The challenge facing Colombia's 2nd LNG terminal

The Colombian government must outline a clear financing plan for the proposed Pacific LNG project before a public tender process is launched, a top official told BNamericas.

Earmarked for the Pacific port of Buenaventura (pictured) in Valle del Cauca department, the facility will boast capacity of 400Mf3/d (11M3/d), requiring investment of around US$400mn.

According to the project blueprint, the plant will serve a 2GW thermoelectric station and will be connected to Colombia's national gas transport network via a new 75km pipeline to the northern outskirts of Cali, the country's third largest city. Investment in the pipeline is estimated at US$200mn.

"The biggest challenge is deciding who is going to pay," said Ricardo Ramírez, the director of energy ministry planning unit UPME.

"It's important to know that. We know that it will be the final consumer. What we're analyzing is whether they're all of the country's consumers or just some, like the electricity sector or certain regions. That's what we are analyzing," he added.

Ramírez said that one of the options was to include the project in the reliability charge program, which remunerates power generators for investments that guarantee firm energy.

He added that gas processed at Buenaventura could be used for all purposes, including power generators, households, oilfield operators, refineries and transport.

Colombia's only existing LNG project – the 400Mf3/d Cartagena terminal on the Atlantic coast – is for the exclusive use of thermoelectric generators.

The government aims to issue a call for expressions of interest in the new project later this year, with bid envelopes slated to be opened in the first half of 2020, according to UMPE documents. The LNG terminal and pipeline are expected to begin operating in 2023.

In May, Colombian gas transporter Transportadora de Gas Internacional (TGI) said it reached an agreement with an international partner to submit a joint proposal for the both the plant and the pipeline.

The full interview with Ramírez can be seen here.