Colombia needs a natgas strategy soon to avoid blackouts, analyst say
By Marianna Parraga and Oliver Griffin
HOUSTON/BOGOTA, Sept 19 (Reuters) -Colombia must decide soon whether to focus on imports of liquefied natural gas (LNG) or encourage domestic output of natural gas if it wants to avoid power blackouts, consultancyWood Mackenzie's head of Americas Gas and LNG said on Thursday.
Under leftist President Gustavo Petro, Colombia has moved away from fracking to develop its reserves of shale crude and gas. Earlier this month, a judge at a court in the city of Santa Marta ordered the suspension of work at a key offshore gas project by state-controlled Ecopetrol ECO.CN and Brazil's Petrobras PETR4.SA.
The two strategies are seen critical to secure gas supplies to feed the country's utilities and its industrial sectors in the coming years, according to experts.
"The Guajira (onshore gas) fields will continue that steep (output) decline. And if you play a scenario where you have a dry hydrology without domestic gas supplies, you will eventually be in a situation facing a risk of blackouts," Wood Mackenzie's Mauro Chavez told Reuters in an interview on the sidelines of the Gastech conference in Houston.
Absent incentives and authorizations to encourage domestic gas output, the country is expected to be forced to expand its capacity to receive LNG imports, which would require the construction of an additional regasification terminal that is not yet in plans and to secure supply contracts, he added.
"The country has to decide whether to rely on imports of LNG... or really support the domestic production," he said.
Ecopetrol, Colombian government ministries and Petrobras "have joined together to appeal the judge's decision and be able to restart the activities," Ecopetrol CEO Ricardo Roa said in a video message shared with journalists on Thursday.
"This discovery is key to guaranteeing the country's energy security," Roa added.
The suspension at the Tayrona exploratory offshore block was ruled as the court found the companies had failed to properly consult a local indigenous community about the operation.
The Uchuva-2 well that was suspended is an important hope for Colombia's dwindling gas reserves, which closed last year at 2.4 trillion cubic feet, equivalent to 6.1 years of consumption, the government's National Hydrocarbons Association reported.
The project's potential reserves are equivalent to 2.5 times Colombia's current reserves.
Reporting by Marianna Parraga and Georgina McCartney in Houston, and Oliver Griffin in Bogota
Editing by Marguerita Choy
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
