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He predicted the scarcity of gas would become "severe" by 2026, contributing to an overall energy deficit of 55%.
Data published by natural gas market administrator BMC shows that Colombia's deficit of the fossil fuel will reach 76.5BBTU/d (billion British thermal units a day) in 2025 and 190BBTU/d in 2026.
The situation has been exacerbated by an alarming decline in gas reserves, which fell to 2.37Tf3 (trillion cubic feet) at the end of 2023 from 2.82Tf3/d a year earlier.
The crisis is arguably even more acute in the electric power segment amid severe delays to renewable energy projects, transmission bottlenecks and a lack of opportunities for thermoelectric generators.
GEB) president Juan Ricardo Ortega has warned that Colombia must take urgent action to avoid imminent gas and electricity shortages.
He revealed that the company faces a gas shortfall of 5Mf3/d (million cubic feet a day) by year end amid soaring demand and rapidly diminishing supply.
"We're currently facing a situation in which we don't have the gas needed for December," Ortega said during an energy forum in Bogotá. "Without these five million cubic feet per day, operating the gas compressors will be impossible."
Meanwhile, Colombia's broader energy strategy is facing a dichotomy. Despite President Gustavo Petro's climate-focused agenda, which includes halting new drilling licenses, the government is pushing to increase oil production. The Energy Ministry aims to boost output to 1 million barrels per day by revitalizing underutilized exploration blocks. This effort is crucial as oil and coal account for half of Colombia's total exports.
The proposed work is part of the government’s IPAT gas transport expansion program and aims to guarantee bidirectional transport capacity from Barranquilla on the Atlantic to Ballena in La Guajira.
Promigas has a 51% stake in SPEC LNG, which operates a regasification terminal in Cartagena.
The project will allow the transport of 170Mf3/d within 36 months under a 20-year regulated income scheme.
Colombia’s efforts to bolster natural gas supply have received a boost with a pledge to advance development of a project to transport the fuel.
In a regulatory filing, gas transport and distribution company Promigas reported that its board ratified its willingness to carry out the Barranquilla-Ballena pipeline project, as announced by energy and gas regulator CREG.
Ecopetrol S.A. EC, has commenced the drilling of the Uchuva-2 well in the Tayrona block, located offshore Colombia’s Caribbean coast.
This move is part of a broader strategy to boost Colombia's natural gas reserves and enhance the country's energy security. The Uchuva-2 appraisal well aims to confirm the size of the natural gas discovery made at the Uchuva-1 exploration well in July 2022, marking a significant milestone in Colombia's offshore energy exploration efforts.
Colombia is emerging as a green hydrogen pioneer in Latin America as it ramps up plans to produce and export the energy vector to international markets.
Efforts to accelerate growth in the nascent sector form part of a broader strategy by President Gustavo Petro to end the country's dependence on fossil fuels and promote investment in clean energy.
BNamericas provides a snapshot of the current panorama for clean hydrogen in Colombia and identifies some of the key recent developments:
CAPACITY, INVESTMENT TARGETS
Encouragingly, Colombia has shown clear signs of additional natural gas potential across both its onshore and offshore basins in recent years, signaling a promising trajectory for future exploration and development endeavors. Onshore, operating companies have continued to report gas discoveries in the Lower and Middle Magdalena Valley, Llanos, and Putumayo basins, while the increase in GOR continues to be an opportunity to improve domestic gas production in mature fields and basins.
Offshore, the ongoing discoveries made by Ecopetrol, Shell, and Petrobras (Gorgon, Glaucus, Uchuva, and Orca) continue to give indications of the potential for developing new offshore natural gas reserves in Colombia. Likewise, exploratory plans in ultra-deep waters by Oxy, Chevron, and Ecopetrol (Komodo and Cumbia) add to the high potential that the Caribbean represents for Colombia’s energy sufficiency. This potential is so clear that at the CERAWeek Energy Conference in Houston, Joelson Mendes, Petrobras’ chief exploration and production officer, told Reuters that “there could be more gas than what Colombia needs.”
