November 3, 2024
Business Colombian economy

EPM: ‘Critical’ Natural-Gas Shortage Coming 2025

Medellin-based energy giant EPM on October 31 warned that Colombia is facing a “critical” shortage of natural gas in 2025 — for which the national government needs to take “immediate” action.

“EPM warns that we have not obtained all the natural gas supply contracts for our demand in 2025, and that the energy deficit in the country is critical and the sector requires immediate solutions,” according to the company.

“Today the natural gas sector faces a supply crisis unprecedented in national history. Since 1998, the gas supply had not been reduced to the point of not having firm quantities of gas for 100% of the residential, commercial, industrial, transportation sector (NGV) and even for the country’s refineries.

“Several situations have arisen to bring us to this point: first, the unexecuted works for the ‘Gas Supply Plan,’ such as the [liquefied natural gas] regasification plant project on the Pacific coast,” the construction contract for which has failed to materialize “on two occasions,” EPM noted.

The company also cited lack of investments in natural gas pipeline projects, including the proposed Barranquilla-Ballena (La Guajira) gas pipeline “that would allow gas to be brought from the Atlantic Coast to the interior of the country.”

On another front, one major gas producer in Córdoba department has ceased production, which “instantly eliminated 7.6% of the country’s gas supply.” Meanwhile, the government’s recent ban on gas-field hydraulic fracturing and “uncertainty in terms of public policy to award new gas exploration and exploitation contracts” has stifled natural-gas supply development, according to EPM.

“If no immediate solution is found, then this situation will mean a setback for everyone, encouraging the consumption of more polluting energy substitutes such as coal, firewood, diesel, among others, reducing the possibilities of advancing in efficient carbon management and, consequently, jeopardizing the country’s contribution to the 2030 Agenda for Sustainable Development,” EPM added.

Industrial users of natural gas are already suffering price hikes from panicking gas suppliers – and “a large part of gas demand, especially industrial demand, will have to be met mostly with interruptible or conditional firmness contracts, which means that a large part of the gas will have to be acquired daily and not in long-term contracts that provide stability to demand,” EPM noted.

“Today, natural gas for thermal demand (cooking and water heating) for residential users on average generates a 65% savings compared to other energy sources, so EPM is looking for alternatives to continue maintaining competitiveness for its users with this public service.

“For 2025, a firm gas supply deficit of between 9% and 12% of the country’s total demand is projected. For the markets served by EPM — more than 1.45 million users — the shortfall amounts to 30% of our customers’ demand, which includes essential users, commercial, small regulated industries and large industry.

“In other words, EPM has only 70% of its demand secured for 2025 and for 2026 the shortfall in supply contracts is much greater. EPM will give priority to serving the entire residential and commercial segment, who can rest assured that they will have the supply of this energy.

“All of the above has been brought to the attention of the national government, and we addtionally have been making every effort to obtain the missing gas that our demand requires.

“Consequently, and as we have stated on repeated occasions, we call on the national government, the industry regulator and producers to urgently guarantee:

“1. That by 2025 producers make available all possible quantities of natural gas, giving priority to end-user demand.

“2.- New gas import and [liquefied natural gas] regasification projects are required, as well as the development of exploration projects, local gas production, both in continental and offshore areas, and the construction of infrastructure for its transportation.
“3. A new gas pipeline is urgently needed to connect the Atlantic Coast with the interior of the country.

“4. It is also necessary to adopt additional regulations to make the purchase and sale of all available natural gas more flexible, and to define guidelines for the marketing of imported natural gas that covers essential and industrial demand,” EPM concluded.

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