a brief description of projects related to enhancement and/or investments in productive processes, verification, compliance with ordinances and laws regarding processes and industrial installations and any other that may directly or indirectly affect the environment:

ENAP Sipetrol S.A.: The resources allocated to environmental projects and initiatives in ENAP Sipetrol, for its subsidiaries in Argentina and Ecuador, relate to the constant water, soil, air quality and biotic environment monitoring systems. Another relevant aspect relates to the Environmental Management System certified in the ISO 14001 standard in the assets of Pampa del Castillo, as well as the monitoring and following-up of the Environmental Management Plan for the assets in Cuenca Austral in Argentina, as well as MDC and PBHI in Ecuador. Another significant process is the treatment of preexisting sources of pollution in SIPEC. Finally, it is worth mentioning the management processes related to the drilling of development wells in the MDC block and the treatment of oiled soils in Pampa del Castillo. As of December 31, 2017, the amount used for projects and environmental initiatives in Argentina amounted to ThUS$ 5,200. In the case of Ecuador, as of December 31, 2017, the amount used for projects, operation and environmental initiatives amounted to ThUS$ 2,100.

ENAP Magallanes: The resources allocated to environmental projects and initiatives in ENAP Magallanes are related to ongoing operations, which is mainly comprised of the management and control of industrial waste, including monitoring, disposal and normalization of the related installations, as well as recovery works on environmental incidents. Another matter is the obtaining of environmental permits for the new Drilling, Hydraulic Fracturing and facility construction projects portfolio, as well as follow-up on commitments to the environmental authorities. As of December 31, 2017, the amount used for projects and environmental initiatives of ENAP Magallanes reached ThUS$ 1,500.

ENAP Refinerías S.A.:

Bio Bio Refinery: The focus and resources allocated to Environmental Projects and Initiatives at the Bio Bio refinery are mainly related to the execution of several commitments to the Concepcion Appeals Court (ICA) and the Superintendency of the Environment (SMA). The Projects and Initiatives related to the ICA are an odor mitigation plan whose main purpose is the management of odors that result from oil refining activity, that affect the adjoining communities. The plan includes Short (1 year), Middle (5 years) and Long-Term (10 years) Projects and Initiatives. The Action Plan presented to the SMA includes projects and initiatives that are related to improvements to the current atmospheric emissions abatement systems. The amount used for environmental projects and initiatives Bio Bio Refinery amounted cumulatively at December 2017 to ThUS$ 24.300.

ENAP AND SUBSIDIARIES

Aconcagua Refinery: The environmental projects and initiatives for the Aconcagua refinery during the year 2017 form part of a Long Term Work Plan and are focused on activities that identify and implement improvements regarding noise emissions, monitoring of atmospheric emissions and general compliance with current Environmental Certification Resolutions. The amount used for environmental projects and initiatives by Aconcagua refinery cumulatively at December 2017 amounted to ThUS$ 4,700.

40. LAWSUITS AND COMMERCIAL COMMITMENTS

There are several pending lawsuits and legal actions against ENAP Group derived from the nature of its operations. These lawsuits are mainly related to civil, tax and labor matters.

At the time of presenting these consolidated financial statements, no additional accounting provisions have been made additional to those shown in “Other accruals”. In the opinion of the company’s management and its legal counsel the portion not provided of these lawsuits do not represent a probable loss, in accordance with IAS 37.

Pending lawsuits that could result in a materiality exceeding ThUS$ 5,000 or having a material adverse effect, and their status at the date of these consolidated financial statements, are detailed as follows:

In Chile:

Empresa Nacional del Petróleo:

Parties: Empresa Nacional del Petróleo (“ENAP”) with PetroMagallanes Operaciones Ltda (PMO) and Greymouth Petroleum Holdings Ltd. (GPHL) Role: File N°21706/ASM before the Court of Arbitration of the International Chamber of Commerce (ICC). Subject matter: Breach and gross negligence in performance of contracts; Enforcement of contracts; Compensation for damages. Amount: (i) ThUS$ 60,800 lawsuit by from ENAP and (ii) ThUS$ 47,000 PMO counterclaim.