The well is part of Ecopetrol’s plan to invest $760 million this year to increase natural gas production, with $350 million earmarked for offshore operations in the Caribbean Sea (OGJ Online, Apr. 25, 2024).
Petrobras is operator of the Tayrona block with 44.4% interest. Ecopetrol holds 55.6%.
Petrobras has started drilling the Uchuva-2 well in the Tayrona block offshore Colombia’s Caribbean coast. The appraisal well is expected to validate the size of the natural gas discovery made in the Uchuva-1 exploration well in July 2022, partner Ecopetrol said in a release June 21.
The well comes as part of a plan to incorporate additional gas reserves to boost gas supply to Colombia.
Given Colombia’s advantageous location with access to markets in Asia, Europe, and Central America due to its exit to the Pacific and Atlantic Oceans and its proximity to the Panama Canal, this increase in gas reserves could mean a business opportunity with the possibility of establishing LNG facilities thereby enabling direct exports to numerous markets – a longstanding objective of present regional operators. This plan to establish Colombia as a natural gas-producing province must be based on a cohesive and integrated approach among the different regional actors in the industry. This concerted effort is crucial not only for meeting the needs of both local and international consumers but also for aligning with national and global energy transition objectives. The potential is monumental, promising transformative impacts on both a national and global scale.
Colombia's economy could soon be hit by soaring energy costs as the South American country is considering LNG imports to meet rising natural gas demand while its domestic production slumps.
Large gas and energy-intensive industries could be hit hard by a further spike in their energy costs, as LNG imports could be two or three times more expensive than domestic supply, according to industry officials and analysts who spoke
Encouragingly, Colombia has shown clear signs of additional natural gas potential across both its onshore and offshore basins in recent years, signaling a promising trajectory for future exploration and development endeavors. Onshore, operating companies have continued to report gas discoveries in the Lower and Middle Magdalena Valley, Llanos, and Putumayo basins, while the increase in GOR continues to be an opportunity to improve domestic gas production in mature fields and basins.
The growth in demand is likely to unfold as over 1.5 million households that nowadays still rely on firewood for cooking are expected to elevate their living standards through the adoption of natural gas. Simultaneously, the nation’s concerted efforts to mitigate emissions entail a gradual shift away from coal production, further fueling the momentum toward embracing cleaner energy alternatives like natural gas.
Natural Gas: The best ally for Colombia’s energy transition
The natural gas situation in Colombia is approaching a critical point in which every decision made will have direct repercussions on the country's energy future and its energy transition plans
Good read, energy. Private sector investment is crucial.
It's our commitment to accelerate and carry out a fair energy transition, which allows taking advantage of the country's opportunities to transform energy into economic development," Camacho told the news conference.
He pointed out that a third of the 48 discoveries made in Colombia over the past decade had been during the current administration, which began in August 2022.
Hydrocarbons agency ANH said natural gas supply, in particular, had been impacted over the past decade by a lack of new discoveries and surging demand.
"We have to take action now to compensate," ANH president Orlando Velandia told a news conference.
He added that Colombia's current reserves replacement rate stood at around 80%.
Energy minister Andrés Camacho insisted the government was taking steps to increase contingent resources and avert possible shortages in the medium term.
Colombia's Empresas Públicas de Medellín (EPM) is seeking joint venture partners to produce green hydrogen for export markets in Europe and Asia, according to CEO John Maya.
The company is aiming to produce 100t/y of green hydrogen in the short term and 400t/y within three years. The energy vector would be stored in ammonia via a chemical process before being extracted through heating.
"We hope to sign a deal for the production of ammonia by the end of the year," said Maya. "It would be exported to countries with hydrogen needs, such as Germany, the Netherlands, Korea and Japan."
Speaking during the company's quarterly assembly, Maya affirmed that EPM could "almost triple" its revenue through hydrogen exports by 2030.
To jumpstart the process, the company began operating a pilot plant at its Aguas Claras water treatment facility in Bello, near Medellín, in February. The plant required an investment of US$5mn and is currently producing around 5kg of green hydrogen per day, according to EPM.
"We’re learning a lot and we plan to undertake many experiments using this plant," Maya said. "One of them is to test the combination of hydrogen with natural gas for household use.
