Saturday, June 17, 2017

Colombian natural gas dynamics and Canacol Energy shoutout

Seeking Alpha:

The flag of Colombia

Colombia's thirst for natural gas has been expanding at a rapid rate and in comparison to its South American neighbors its reserves of around 4.8 trillion cubic feet are quite small. Despite these relatively low reserves Colombia was natural gas self-sufficient up until 2016 when booming demand and supply constraints forced it to import natural gas for the first time ever. This heralded the end of decades of self-sufficiency creating a significant opportunity for natural gas producers.

Of greater concern for Colombian policy makers is that a combination of a sharp uptick in demand coupled with growing supply constraints is causing demand to significantly outstrip supply. 


Canacol has formed a special purpose vehicle to construct a new private gas pipeline connecting its gas facility located at Jobo to the Promigas operated pipeline at Sincelejo. The pipeline is forecast to be completed by December 2017 and will transport 40 MMscfpd to Canacol's customers in Cartagena. It also will lift the company's production flow rate to 130 MMscfpd and expand to 230 MMscfpd by 2018, giving its earnings a healthy lift.

I am waiting for the pipeline to be completed so that Canacol's delivery of gas can be increased. This should happen by the end of the year. Obviously there is risk but the market exists and the country is hungry for gas.

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