Concern Over Natural Gas Supply Stability Grows After Public Tender for Plant in Colombian Pacific Region Is Called Off Again

On August 28, the Mining and Energy Planning Unit (UPME) declared void the public tender to build and manage a major liquefied natural gas (LNG) terminal on the Colombian Pacific coast, a project known as Regasificadora del Pacífico. 

This marks the second time that a similar call for bids has been called off, and now many fear for the long-term future of the gas supply in a region that lacks reserves, infrastructure, and stability.

The public tender, which the UPME unit of the Colombian Ministry of Mines and Energy voided with Resolution #000588 of 2023, was canceled due to the fact that it included the participation of just one bidder, Buenavegas consortium, and because that offer did not meet the established requirements. As a result, UPME closed a call for bids that had been opened on August 10, 2023 and terminated the Public Call UPME GN 001-2022.

The government agency was looking for an “investor for the provision of LNG storage services, processing, transportation of natural gas, and associated services of the natural gas importing infrastructure on the Colombian Pacific coast.” This project was intended to operate by receiving foreign LNG ships that would offload cargo to the terminal, which in turn would transform the natural gas from a liquid to a gaseous state in order to deliver it to the supply companies in the Pacific region.

“The results obtained from the latest volumetric balance of natural gas prepared by UPME for the period 2022–2031 shows that there will be a deficit as of May 2026. That is, the medium-term scenario shows a loss of self-sufficiency to supply the demand for natural gas from then on.”

“The results obtained from the latest volumetric balance of natural gas prepared by UPME for the period 2022–2031 shows that there will be a deficit as of May 2026,” states the resolution. “That is, the medium-term scenario shows a loss of self-sufficiency to supply the demand for natural gas from then on.”

This is the second time the public call for this terminal has been declared void. The previous attempt, in October 2021, saw seven interested parties, but none presented a formal proposal.

Why the Colombian Pacific Needs a Natural Gas Terminal

Currently, Colombia only has one LNG plant, which has been operated in Cartagena since December 2016 by Spec LNG, a facility that belongs to Promigas, a natural gas transportation company for the Caribbean coast located in the Barú sector.

Southwest Colombia’s need for a similar, stable solution has only grown more evident in recent years, as multiple emergencies have limited or entirely cut off the supply. 

In January 2022, the supply was cut when the Mariquita-Cali gas pipeline suffered damage and a high risk of rupture due to earth movement in this country’s largest coffee growing zone.

In May 2023, geological activity caused extreme heat that affected the ground where the gas pipelines run and forced the suspension of LNG supply to homes and vehicle service stations for several days.

In the aftermath, Valle del Cauca Governor Clara Luz Roldán urged governmental leaders to initiate the construction of the Regasificadora del Pacífico terminal in order to broaden supply options and prevent future emergencies. In an assessment shed posted to Twitter, a facility located in the coastal port city of Buenaventura would be capable of “refining of 400 million cubic feet per day (CFD), which will supply the entire southwest of the country, as well as the storage of 170,000 cubic meters of Liquefied Natural Gas (LNG).”

Since there is no natural gas facility in this part of Colombia, homes and vehicles in the southwest must rely on supplies from other zones, such as the Caribbean coast or the Llanos Orientales. The Colombian Association of Natural Gas (Naturgas), made up of companies dedicated to the commercialization of gas, indicates that there are  876,424 natural gas users in Colombia’s southwest and central regions, 1.2 million in Valle del Cauca, and more than 600,000 in the Coffee Axis (Eje Cafetero).

Stella Murgas, president of Naturgas, believes Colombia should develop its potential reserves in pursuit of becoming more energy independent. (Photo credit: Naturgas)

Colombian Gas Industry Encourages More Supply Sources and Developing Reserves

Luz Stella Murgas, president of Naturgas, told Finance Colombia that an LNG terminal in the Pacific region would be a significant development. But while she stresses that “all sources of supply are welcome,” Murgas says she also believes that “we must insist on developing the potential reserves that we have to be self-sufficient in the long term and not depend on energy from other countries.”

Furthermore, Murgas revealed that, no matter what the outcome of a future public tender, Naturgas will continue working on regulatory aspects to achieve equitable transportation rates. 

“We have requested that the methodology for the transportation rate, the way it is generated today, must be modified given that it is calculated according to the signal distance,” said Murgas. “We stand for a stamp methodology, which is equivalent to a single rate for all consumers along the entire route of the gas pipeline. This implies that no matter if the consumers are far from the production fields or if others are a little closer, it will be the same for all of them, something much more equitable and that will alleviate the issue in the southwest of the country.”

Mónica Contreras, a representative for industry company International Gas Transporter (TGI), told Finance Colombia that the firm hopes UPME will continue to push for projects that will benefit the Supply Plan, including the Regasificadora del Pacífico Plant, so that “better conditions will be achieved that will make the project bankable” and “risks in the construction stage are covered, making it more attractive for national and foreign investment.”

Likewise, TGI expects that the government, aware of the risks present in this zone, will act as a facilitator for improving community relations, design of aspects related to licensing and communities, and specific risks that the project has had.

(Top photo credit: Naturgas)