"It's difficult at the moment because the costs are currently high. But technology evolves and eventually these costs will come down."
Natural Gas: The best ally for Colombia’s energy transition
The natural gas situation in Colombia is approaching a critical point in which every decision made will have direct repercussions on the country's energy future and its energy transition plans
News of the project's progress coincides with fears of an imminent natural gas shortage in Colombia.
Investment in the first stage – including the regasification terminal and power plant – is expected to reach US$350mn.
The project also includes a gas pipeline component that would serve industrial and thermoelectric offtakers in Cali and its surrounding metropolitan area, as well as other consumer markets in southwestern Colombia.
"In the first phase, gas will be supplied via virtual pipeline, or truck, while the pipeline becomes operational," Tenorio said. "There are several alternatives, including the option of building a new pipeline or utilizing an existing polyduct belonging to [state oil company Ecopetrol’s midstream unit] Cenit."
Colombia's Andes Energy is in talks with potential partners to move forward with an LNG import terminal and an associated thermoelectric power plant, the company's chairman told BNamericas.
The Cali-based developer has completed the project's initial design stage and hopes to secure another stakeholder in the coming months, Manuel Tenorio, who is also Andes Energy's co-founder, said in a telephone interview on Friday.
"We are having conversations with two potential strategic partners," Tenorio said, adding that he could not reveal the names of the parties due to confidentiality agreements.
We have been working to make regulatory terms more flexible and guarantee enabling conditions to commercialize off-shore gas this year so that we can advance in the supply plan required in 2026 and 2027,” Camacho said at an event organized by Naturgas in Cartagena.
Colombia will look to loosen regulation on gas exploration and supply to meet its needs in 2026 and 2027, Mines and Energy Minister Andres Camacho said on Wednesday.
The South American nation needs to resolve a gas deficit amid rising demand, with measures to include buying more liquefied gas and possibly importing from neighboring Venezuela.
Rod Lewis, founder of Lewis Energy Group and self-made billionaire, sees major potential in Colombia’s natural gas market and in Latin America, in general.
By 2025, Colombia's natural gas supply will fall short of demand by 17% according to state-owned oil producer Ecopetrol SA. What’s more, Colombia's proven oil and natural gas reserves can last only around seven more years at the current extraction rate.
While recent gas discoveries offer some hope, Colombia is still grappling with the challenge of declining reserves and struggling production. In response, Colombia's state-run oil company, Ecopetrol, plans to invest up to $6.7 billion in 2024 to boost exploration and production activities, as well as developing new technologies to improve efficiency and sustainability in the sector.
This shortage is compounded by the challenges caused by El Niño and declining oil and natural gas reserves, as Colombia strives to maintain its position in the global energy market. El Niño has reduced hydropower generation in Colombia, increasing reliance on natural gas for electricity and boosting demand amid a tight supply.
Despite its significant potential, Colombia’s energy sector is heading towards a major natural gas shortage by next year.
The oil and gas market is the key to Colombia’s national revenue, accounting for roughly 10% of GDP and 20% of exports. However, decreasing onshore production, delayed start-up of new offshore discoveries and President Gustavo Petro's focus on renewable energy are creating ongoing challenges in the sector.
Ecopetrol is looking for alternative natural gas sources to import. According to the report, by 2025, Colombia will have a 17% deficit versus demand. Purportedly, this is until Ecopetrol builds the supplies from its own offshore fields. And, unfortunately, that comes with few guarantees — and a lot of “possibles” — whenever the company is asked.
The other issue is price. It would make far more sense, setting aside the geopolitical risk, to import very cheap gas from Venezuela, which is also desperate for the revenues. That option, however, at least for 2024, is under threat due to the urgent need for pipeline repairs.
At Colombia's Tayrona block, Petrobras and Colombia's state-run Ecopetrol (ECO.CN), opens new tab will drill two wells this year following a gas discovery at the Uchuva-1 well in 2022. Future analysis will determine the type of project needed, said Joelson Mendes, Petrobras' chief exploration and production officer.