Brief statement of the facts: ENAP requested the initiation of an ICC arbitration suit against PMO and GPHL calling for compliance of the joint operation agreement ("JOA") signed with respect to CEOP Bloque Caupolicán and ordering compliance Force of the JOA, including ENAP's right to audit, plus compensation for damages. PMO counterclaimed the payment of certain amounts under the same agreement and in case of termination, cancellation or damage of the CEOP Bloque Caupolicán, an indemnification of damages.

Current status: ENAP presented a reply to its annual report and response to the PMO counterclaim dated September 6, 2017. The arbitration process is still in progress.

ENAP AND SUBSIDIARIES

Enap Refinerías S.A. (Aconcagua):

Parties: Enap Refinerias S.A. with Shipbuilders of the Motor Vessel LR Mimosa and/or charterers and/or operators. Section: 17-2014 text IV (ex C-17-2014), Minister of the Appeals Court of Valparaíso Mr. Droppelmann, acting as a Unipersonal Tribunal Matter: Compensation for Losses Amount: ThUS$ 8,000. Brief description of the Facts: Oil spill in the Bay of Quintero by the vessel B/T Mimosa Current status: The claim was answered by Armadores de LR Mimosa and Ultratug. On July 12, a conciliation hearing was held. A new date was suspended at the request of the parties. Parties: Francisco Acevedo and Others with Shipowners of Motor vesses LR Mimosa and Others. Case No.: 17-2014, to which were added the cases No. 17-2014 Volume I (formerly 22-2014); Case No. 17-2014 Volume II (formerly 23-2014); Case No. 17-2014 Volume III (formerly 1-2015); Case No. 17-2014 Volume V (formerly 8-2015); Case No. 17-2014 Volume VI (formerly 9-2015). Case N°17-2014 Volume VII; Case N°17-2014 Volume VIII; Case N°17-2014 Volume IX; Case N°17-2014 Case X; Case N°17-2014 Volume XI. Minister of Valparaiso´s Court of Appeals Mr. Droppelmann, acting as Single-Member Court. Matter: Compensation for damages according to Navigation Act. Amount: ThUS$ 100.000.- Brief summary of facts: Civil claim for damages governed by Article 153 of the Navigation Act, to obtain compensation for consequential damages, lost profits and moral damage allegedly suffered by fishermen and others, due to the pollution caused by the oil spill in the Quintero bay by the oil tanker Mimosa at a time when it was towed by the offshore tugboat on September 24, 2014 at the Maritime Terminal Monoboya. Current status: On October 2 and 17, 2017, the causes were joined together (trial number 1-2017, trial number 2-2017 and trial number 3-2017) to the present case. The causes were renamed as trial number17-2014 Volume XII, trial number 17-2014 Volume XIII, and trial number 17-2017 Volume XIV, respectively. The suspension of the present case and the accumulated ones were ordered until it is certified that they all reach the same state. Labeled: Spill of Hydrocarbons of September 24, 2014 Case N/A, Maritime Prosecutor's Office of Valparaiso / Maritime Governor of Valparaiso. Matter: Oil spill into the sea. Amount: 80,000 gold pesos. Procedure: Administrative Navy, Brief summary of facts: Oil spill in the Bay of Quintero from oil tanker Mimosa. Current Status: A claim of illegality was filed with the Comptroller General of the Republic against this last resolution of October 27, 2016. The Comptroller ordered the Director General of the Maritime Territory and Merchant Marine and the Maritime Governor of Valparaíso to inform the contents of the claim. Reports were made by both required authorities. Parties: Ilustre Municipalidad de Quintero with Enap Refinerías S.A. et al. Case N°: D-13-2014. Second Environmental Court of Santiago Subject matter: remedying of environmental damage Amount: Undefined. Brief record of facts: the hydrocarbons spillage in the Quintero bay caused by tanker Mimosa while being assisted by an ocean-going tug on September 24, 2014 in Maritime Terminal Monoboya ENAP resulted in environmental damage. 85

ENAP AND SUBSIDIARIES Current status: Closing allegations are made. The municipality of Puchuncaví took part an additional party. This was accepted by the court. The municipality of Quintero requested an expert opinion in accordance with Article 42 of Law 20,600. The court refused the reason due to the status of the case, as it has not yet been scheduled to hear a judgment.

