BRIGHT OUTLOOK

Colombia 2015 | ENERGY & MINING | B2B: TRANSPORTATION OF GAS

A soft market has not stopped energy companies in Colombia from looking to the future, and the domestic outlook is brighter than ever.

Jose Arcos
JOSE ARCOS
Secretary General
Naturgas
Magín Ortiga Pareja
MAGÍN ORTIGA PAREJA
General Manager
Surtigas

What are the most important developments that you are witnessing in the energy sector these days and how they relate to your activities?

Jose Arcos Gas in Colombia is a highly dynamic industry, with considerable private investment, and we are representative on all levels of the supply chain, from exploration, to commercialization. The best companies in the world are in Colombia exploring for gas; Exxon, Shell, and our own Ecopetrol. With regards to commercialization we have the most renowned management companies in the world helping maintain this segment as an attractive one for investors, such as Fenosa of Spain, EMP, our national company from Medellín, and Promigas. We aim to ensure effective public policy so that investment remains at the desired rate. We need to make sure that our legal stability remains, not only to attract investors but also for the benefit of the public sector. A process is underway, for better distillation facilities, and exports, for which we need to ensure that the rules and system are symmetrical, and that international trading standards are in place. In the future, if the supply of our gas is restricted, we have measures and mechanisms in place to ensure that national demand can be met, this means that we give clear signals to investors that investments are safe, whilst ensuring that national demand is always protected—it is our job to oversee this.

Magín Ortiga Pareja Nowadays Colombia is the 7th or the 8th country in the world in terms of compressed natural gas use for transportation. Recently we reached a record high of having 500,000 gas-powered vehicles in Barranquilla, reducing negative externalities on the environment. We also have mass transport vehicles. In Medellín, for example, all mass transportation uses natural gas. Cartagena is going to use natural gas as fuel too, and we will be launching this for 2016.

What measures is Colombia taking to ensure that all levels of the supply chain are prepared for the potential expiry of gas resources?

JA This implicates the three different parts of the supply chain: Exploration, infrastructure, and commercialization. In exploration the most important thing is to ensure that we maintain the rhythm of exploration. It's worth noting that in this country there is no real distinction between the exploration of petrol and gas, they are searching for hydrocarbon reserves. In infrastructure, the remuneration aspect is very important, we have transports tubes, and distribution tubes, and all infrastructure offered by the service industries. The remuneration is fundamental because it depends exclusively on the points where gas is found in the exploration process and the gas that is commercialized for end users. These people have very little management over the economic variables of the two points, so we have to guarantee them with effective regulation. We have been establishing commercial criteria to ensure that all transactions are real, and remunerated at all levels of supply in such a way that ensures sustainable commerce. The final seller of the gas needs to ensure that they are paid as that is what the sustainability of gas flow depends on. This stage is subject to various different rules, environmental, commercial, competition and trust related laws. This is also essential to incentivize the consumption of gas with various commercial schemes and ensure the supply chain remains dynamic.

How much does local industry account for gas consumption, and how is this ratio changing as household consumption gradually increases in Colombia?

MP Almost 100% of industry uses natural gas as a fuel, as it is suited to cogeneration. There has been strong support from politicians who tend to see the gas issue as a driver of national development. Gas has also begun to arrive in the interior of the country. The Guajira and Cuisiana gas deposits are located there, with Gas Natural and Unión Fenosa, the Spanish company, present in the latter. In the west of the country is Gases de Occidente, which is the second or third biggest company in Colombia. Gas has been the cause of a true social revolution in Colombia, and whomever you ask will tell you that its benefits are numerous.