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Colombia's Promigas outlines Cartagena LNG expansion plans

Bnamericas Published: Friday, September 24, 2021
Colombia's Promigas outlines Cartagena LNG expansion plans

Colombia should prioritize an expansion of the Cartagena LNG regasification plant before moving ahead with other liquefied natural gas projects, according to the facility's major shareholder. 

In its newly published annual gas market report, Promigas confirmed it is seeking to raise capacity at Colombia's only LNG import terminal, with planned works expected to increase daily regasification by 100Mf3.

"It is an option that should be thoroughly evaluated by government entities and the main agents in the sector before there is a decision to embark on the construction of new high-cost LNG infrastructure," Promigas said. 

"The aim of this expansion, in addition to continuing to serve [three] thermoelectric plants, is to complement national supply and help meet demand," it added.

The Barranquilla-based firm called on regulator Creg to facilitate the expansion and establish the characteristics of the infrastructure, such as whether it will be based onshore or on a floating offshore platform. 

According to Promigas, the proposed works offer the best way for Colombia to avoid a looming gas shortage, which officials have warned could occur as soon as 2024. 

"The need to incorporate LNG as a complement to local gas production ... [means there is] high probability of requiring an expansion of [the Cartagena LNG plant]. It is the only certain option to guarantee supply during critical periods before 2025," the report said.

Promigas has a 51% equity stake in the SPEC consortium that operates the Cartagena terminal, with the remainder held by Dutch tank storage company Royal Vopak.

Completed in 2016 at a cost of US$427mn, the Cartagena LNG plant includes a floating storage regasification unit (FSRU) with 170,000m3 of holding capacity and daily regasification potential of 400Mf3/d.

It is connected to the national gas network via a 9.2km pipeline. SPEC also holds long-term contracts to supply three local gas-fired power plants.

PACIFIC LNG CONCERNS

Promigas expressed misgivings about the long-delayed Pacific LNG project

Earmarked for the western port of Buenaventura, the facility is due to be completed in late 2026 at an estimated cost of US$700mn. A competitive bidding process was relaunched in June, giving potential developers until October 21 to submit technical and economic proposals for the project.

"The risk for the investor lies in the possibility of a force majeure event that cannot be resolved, and that prevents the start of commercial operations. The investor would not have a mechanism to recover their investments or receive compensation for the costs incurred," the report read.  

It warned that under the current contract model, the investor would be rewarded for construction delays to the pipeline component by receiving payments funded by end-users. 

"The project is being shielded with a series of mechanisms and what is going to happen is that the users are the ones who are going to be responsible for the income that the regasification plant requires, without having their connection to the transport system assured," the document added. 

OTHER LNG IMPORT PROJECTS

The report also outlined details of two other proposed LNG import projects in Colombia's north: one in the Gulf of Morrosquillo and the other in La Guajira.

"There is every indication that the characteristics and technical specifications of these plants could be very similar to the infrastructure of SPEC LNG in Cartagena and to the one that would be developed in Buenaventura," it said. 

According to Promigas, the proposed Gulf of Morrosquillo project in Córdoba department would require additional investments to connect the terminal to the national pipeline system.

"In the future this complex would serve to guarantee the supply of natural gas given that the Jobo-Medellín-Mariquita-Bogotá gas pipeline would be operating by then," it said. 

Meanwhile, the Guajira regasification complex would allow the supply of natural gas to the east and center of the country via the Ballena-Barrancabermeja gas pipeline, the report noted. Both terminals could opt to import LNG from the US Gulf of Mexico given the geographical proximity, it added.

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