Parties: Ilustre Municipalidad de Quintero with Enap Refinerías S.A. RIT N °: D-29-2016. Second environmental court. Subject: Statement and repair of environmental damage action. Amount: Undetermined. Brief description of facts: Environmental demand is presented by the municipality of Quintero as result of the oil spill in the Quintero Bay caused by the b/t Ikaros, as a result of strong winds making the vessel lose position and cut spies. Current status: On December 20, 2017, the parties submitted to judicial approval the transaction between them. On December 21, 2017 the conciliation and trial hearing was held, which was suspended by the Court to review the transaction. By means of resolution dated January 5, 2018, the court made observations on the transaction. Parties: Union of small fishermen, independent workers, divers mariscadores and Caleta Horcón similar bouquets and others with Aes Gener S.A. and others. RIT N °: D-30-2016. Second environmental court. Amount: Undetermined Matter: Declaration and repair of environmental damage action. Brief description of facts: On July 1, 2016, the parties filed a lawsuit of Declaration and material repair of so-called environmental damage generated by firms located in the Ventanas area, 5th Region, during all of the years they have worked in the area to the environmental Court. Among these companies, ENAP is one of the defendants through its subsidiary, Enap Refinerías S.A. Current status: On December 6, 2017, the plaintiff submitted to the court the preliminary agreement bases, on which the parties had agreed. The court ordered the suspension of the proceeding and the notification of the resolution that entered the case for the time allowed for producing evidence to one of the defendants. Parties: Enap Refinerías S.A. with Linde Gas de Chile S.A. Section N°: 2129-2014. CAM Arbitral Tribunal Matter: Forced Compliance of contract with compensation for damages. Amount: US$ 70 million Brief description of the Facts: Contract for the supply of hydrogen and steam currently in effect between the parties, has been breached by Linde Gas de Chile S.A. with regards to determining the value of the nitrogen and to the amounts of steam to be delivered. Current status: A new suspension of the proceeding has been requested by agreement for 3 months from July 10, 2017. The parties requested a new extension of the suspension of the proceeding until January 18, 2018. Parties: ENAP Refinerías S.A. vs. Innergy Soluciones Energéticas S.A. Case N°: 2.215 – 2014. Santiago Arbitration and Mediation Center Subject matter: Cancellation of contract and damage compensation Amount: ThUS$ 12,000 Approximately. Brief record of facts: Enap Refinerías S.A. files a complaint against Innergy Soluciones Energéticas, in relation to non- compliance with Contracts 1 and 2 of gas supply, requesting the termination of both contracts, plus the payment of compensation for breach of contract by Innergy. Innergy in contravention brings a claim against ENAP requesting the payment of (approx.) USD MM6 for unpaid fixed charges of both contracts plus amounts allegedly indebted by ERSA. Current status: Period allowed for producing evidence. Pending scheduling of witness hearings.

ENAP AND SUBSIDIARIES Parties: Harry Andrés Jerez Díaz representing Mr. Jacobo Silva Silva and Others with PGC, owner and owner of the B / T PGC Ikaros Nassau and Enap Refinerías S.A. Role No: 7-2016. Minister of the Court of Appeals of Valparaiso Mr. Cancino, acting as Single Judge. Matter: Compensation for damages according to the Law of Navigation. Amount: ThUS$ 33,300.- Brief summary of the facts: Civil action has been taken for compensation of damages regulated by article 153 of the Law of Navigation, to obtain compensation for loss of profit and moral damages allegedly suffered by fishermen and others due to the pollution caused on May 15, 2016 from the oil spill in the bay of Quintero. This resulted from B / T Ikaros loading product in the Maritime Terminal Multicrudo. Current status: On October 11, 2017, the incident of prior and special pronouncement promoted by ERSA was accepted, ordering the judge to try case 8-2016 jointly with the record of the case. The case is now called trial number 7 -2016 Volume II, and is suspended until it is certified that both cases have reached the same state.

