Colombia Needs a Natgas Strategy Soon to Avoid Blackouts, Analyst Say

SEATTLE (Oil Monster):  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, consultancy Wood 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 and Brazil's Petrobras.

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.

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.

Courtesy: www.reuters.com