Colombia seeking to fast-track US$700mn Pacific LNG plans

Investors will be offered financial incentives to accelerate the development of Colombia's US$700mn Pacific LNG import project, as the government moves to avert a looming natural gas shortage. 

Slated for the port of Buenaventura in Valle del Cauca department, the new infrastructure would regasify up to 400Mf3/d and store 170,000m3 of natural gas. The initiative also includes an associated pipeline that would connect the import terminal to Yumbo, on the northern outskirts of Cali.  

UPME head Christian Jaramillo said during his participation in the Colombia Investment Summit on Friday that a competitive bidding process would likely be launched "in the next two weeks" and finalized in the first quarter of next year.

"We're in the last phase of a discussion related to when the [operational] starting date will be," Jaramillo said during the online event. 

"We will provide incentives for the early entry into operation. There will be additional revenue. And it will be regulated, meaning there won't be any risk for the investor."

Jaramillo did not give details about the additional payments or where they would come from. 

NEW TIMETABLE 

He revealed the government had reconsidered the construction timetable, estimating the project would come online "four or five years after the contract is awarded." 

Officials previously forecast an operational startup in early 2024, when the government also expects Colombian gas demand to exceed supply from existing sources. 

Jaramillo said up to 42% of remuneration for the project could be in US dollars, reducing investor exposure to exchange rate risks.  

He also provided additional details about the pipeline, which will transport gas to off-takers in Cali and other neighboring areas.  

According to Jaramillo, the pipeline will have a diameter of 30 inches and span 110km, traversing the Cordillera Occidental, the westernmost flank of the Colombian Andes. 

Among the companies to have expressed interest in the tender are Grupo Energía Bogotá (GEB) subsidiary TGI and Barranquilla-based Promigas, which has a majority stake in Colombia's only existing LNG import terminal – the Sociedad Portuaria el Cayao (SPEC) facility on the Caribbean coast 

GEB chief executive Juan Ricardo Ortega told BNamericas last week that TGI would only consider a bid if steps were taken to mitigate risks to investors, such as the threat of delays related to community opposition. 

During a public consultation for draft terms of reference, companies expressed doubt over who would bear the cost of the project and how. In addition, local producers have warned they could be left without a market for their gas. 

NEW TRANSMISSION PROJECTS

Meanwhile, Jaramillo said UPME planned to publish a new power grid expansion plan later this year. 

The document is expected to outline five major transmission projects, including a new high-voltage connection to wind farms under construction in the northern department of La Guajira. 

In the same discussion panel, Pablo Mejía, the transport ministry's director of infrastructure, said he was working with authorities to address logistical hurdles facing energy project owners in the Caribbean region.   

Wind developers have complained that the delivery of extra-heavy materials has been stalled by limited road capacity. 

"The biggest challenge has been to guarantee that the infrastructure has the necessary availability and capability," Mejía said. "We are making every effort to make sure that these projects can be developed without any logistical problems."