Parties: Francisco Antonio Acevedo Medina et al. (857) and ENAP Refinerias S.A. Number of plaintiffs: 858 Trial number: 1- 2017 (moreover, it is requested to try jointly trial number 17 – 2014; judge of the Court of Appeals of Valparaíso, Mr. Pablo Droppelmann Cuneo) Subject: Compensation for damage, Decree Law No. 2,222 “Navigation Act”. Amount: ThUS$ 10,000. Brief record of events: Civil claim for compensation for alleged damage due to pollution caused by spill of hydrocarbons in the bay of Quintero by the B/T Mimosa at a time when it was performing operations of unloading to single buoy moorings , on September 24, 2014 at the ERSA Maritime Terminal Current status: On October 2, 2017, the judge, acting as the Court of First Instance, ordered to try this case jointly with Case No. 17-2014 Volume IV, renamed as Case No. 17-2014 Volume XII, and also ordered the suspension of this case and the joined ones until it is certified that all reach the same state. Parties: Jorge Adrian Fenero et al (149) and Empire Navigation Inc. (shipping line and owner and/or shipowners of M/N LR Mimosa, Gener Mercado Dimaculangan, Captain of M/N LR Mimosa and ENAP Refinerías S.A. Number of plaintiffs: 150 Trial number: 2- 2017 (moreover, it is requested to try jointly trial number17 – 2014; judge of the Court of Appeals of Valparaíso, Mr. Pablo Droppelmann Cuneo) Subject: Compensation for damage, Decree Law No. 2,222 “Navigation Act”. Amount: ThUS$ 3,500 Brief record of events: Civil claim for compensation for alleged damage due to pollution caused by spill of hydrocarbons in the bay of Quintero by the B/T Mimosa at a time when it was performing operations of unloading to single buoy moorings , on September 24, 2014 at the ERSA Maritime Terminal Current status: On October 2, 2017, the judge, acting as the Court of First Instance, ordered to try this case jointly with Case No. 17-2014 Volume IV, renamed as Case No. 17-2014 Volume XIII, and also ordered the suspension of this case and the joined ones until it is certified that all reach the same state.

ENAP AND SUBSIDIARIES Parties: Pesquera Quintero S.A. and Remolcadores Ultratug and others (LR Mimosa Inc., Empire Navigation Inv., Gener Mercado Dimaculangan and ENAP Refinerías S.A.). Number of plaintiffs: 1 Trial number: 3- 2017. Full Court of Appeals of Valparaíso applied Article 160 to try the case jointly with the others followed before the judge of first instance, Mr. Pablo Droppelmann Cuneo, due to oil spill in Quintero Bay on September 24, 2014. Subject: Compensation for damage, Decree Law No. 2,222 “Navigation Act”. Amount: ThUS$ 2,000 Brief record of events: Civil claim for compensation for alleged damage due to pollution caused by spill of hydrocarbons in the bay of Quintero by the B/T Mimosa at a time when it was performing operations of unloading to single buoy moorings , on September 24, 2014 at the ERSA Maritime Terminal Current status: On October 17, 2017, the judge, acting as the Court of First Instance, ordered to try this case jointly with Case No. 17-2014 Volume IV, renamed as Case No. 17-2014 Volume XIV, and also ordered the suspension of this case and the joined ones until it is certified that all reach the same state.

