Colombia paves way for weekly, daily gas contracts amid deficit fears

Colombian energy sector regulator Creg has proposed greater flexibility for wholesale gas contracts in an effort to allay fears of imminent shortages. 

In a draft resolution, the entity raised the possibility of weekly contracts for firm supply, down from the current minimum of a month.

Daily contracts would be allowed on weekends and public holidays. 

"It is necessary to take short-term implementation measures that seek to facilitate greater supply offer from primary market sellers to meet short-term demand needs," Creg said in the document. 

It added that the changes would be particularly beneficial for thermoelectric power generators, whose demand for gas can oscillate quickly and unexpectedly. 

Creg said the changes would also simplify terms for direct negotiations between sellers and buyers of both domestic and imported gas, ensuring more predictable pricing and limiting risks for buyers.

"The shorter duration of the contracts and the shorter lead times ... seek to encourage purchases of imported gas with a sale price that does not require indexers that transfer a greater risk to buyers in the primary market," Creg said. 

According to industry group Naturgas, Colombia faces a natural gas shortfall as soon as December, leading to possible price hikes and rationing. 

Data published by natural gas market administrator BMC shows the country will have a natural gas deficit of 76.5BBTU/d (billion British thermal units a day) in 2025 and 190BBTU/d in 2026.

The situation has been exacerbated by a sharp decline in gas reserves, which fell to 2.37Tf3 (trillion cubic feet) at the end of 2023 from 2.82Tf3 a year earlier, according to official figures.