The Colombian conventional energy sector needs at least USD 655 million in investments in natural gas expansion projects in order to avoid a future deficit. The project portfolio includes a liquefied natural gas (LNG) import terminal, and its pipelines, on the Pacific coast, enabling bidirectional gas flow along the Caribbean pipelines, and new pipelines for the Jamundí-Popayán segment in the Pacific and the Mariquita-Gualanday segment in the Central Andes mountain range.
Why invest in this sector?
Status of Colombia’s oil & gas reserves
- According to Colombia’s National Hydrocarbons Agency (ANH, as per its Spanish acronym), the country had proven oil reserves totaling 2 billion barrels in 2019—a 4.9% increase compared to 2018—most of which are located in the Llanos Basin. The ANH also reported the country's proven gas reserves at 0.1 Tm3 in 2019, a 2.6% increase compared to 2018. These conventional resources are mainly found in basins located in the departments of Boyacá, Casanare, Meta and Tolima.
Colombia’s forecast for developing clean energy
- In order to diversify Colombia’s energy basket through the use of alternative sources that are compatible with a sustainable environmental, economic, and social development, a policy to use ethanol as fuel was enacted, which included incentives for its production, sale, and consumption. Said policy promoted the development of the biofuels program, starting with the use of ethanol as a gasoline oxygenate and establishing its mandatory use in urban centers with more than 500,000 residents.
Non-conventional exploration in Colombia
- The Ministry of Mines and Energy, together with the National Hydrocarbons Agency are launching non-conventional exploration pilot projects in Colombia, which would increase Colombia's gas reserves fivefold and create 275,000 jobs by developing over 5,000 wells.
Demand for natural gas in Colombia
- Colombia has more than 10 million natural gas consumers, distributed among the domestic, commercial, industrial, and transportation segments. Industry is the largest consumer, accounting for 29% of the total gas use, followed by refineries (25%), electricity generators (23%), households (15%), natural gas vehicles (6%), and petrochemical products (2%). By 2020, 250,000 new consumers are expected to connect to Colombia's gas distribution network, which will result in an annual increase in demand of more than 2%.
Investment forecast for Colombia’s gas sector
- Gas consumption is now at the same level as gas production in Colombia. Therefore, the national government has designed a plan to guarantee long-term energy sovereignty, with investments in regasification plants in the Caribbean and Pacific regions; in fact, the latter will soon be put out to tender. The Cartagena project was launched in 2016 with a USD 450 million investment by foreign firms.
Investment opportunities in Colombia:
- The Pacific coast regasification plant stands out as an investment opportunity in natural gas projects, which would be awarded by the Mining and Energy Planning Unit (UPME, as per its Spanish acronym) to a private company in the second half of 2020 and would begin operations in 2024. The cost of the plant and gas pipeline amounts to USD 600 million. Companies such as the Bogotá Energy Group (BEG, as per its Spanish acronym) and TGI have expressed interest. The plant’s cost will be recovered through gas and electricity charges.