Colombia's Andes Energy eyeing 'strategic' LNG project partner

Colombia's Andes Energy is in talks with potential partners to move forward with an LNG import terminal and an associated thermoelectric power plant, the company's chairman told BNamericas.

The Cali-based developer has completed the project's initial design stage and hopes to secure another stakeholder in the coming months, Manuel Tenorio, who is also Andes Energy's co-founder, said in a telephone interview on Friday. 

"We are having conversations with two potential strategic partners," Tenorio said, adding that he could not reveal the names of the parties due to confidentiality agreements. 

In its first phase, the Andes Energy Terminal would include a 145,000m3 (5.1Mf3) floating storage unit and a land-based LNG terminal capable of regasifying 150Mf3/d (million cubic feet per day) in Buenaventura, on Colombia's Pacific coast. Both facilities could be expanded in the future as demand increases.

The infrastructure would be connected to a thermoelectric power plant initially boasting simple-cycle capacity of 270MW that would later be expanded to 400MW utilizing combined cycle technology. 

Investment in the first stage – including the regasification terminal and power plant – is expected to reach US$350mn.

The project also includes a gas pipeline component that would serve industrial and thermoelectric offtakers in Cali and its surrounding metropolitan area, as well as other consumer markets in southwestern Colombia.

"In the first phase, gas will be supplied via virtual pipeline, or truck, while the pipeline becomes operational," Tenorio said. "There are several alternatives, including the option of building a new pipeline or utilizing an existing polyduct belonging to [state oil company Ecopetrol’s midstream unit] Cenit."

On Thursday, global engineering and consulting firm Black & Veatch said it completed a feasibility study for the project.

The study included an assessment of site suitability, design needs, costs, financial viability, financing options and construction plans, among other factors, Black & Veatch said in a statement.  

News of the project's progress coincides with fears of an imminent natural gas shortage in Colombia. 

According to Ecopetrol, the country faces a supply deficit of 131BBTU/d (billion British thermal units) next year and 150-200BBTU/d in 2026. 

The government is considering several options to boost gas supply in the short term, including reactivating a disused pipeline to import the fuel from Venezuela. 

"The solutions of imported gas from Venezuela or the exploitation of offshore fields in the Colombian Caribbean are not practical or realistic solutions to this crisis," Tenorio said.

"Unless LNG import and regasification capacity is expanded in the near term with new infrastructure in Buenaventura, the Colombian industry and households, particularly in the southwest, will suffer the consequences of this looming shortage of gas. The regasification plant on the Pacific coast is an undeniable need, and we’re in a privileged position to be able to deliver the solution to this challenge."

Colombia's only current gas import facility is the SPEC terminal in Cartagena, which has a regasification capacity of 400Mf3/d.

According to Tenorio, the Andes Energy Terminal's importance has been heightened by the government's unsuccessful attempt to attract investor interest in its long-mooted Pacific LNG regasification project. 

"This project is ready," Tenorio said. "There is no need [for the government] to launch others because we have structured it in a way that is bankable, because the other [Pacific LNG] project is not easily financed."

He said pending environmental licenses for the project were on track to be approved in around 12 months, allowing for the plant's construction to be completed in 2026. 

Andes Energy aims to secure electricity offtake contracts for the thermoelectric plant in Colombia's next auction for firm energy obligations.

The full interview with Tenorio will be published in the coming days.