GEB issues Colombia gas supply warning

Grupo Energía Bogotá (GEB) is pushing ahead with efforts to guarantee gas supply in Colombia after a government decision to shelve plans for the Pacific regasification terminal, executives said on Thursday. 

In a quarterly earnings call, GEB chief executive Juan Ricardo Ortega said the country must continue to pursue natural gas expansion projects despite booming investments in solar and wind developments. 

"What Colombia must have as a priority is a certainty in the supply of gas," Ortega said, highlighting the importance of backup gas-fired power plants in a country where hydropower comprises more than 75% of the energy mix. 

"It is very likely that the El Niño [drought] cycle will occur next year or the year after, and it could be severe. The country clearly needs to have a guarantee of access to gas."

The government aborted a tender for a proposed liquefied natural gas (LNG) plant at the Pacific port of Buenaventura and an associated pipeline last October because of tepid interest. 

Potential investors and existing energy stakeholders had expressed doubt over who would bear the cost of the project and how prices would be impacted. 

Despite these concerns, Ortega said a new LNG import project remained a viable option in Colombia, if structured correctly.

"We obviously think the Pacific LNG project makes sense because transportation costs make energy costs uneven in different parts of the country," Ortega said.

GEB chief financial officer Jorge Tabares added that the Cartagena LNG plant – currently Colombia's only gas import facility – might not be enough to guarantee future demand for the fossil fuel. 

"The Pacific basin offers access to different markets than the Atlantic basin. Having another regasification plant [has] technical validity and would help guarantee energy sufficiency and reliability. The conversation is now not about the Pacific regasification plant as it was previously structured, but with changes," he said.

Ortega added that Venezuela was positioning itself as a major gas player following a decision by the US government to allow Chevron to resume operations in the country. 

"Venezuela is going to have an important role," he said. "We're seeing that the United States now has a different agenda for the country and Chevron is already looking at the possibility of developing one of the largest proven gas areas off Venezuela's coast."

Meanwhile, GEB said it is on track to allocate US$370mn in capital investments this year, including US$118mn in transmission, US$107mn in Peruvian gas unit Cálidda and US$55mn in local gas transporter TGI.

Transmission will continue to be the company's main focus in the medium term, as it projects capital spending of US$341mn in 2023, US$218mn in 2024 and US$169mn in 2025.