Petro Administration Announces Natural Gas Rationing in Colombia Despite Abundant Hydrocarbon Resources

Colombia’s Ministry of Mines and Energy has announced a gas rationing measure to be implemented from Today, October 31 to November 4, 2024. The measure is intended to manage Colombia’s energy needs amidst supply constraints attributed to limited domestic hydrocarbon exploration. The administration of President Gustavo Petro’s recent decision to suspend new hydrocarbon exploration contracts has reduced internal gas supplies, sparking energy sector concerns.

The rationing will primarily affect Colombia’s Caribbean region, encompassing departments such as Bolívar, Magdalena, La Guajira, Cesar, Córdoba, Sucre, San Andrés, and Atlántico. This recently planned restriction will mostly impact industrial sectors, with thermal power plants in the Caribbean facing significant reductions in gas availability. Residential and small commercial consumers are expected to remain unaffected in the short term, according to the Ministry of Mines and Energy.

The planned maintenance of the Spec LNG regasification plant in Cartagena—a critical facility for liquefied natural gas (LNG) processing—directly influences the gas rationing decision. Maintenance is typically conducted annually and is mandated under Decree 1073 of 2015. However, this year’s maintenance is notable due to the decreased gas reserves and high demand.

Gas Supply Shortfall and Import Strategy

The Colombian Natural Gas Association (Naturgas), represented by its president Luz Stella Murgas, has emphasized the urgency of sourcing gas imports from neighboring countries to counter declining internal reserves. According to Murgas, increasing gas imports is the only viable option to avoid mid- to long-term shortages. Colombia’s domestic reserves have seen accelerated depletion, raising alarms within the industry and highlighting a critical need for regulatory adjustments.

Colombia’s reliance on hydroelectric power sources—which account for approximately 70% of national electricity—compounds the situation. Reservoir levels dropped significantly due to the El Niño phenomenon, which concluded in April 2024. Although reservoirs have since begun recovering, their current levels remain below optimal. As of October 20, Ecopetrol reported reservoir levels at 53.64% capacity, a figure that remains insufficient as the country anticipates a dry season with lower-than-average rainfall beginning in December.

The increased reliance on thermal power plants to compensate for lower hydroelectric output has put additional strain on natural gas supplies. The Ministry of Mines and Energy indicated that imported gas volumes have been insufficient to meet this demand surge, leading to the current shortage. In response, the ministry has proposed regulatory “enablers” to facilitate gas imports, a policy adjustment aimed at stabilizing market conditions, according to Minister Andrés Camacho.

Rationing Details and Implications for the Industrial Sector

The rationing strategy includes staged reductions in gas supply to major industrial consumers over the four-day period, with planned volumes of:

• October 31 – November 1: 84.6 million cubic feet
• November 2: 75.7 million cubic feet
• November 3: 60.3 million cubic feet
• November 4: 72.4 million cubic feet

These allocations are part of a broader inventory management approach aimed at maintaining energy system balance. However, experts have raised concerns that these volumes may fall short of meeting the region’s rising industrial demand, especially in the Caribbean.

Broader Energy Policy and Economic Impact

The rationing decision highlights the complex intersection of Colombia’s energy policies, supply dynamics, and environmental factors. The Caribbean region’s high concentration of energy-intensive industries is expected to feel the brunt of the rationing’s indirect effects on electricity stability. While this measure remains temporary, the government’s exploration moratorium and current reserve limitations suggest a challenging outlook for Colombia’s energy sector.

The Ministry of Mines and Energy’s gas rationing strategy illustrates the critical need for policy adaptations to mitigate shortfalls and ensure energy security in the face of fluctuating internal resources and environmental variables. As the situation evolves, the government will face mounting pressure from industrial stakeholders and the public to develop more resilient energy policies.