Enap Refinerías S.A. (Biobío) Parties: Mendoza Mendoza, Luis vs ENAP Refinerías S.A. et al. Case: 4-2007; Judge of the Court of Appeals of Concepcion, Ms. Juana Godoy. All compensation claims were accumulated to this cause filed and notified in time and form. The procedure followed in the referred lawsuit corresponds to a special plenary action of article 153, Navigation Law. Brief record of facts: A compensation for damages is requested based on the extra contractual liability as a consequence of a spillage that took place in San Vicente Bay. Current status: ERSA filed an appeal for annulment and an appeal on May 12, 2017. Both were accepted to be processed. The plaintiff filed an assent appeal in order to increase the amounts of the sentence. Said contingency may amount to CLP$6,517.108 (equivalent to ThUS$10,601), if the appeal is fully accepted. The appeals have been declared admissible, but they have not been entered the weekly list of cases yet for their oral hearing and decision of the court. Parties: Carte vs ENAP Refinerías S.A. ENAP et al. Case: 1999-2014; 1st Civil Court of Talcahuano Subject: Claim for damages. Amount: ThUS$ 38,373.- Brief account of the facts: Neighbors to the ERSA-Hualpén plant, after processing a preliminary injunction to show documents, filed a claim for compensation for non-contractual civil damages for moral damages. Current Status: On August 28, 2017 after processing the appeal and in order to avoid possible annulments, the court ordered to personally notify the status of the trial to the plaintiffs that have become adults to date. Finally, on October 6, 2017, based on a filing by the plaintiff on September 30, 2016, the court of first instance stated that the resolution that accepted the dilatory exceptions was partially complied. Said resolution was subject to an application for reconsideration and an additional appeal by the Company in October 2017.

ENAP AND SUBSIDIARIES

Commercial Commitments:

The Company has the following commercial commitments related to its operations:

GNL CHILE S.A.

On May 31, 2007, ENAP Refinerías S.A. signed a natural gas sales agreement (GSA) with GNL Chile S.A. This contract guarantees the LNG supply for the operation of its Aconcagua Refinery in Concón. The supply of LNG started in August 2009. The contract obligations assumed by ENAP Refinerías S.A. under the LNG Supply Contract have been guaranteed by its parent company, Empresa Nacional del Petróleo.

This contract has a 21-year term, starting on the Early Commercial Operation Date (ECOD), allowing ERSA unrestricted access to 4.3 million cubic meters or natural regasified gas per day. On December 14, 2012, a new amendment to the Gas Sales Agreement was signed, caused by the signing of a new GNL supply agreement on the same date between GNL Chile S.A. and BG Trading, its LNG supplier. This amendment allows ENAP Refinerías S.A. to have access to quantities of natural gas under new commercial conditions from January 1, 2013. These commercial conditions establish a Take or Pay clause of 29,693,766 MMBtu’s annually.

To obtain the designated daily capacity, both of regasified natural gas, Enap Refinerías S.A. acquired the commitment to pay annually for the duration of the Gas Sales Agreement around THUS$ 55,000 to GNL Chile S.A., which from May 31, 2007 holds the Terminal Use Agreement with GNL Quintero S.A. Under this scheme, the annual amount specified is subsequently paid by GNL Chile S.A. to GNL Quintero S.A.

Restrictions: ENAP - At December 31, 2017 and 2016, the Company has no restrictions or covenants to comply with its creditor banks and public bonds.

Enap Sipetrol Argentina S.A. - According to applicable Argentine legislation the company must allocate 5% of the year’s income to building a statutory reserve, which is an account forming part of the net shareholders’ equity, until such reserve is equal to 20% of the adjusted paid-in capital. Pledges from third parties: ENAP - On December 31, 2017 and 2016 ENAP Group has not received pledges from third parties.

ENAP AND SUBSIDIARIES

41. GUARANTEES COMMITTED WITH THIRD PARTIES

Direct Guarantees:

Creditor of the guarantee Description Type of Guarantee ThUS$

Bank of Nova Scotia Guarantee Financial Loan (Guarantee granted by ENAP to the subsidiary Enap Sipetrol Argentina S.A.) Personal guarantee on first 80,000 demand BBVA Guarantee Financial Loan (Guarantee granted by ENAP to the subsidiary Enap Sipetrol Argentina S.A.) Personal guarantee on first 75,000 demand Citibank Guarantee Financial Loan (Guarantee granted by ENAP to the subsidiary Enap Sipetrol Argentina S.A.) Personal guarantee on first 75,000 demand BG GLOBAL ENERGY-GNL Guarantees full compliance with the contract of sale of Liquefied Natural Gas, valid until march 02, 2018. Letter of Credit 21,682

BG GLOBAL ENERGY-GNL Guarantees full compliance with the contract of sale of Liquefied Natural Gas, valid until January 30, 2018. Letter of Credit 19,442

