Colombia's economy could soon be hit by soaring energy costs as the South American country is considering LNG imports to meet rising natural gas demand while its domestic production slumps.
Large gas and energy-intensive industries could be hit hard by a further spike in their energy costs, as LNG imports could be two or three times more expensive than domestic supply, according to industry officials and analysts who spoke to Bloomberg.
Colombia's oil and gas industry is in disarray and in continuous decline, also due to Colombia's leftist President, Gustavo Petro, banning the awarding of new oil and gas exploration licenses and contracts.
Colombia's natural gas production averaged 1 billion cubic feet per day during March 2024, or 2% less than a month prior and 6% lower year over year. That number was also lower than the 1.04 billion cubic feet of natural gas pumped during March 2019.
With domestic supply falling and demand rising, Colombia likely needs to turn to imports-and this will cost its industry a lot.
State energy firm Ecopetrol is considering importing LNG, which will be more expensive than domestic supply.
Colombia was also planning to start importing natural gas from Venezuela this year. But this plan may not materialize in the near term because of a decayed idle pipeline in dire need of repairs.
Ecopetrol said in November that it was exploring a proposal from Venezuela to start importing natural gas from its neighbor beginning in December 2024.
Colombia will benefit from cheaper gas from Venezuela, which could also lower the cost of electricity, the Colombian government said at the time.
However, the pipeline expected to ship the gas from Venezuela to Colombia is in no state to serve natural gas transportation currently, Luz Stella Murgas, who heads the industry group Naturgas, told Bloomberg earlier this year.
By Charles Kennedy for Oilprice.com
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