"There could be more gas than what Colombia needs," Mendes told Reuters in on the sidelines of the CERAWeek energy conference in Houston. Colombia's government has asked Petrobras to speed up the project, he added.
Last year, Colombia's tender to add a second LNG import terminal received only one bid, and the lack of investor interest is further complicating the country's efforts to ensure enough gas supply amid uncertain rain patterns with the El Nino weather phenomenon, Natural Gas Intelligence noted.
Colombia will need investments of at least $2 billion in natural gas infrastructure over the next decade to meet its rising gas demand, according to a recent government report.
In November, Ecopetrol announced that it would allocate more than 40% of its 2024 investment budget to clean energy as it accelerates decarbonization plans.
By 2030, the company expects its traditional oil and gas business to account for less 60% of Ebitda, with the remainder to come from low or zero-carbon initiatives.
At the forefront of the new business model is a focus on clean hydrogen, non-conventional renewable energy generation and natural gas.
Colombia, being a country that also has hydrocarbons, has natural gas reserves, which we can use for blue hydrogen production. We see that as something positive.
28 projects, the first thing to highlight is that there are 16 in the Caribbean region. The Caribbean region of Colombia is the one with the largest renewable energy resources – solar and wind – and what we're seeing is that green hydrogen generation projects are being located mostly in that region.
So, let's say that Colombia is developing. The most important message we see in this project database is that we're no longer just in the roadmap stage. We're starting to propose projects on an industrial scale and develop projects in the country.
Investments in the oil exploration and production (equivalent to ~50% of the annual plan) and gas exploration and production (equivalent to ~12% of the annual plan) will be allocated to reach organic production levels of 725,000 to 730,000 barrels of oil equivalent per day by 2024 (76% crude, 19% gas, and 5% white products) implementing improved recovery technologies to maximize existing resources and protect the production curve against natural field decline,” stated Ecopetrol in a statement.
Despite the curbs on oil extraction in the nation that President Gustavo Petro has overseen since taking office, Ecopetrol plans to drill around one development well per day in the coming year, with nearly three-fourths of the planned 360 wells expected to be with in Colombia (and the remaining quarter located in the Permian Basin). In terms of exploration, just 15 wells are planned for 2024, primarily in Northern Colombia and the Caribbean offshore.
This is an intense debate in Colombia. It does not mean that we will be left without oil or coal, since there is already coal, oil and gas in exploitation, and there are already many previously signed exploration contracts that remain in force."
Oil and gas industry groups have repeatedly warned Petro that his decision threatens Colombia's energy security while limiting its most important source of export revenue.
Guillermo Acosta, the CEO of oil engineers' association Acipet, told BNamericas earlier this year that he was confident the government would change its mind based on "technical data and expert information".
Apart from ruling out the possibility of signing new exploration contracts, the government said its energy investment strategy was now focused on renewable sources, with a particular focus on offshore wind and hydrogen.
Colombia has not yet halted oil and gas production and has several projects currently in the works. Last November, Colombia's state-run oil company Ecopetrol and Brazilian partner Petrobras started drilling their Orca Norte 1 offshore appraisal well in the Tayrona block. The two firms hope to transport gas to the mainland via a new pipeline that would also run to the Chuchupa gas field. Ecopetrol is also working with Shell to develop their Gorgon discovery in the ultra-deepwater COL-5 block.
Onshore, Geopark and Hocol are developing Llanos 123, which is one of five exploration blocks the pair were awarded in a 2019 licensing round. Following two successful discoveries, the duo are hopeful for more over the next year. Meanwhile, the independent Canadian gas producer Canacol plans to drill the Pola-1 exploration well on the VMM-45 block in the first half of 2024, following three recent discoveries
Therefore, gas is a very relevant energy source, with very positive qualities, with very good coverage of vehicle natural gas stations in Colombia, with local gas, unfortunately it had to compete for many years against highly subsidized gasoline. . It was declining. Now, if we go back to the beginning of 2023, Vehicle natural gas is increasing. Because Because gasoline is rising, natural gas is competing against gasoline in an open competition, and we are seeing many sectors migrating away. Conversion to natural gas vehicles is finally increasing, they were depressed, and consumption is increasing.