Secretaría de Hidrocarburos de Issuer: EOP Operaciones Petroleras S.A. Benificiary: Secretaría de Hidrocarburos de Ecuador. Guarantees 20% of the Stand-by Letter of Credit as 2,975 Ecuador minimum investments of Phase I of Exploration of the Service Contract for the Hydrocarbon Exploration and Exploitation counter-guarantee for the in Block 28, Ecuador, valid until May 13, 2018. issue of guarantee abroad

Ministry of Energy Guarantees faithful performance of investment and exploration work committed to CEOP Coirón Block. Valid until Bank guarantee in foreign 2,891 Novembre 17, 2018. currency

BG GLOBAL ENERGY-GNL Guarantees full compliance with the contract of sale of Liquefied Natural Gas, valid until January 31, 2018. Letter of Credit 1,500

Ministry of Energy Guarantees the abandonment of CEOP Coirón Block well. Valid until May 23, 2018. Bank guarantee in foreign 946 currency

Ministry of Energy Guarantees the abandonment of CEOP Cuapolican Block well. Valid until June 28, 2018. Bank guarantee in foreign 643 currency

Miscellaneous creditors Miscellaneous minor guarantees. (ENAP, ERSA and Enap Sipetrol S.A.) Miscellaneous 925

Banco BNP Paribas (*) Pledge on 22,199,866 shares of Productora de Diesel S.A. owned by ENAP to guarantee the repayment of credit Pledge of shares obtained to finance the project, which is valid until 2017. - Citibank (*) Pledge of 1,010,000 shares of Energía Concón S.A. shares owned by ENAP Refinerias S.A., guaranteeing the payment Pledge of shares of the loan obtained to finance the project which is valid until 2020. - (*) See Note N° 23

42. CONSOLIDATION SCOPE a) Below is a detail of the percentage interest held in companies that have been consolidated:

Functional Ownership percentage Percentage with voting rights Company Country currency 12.31.2017 12.31.2016 12.31.2017 12.31.2016 Relationship Enap Refinerías S.A. Chile Dollar 99.98% 99.98% 99.98% 99.98% Direct subsidiary Enap Sipetrol S.A. Chile Dollar 100% 100% 100% 100% Direct subsidiary Petro Servicios Corp. S.A. Argentina Dollar 100% 100% 100% 100% Filial Indirecta Gas de Chile S.A. Chile Chilean Peso 100% 100% 100% 100% Indirect subsidiary Petrosul S.A. (1) Chile Dollar - 100% - 100% Merger in 2017 Energía Concón S.A. Chile Dollar 100% 100% 100% 100% Indirect subsidiary Productora de Diesel S.A. (1) Chile Dollar - 100% - 100% Merger in 2017 Cía. de Hidrógeno del Bío - Bío S.A. (1) Chile Dollar 100% 10% 100% 10% Indirect subsidiary Petropower Energía Ltda. Chile Dollar 100% 100% 100% 100% Indirect subsidiary Enap Sipetrol Argentina S.A. Argentina Dollar 100% 100% 100% 100% Indirect subsidiary Sipetrol International S.A. Uruguay Dollar 100% 100% 100% 100% Indirect subsidiary EOP Operaciones Petroleras S.A. Ecuador Dollar 100% 100% 100% 100% Indirect subsidiary Petrofaro S.A. Argentina Dollar 50% 100% 50% 100% Indirect subsidiary (1) See note 3.1b).

