Colombia Risks Losing Self-sufficiency in Natgas by 2018

Colombia's natural gas reserves will decline by about 5 percent a year from this year and it will need to import gas from 2017 unless investment to bring new supplies online is urgently ramped up, a senior oil sector official said on Wednesday.

 

Investment is needed to replace diminishing reserves at mature projects such as Campo Guajira in La Guajira province in the far north, which supplies much of the gas consumed on the coast, a region where output is falling about 10 percent a year.

 

Colombia currently produces an average 1.1 billion cubic feet of gas per day, about 50 million of which is exported to Venezuela under a contract which expires next year. The rest is consumed domestically and demand is growing annually.

 

"If there is investment, we could incorporate more gas to slow this (need to import) down by two or three years," Francisco Lloreda, head of the Colombian Oil Association of private producers, told a press briefing in Bogota.

 

On top of slowing exploration for oil and natural gas after the recent plunge in global crude prices , the industry has warned that political pressures in the country's Caribbean coastal region to change production contracts would make new investment less attractive.

 

Producers have begun to raise prices to clients on the coast due to tightening supplies but local politicians are seeking regulation to block increases, which would apply retroactively to existing contracts, a move the gas industry opposes.

 

"This is a call to reason so that decisions taken do not put at risk the production of gas in Colombia," said Lloreda.

 

"Importing gas into Colombia is much more expensive without even thinking about the benefits Colombia receives through royalties," he said.

 

The association forecasts a deficit of 190 million cubic feet of natural gas per day by 2018, rising to 345 million by 2021, based on existing proven reserves.

 

Eleven of 126 exploratory wells scheduled to be drilled in Colombia this year are potential onshore gas areas. Another half dozen wells in offshore zones, where Lloreda said "significant" reserves may lie, are scheduled to be drilled this year.

 

Colombia's interior faces no supply difficulties but there is no viable means to transport gas from there to the coast, which would force the mountainous Andean nation to turn to imports currently costing about twice as much as domestic gas.