Colombian gas regulator moves to ease Pacific LNG doubts

Costs associated with Colombia's long-delayed Pacific LNG project will not be fully known until supply contracts are signed with off-takers, according to sector regulator Creg. 

In a series of responses sent to energy ministry planning unit UPME, Creg executive director Jorge Valencia said costs would hinge, in part, on values agreed during the contracting process and on the number of final users. 

"As the number of contracts rises for associated services by [companies] ... income will be higher in the short term and, therefore, the amounts to be paid by the beneficiaries will be reduced," he said. 

He added that UPME would be responsible for calculating the capacity percentage to be paid by users “under any contractual modality in the primary market.”

"Today there is an identification of UPME beneficiaries that could change," Valencia said. "It is only when each [gas expansion] project comes online that ... the beneficiary nodes can be specified."

The 27-page missive also includes clarification from Creg related to incentives for the early completion of construction work, investor protection from cost overruns and rules related to guarantees, among other matters.

The document can be seen here in Spanish. 

Earmarked for the port of Buenaventura, the Pacific LNG project comprises a 200,000m3-capacity LNG storage and regasification facility and a 120km pipeline that would transport up to 400 million cubic feet per day to Yumbo, on the northern outskirts of Cali.

According to the latest bidding documents, interested parties have until March 3 to present technical and economic bids, with envelopes scheduled to be opened on March 21 and 24. 

An April 11 deadline has been set for the counteroffer stage, the results of which are slated for publication on April 26 (technical proposals) and May 3 (economic bids). Contracts are due to be signed on May 8. 

UPME has set a construction deadline of 58 months after the contract is awarded. 

An initial tender process for the project, which is expected to be built at a cost of between US$650mn and US$1bn, was aborted last year due to tepid investor interest. 

Bidding documents can be seen here and here.