ENAP AND SUBSIDIARIES b) The business of consolidated companies:

Company Activity

Enap Refinerías S.A. Purchase and refining of crude oil and by-products Enap Sipetrol S.A. Exploration, production and marketing of hydrocarbons and render advisory services in Chile and abroad Petro Servicios Corp. S.A. Petroleum services Gas de Chile S.A. Import, export and operation in general of all kinds of fuels and by-products, specially natural gas in any of its phases. Energía Concón S.A. Feasibility study Cía. de Hidrógeno del Bío - Bío S.A. Construction and operation of an industrial plant, located in the facilities of Enap Refinerías S.A., in the district of Talcahuano and destined to the production of high quality hydrogen Petropower Energía Ltda. Construction and operation of a plant for the production of energy and steam. Enap Sipetrol Argentina S.A. Generation of Uniones Transitorias de Empresas (UTE) [similar to Joint Ventures], collaboration groups, joint venture, consortiums or other kinds of associations to explore, exploit and transport hydrocarbons Sipetrol International S.A. Make and administrate investments. One or more of the activities related to the exploration, exploitation or benefits from fields containing hydrocarbons. EOP Operaciones Petroleras S.A. Surface geological studies, and drilling of exploratory well. Petrofaro S.A. Exploration and exploitation of hydrocarbons, their marketing and industrialization

c) Summary financial information on subsidiaries, including the structured entity

As of December 31, 2017 Assets Liabilities Income Non- Non- (loss) of the Current current Coriente current Revenues Expenses year Company ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Enap Refinerías S.A. 1,704,946 2,296,562 3,003,508 158,124 5,755,489 (5,378,041) 75,261 Enap Sipetrol S.A. 328,754 863,176 338,348 231,751 379,487 (265,099) 12,351 Petro Servicios Corp. S.A. 339 - - - - - (65) Gas de Chile S.A. 713 5,065 43 - - - 270 Petrosul S.A. - - - - 410 - 318 Energía Concón S.A. 102,009 163,030 190,232 17,643 14,218 - 3,301 Productora de Diesel S.A. - - - - 254 - 160 Cía. de Hidrógeno del Bío - Bío S.A. 3,575 8,228 1,610 2,609 2,789 (1,210) 1,131 Petropower Energía Ltda. 85,906 61,714 44,190 15,712 49,383 (35,931) 11,743 Enap Sipetrol Argentina S.A. 179,723 424,097 305,078 223,465 196,601 (186,391) (46,204) Sipetrol International S.A. 87,704 97,394 7,362 - 58,859 (15,500) 41,770 EOP Operaciones Petroleras S.A. 1,119 781 370 - - (1) (1,025)

As of December 31, 2016 Assets Liabilities Income Non- Non- (loss) of the Current current Current current Revenues Expenses year Company ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

Enap Refinerías S.A. 1,206,366 2,023,779 2,374,860 191,948 4,601,938 (4,181,529) 233,421 Enap Sipetrol S.A. 222,056 754,642 161,469 205,630 386,457 (271,009) 25,544 Petro Servicios Corp. S.A. 437 1 26 - - - (88) Gas de Chile S.A. 644 4,442 36 - - - 550 Petrosul S.A. 18,310 7,410 4,932 3,212 847 - 2,033 Energía Concón S.A. 90,650 196,815 88,882 147,128 16,481 - 3,134 Productora de Diesel S.A. 27,442 11,898 18,728 1,741 1,288 - 711 Cía. de Hidrógeno del Bío - Bío S.A. 4,035 10,873 1,323 3,564 3,135 (1,210) 1,398 Petropower Energía Ltda. 37,327 61,940 5,552 17,695 - - - Enap Sipetrol Argentina S.A. 88,780 378,197 147,494 197,997 227,370 (189,692) (7,197) Sipetrol International S.A. 99,914 108,560 7,598 - 61,135 (21,671) 26,225 EOP Operaciones Petroleras S.A. 1,079 667 172 - - (1) (1,015) Petrofaro S.A. 5,445 6,398 1,107 1,506 4,155 (1,624) 1,767 91

ENAP AND SUBSIDIARIES

43. SUBSEQUENT EVENTS

Between January 1, 2018 and the date of issuance of these consolidated financial statements, there have been no subsequent events that could significantly affect their reasonableness.

DECLARACIÓN DE RESPONSABILIDAD

Los abajo suscritos, miembros del Directorio y Gerente General de la Empresa Nacional del Petróleo, en conformidad con las normas establecidas por la Superintendencia de Valores y Seguros, declaran que la información contenida en la Memoria y Estados Financieros Anuales 2017 es veraz y completa.

Santiago, marzo de 2018.