The Company

Law 20,285 on access to public informationENAP

ENAP’s Background Permanent and Publicly Available, Pursuant to the stipulations of Tenth Article, Law 20,285

Pertinent Regulatory Framework

Empresa Nacional del Petróleo (ENAP) is a company owned by the State, created by Law N° 9,618, dated June 19, 1950.

The organic standards that apply to ENAP are contained in said Law N° 9.618, which refunded text, coordinated and systemized, was established through the Decree in Force of Law (DFL) Nº 1, of the Ministry of Mining, published in the Official Gazette dated April 24, 1987. Such text has been modified by Law Nº 18,888, published in the Official Gazette dated January 6, 1990; by Law Nº 19,031, published in the Official Gazette dated January 19, 1991; and by Law 19,657, published in the Official Gazette dated January 7, 2000.

ENAP’s by-laws were approved by Supreme Decree N°1,208, dated October 10, 1950, by the then Ministry of Economy and Commerce.

ENAP’s purpose is defined in the second and third paragraphs of Article 2º of Law Nº9.618:

“Empresa Nacional del Petróleo shall be entitled to carry out exploration, exploitation or profitable activities of ores containing hydrocarbons, inside or outside the nation’s territory, either directly or through companies in which it participates, or in association with third parties. In the event the company carries out such activities inside the nation’s territory through companies in which it participates or through third parties, the company shall do it by means of administrative grants or special operation agreements, with the requirements and under the conditions the President of the Republic established in the corresponding Supreme Decree”.

“Empresa Nacional del Petróleo may also, and not exclusively, either directly or through companies in which it participates, store, transport, transform, treat, process, refine, sell and, in general, market oil or gas, as well as develop any other activity related to hydrocarbons, its products and derivates. Also, the Company shall, on the account of the State, receive, re-acquire, sell and market in any manner hydrocarbons originated by special operation agreements, and carry out the rest of the tasks and rights entrusted by the Supreme Decree and the corresponding agreement, either with or without the Company’s participation. Finally, the Company will be entitled to participate, through companies in which its participation is lower than 50% the company’s capital, in activities related to geothermal energy, being entitled for such purposes to file grants applications, to participate at biddings, to render any kind of services to grantees for the execution of the geothermal energy exploration and exploitation tasks and, in general, to carry out all the industrial and commercial activities related to energy exploration and exploitation. The purpose of such companies may be the use of underground water appearing in the geothermal exploration and exploitation tasks.”

According to its by-laws, ENAP is entitled to “carry out any industrial, agricultural, mining, commercial, financial or any kind of activity that serves to the achievement of its purposes, either directly or in association with third parties” (article 4º, letter h); and, “in general, to carry out all the operations and enter into any kind of actions and agreements, either civil or commercial, or of any nature, directly or indirectly related to the exploration and exploitation of oil ores, or with the refining, transportation, storage, utilization or sale of oil, its derivates or by-products, obtained or acquired in the development of its activities, without limitations.” (Art. 4, letter i).

Pursuant to the stipulations of Article 19 Nº 21 of the Political Constitution of the Republic of Chile, the entrepreneurial activities carried out by ENAP are subject to the legislation that applies for private companies, without prejudice of the exceptions established by the law for justified reasons.

As a State Company created by law, ENAP is ruled by the standards of Title I of Law N°18,575, Organic Constitutional on the General Bases for the State’s Administration. By virtue of the above, the principles of lawfulness, continuity and permanence, responsibility, efficiency and action unit, hierarchy and discipline and the standards on administrative probity contained in such legal body apply to the Company.

Also, ENAP is subject to a series of public law standards that apply to the State’s companies, and to the companies in which the State, its institutions, entities or companies participation is equal to or higher than 50%.

This way, for example, ENAP is subject to the financial, accounting, administrative and disciplinary control of the Republic’s General Comptroller. Regarding its budgetary and financial regime, ENAP is ruled by the stipulations of Article 11 of Law N°18,196. The stipulations of Articles 29 and 44, letter a) of Decree Law N°1,263 of 1975 on the State’s Financial Administration, referred to the powers of the Ministry of finance to instruct profit transfers and advances, and to the requirement of obtaining a previous authorization by such Ministry to engage public credit, either through direct indebtedness, guarantees or other kind, also apply to ENAP. According to the stipulations of Article 3° of Decree Law N°1,056 of 1975, ENAP is only entitled to make capital contributions to companies, to make deposits or to acquire capitals market instruments with the previous authorization by the Ministry of Finance.

Since October 4, 2002, ENAP is voluntarily registered with number 783 in the Securities Record of the Securities and Insurances Superintendency, consequently it is subject to the control and supervision of such entity. For this reason, the standards of Law N°18.045 on Securities Market, and DL N°3,538 that created such Superintendency, apply to the Company in their relevant aspects.

According to the stipulations of the Company’s Organic Law, the labor relationship between ENAP and its employees is regulated by the Labor Code.