Colombia's LNG expansion: A matter of urgency?

Colombia must push ahead with plans to build a second LNG import terminal to avoid a looming natural gas shortage, a leading consultant told BNamericas.

Colombia's first LNG facility – the SPEC plant on the Caribbean coast – began operating in 2016 but there are fears it will soon be insufficient to meet demand from thermoelectric generators, refineries, industries, households and the transport segment. 

According to Alejandro Lucio, director and founder of consultancy firm Óptima Consultores, Colombia's increasing reliance on gas-fired thermopower as a backup for hydroelectric plants has made LNG vital to the country's energy security.

"Low LNG prices have allowed thermoelectric plants to generate electricity with very competitive prices during the current drought," Lucio said a telephone interview.  

"What is happening this year proves that these LNG facilities are required and necessary," added the Bogotá-based expert, who has worked with the Colombian government on energy policy proposals. 

Earmarked for the port of Buenaventura on Colombia's Pacific coast, the proposed new LNG terminal would regasify up to 400Mf3/d and store 170,000m3 of gas. 

The project includes an associated 75km pipeline connecting the facility to Yumbo on the northern outskirts of Cali, Colombia's third largest city.

The import terminal, regasification plant and storage unit are expected to require investments of US$400mn while the pipeline has been budgeted at US$260mn. 

Officials have said that a tender for the construction and operation of the infrastructure will be launched by August, with civil works expected to begin early in 2021.

According to deputy energy minister Diego Mesa, the project will be completed in early 2024 – six months later than previously planned – and just in time to address an expected natural gas shortfall. 

However the initiative has drawn opposition from some local producers, who fear they won't have a market for their gas. 

There have also been concerns about how the government will implement a tariff structure that is fair to investors, transporters and consumers. 

"There's a lot of debate. Producers have said there will be enough gas from local fields and have warned that users will be forced to pay for infrastructure that will not be needed," Lucio said. "But the numbers show that there is going to be a gas deficit somewhere around 2024 and maybe earlier. 

"The need for another regasification plant is obvious, especially in the western and southwestern parts of the country, which are far from production fields. There needs to be clarification about who is going to pay for the infrastructure and how it will be charged."

The full interview with Lucio can be seen here and here.