Colombian generators eye late 2016 start for LNG imports

A consortium of power generators working on Colombia’s first LNG import project has targeted late 2016 for start-up, after a government report highlighted that the country could face a gas deficit as early as 2018.

Colombian power generators Termobarranquilla (TEBSA), Celsia and Termocandelaria are currently negotiating the terms for creating a marketing agent to take on responsibility for handling capacity at the 2.6mtpa facility, Luis Fernandez, President of TEBSA told ICIS.

Each of the three generators will likely take a stake in the marketing agent, which will manage the supply of volumes to offtakers as well as potentially selling excess gas to the domestic Colombian market.

Initial talks with LNG suppliers have been held for contractual volumes for the 11 million cubic metre (mcm)/day capacity terminal.

“We expect our project to come on line at a similar time to new projects proposed for North America. However we aren’t limiting ourselves to just one potential supply point, we are well aware LNG can be sourced from other regions,” Fernandez told ICIS.

Colombian gas distributor Promigas was chosen to supply the infrastructure for the terminal, including a 160,000 cubic metre (cbm) capacity floating storage and regasification unit (FSRU) provided by Norwegian shipowner Hoegh, in February 2014. Spanish engineering company Sacyr has since been lined up to construct the terminal as a sub-contractor.

The developers are still completing the environmental licensing process, according to Fernandez, although key permits are expected to be granted in the coming months.

“The government has designated the regasification terminal [as] a project of national interest, so we hope that it will be treated as a priority in the environmental process,” Fernandez said.

In late February, the country’s ministry of energy and mining planning unit UPME published a gas demand outlook for Colombia, which highlighted the government’s concerns over future natural gas supply to the domestic market, given rising industrial demand, volatile thermoelectric consumption and declining production.

The ability of domestic production to meet the country’s consumption needs was estimated under four different supply scenarios in the report. In all but the highest production scenario, demand is seen outstripping domestic supply by 2021.

A deficit could begin to emerge as soon as early 2018, according to the most bearish scenario presented in the report, although the inclusion of a regasification terminal in the country’s supply mix would postpone the start of such a deficit until 2022.

“Without the entrance of a regasification plant before 2018, the country will likely be confronted with serious difficulties in terms of natural gas supply,” the UPME report concluded.

The UPME report also recommended that sectors other than thermoelectric power generators are able to obtain supply from the terminal, given strong demand growth from industrial consumers and refineries.

Power generators on Colombia’s Atlantic coastline have traditionally been seen as the logical recipients of LNG, based on their volatile demand.

Over 70% of installed capacity on the country’s SIN power grid is composed of hydroelectric facilities. However, extended periods of drought during El Nino weather system years forces thermoelectric power plants to ramp up output.

During these periods, gas demand for power generation on the country’s Atlantic coast can more than triple from 100 million cubic feet (mcf, 2.8mcm)/day to 350mcf/day during El Nino years, according to TEBSA estimates.

The last severe El Nino weather in 2009-10 led the government to enforce gas supply restrictions to industrial users in order to guarantee supplies to power generators.

El Nino conditions were expected to develop in 2014, and could potentially still sometime this year, although the weather phenomenon is difficult to predict. El Nino cycles can occur every three to five years. James Fowler