News and AnalysIs for

The Ministry of Mines and Energy (MinMinas) issued a decree (N°2345 of December 2015) that looks to increase the reliability and supply of natural gas in the country and address a lack of infrastructure.

After much fanfare the Minister of Mines and Energy Tomás González announced that authorities had reached an agreement with lawmakers and industry delegates from the Caribbean coast that would mean no new price increases for natural gas, to the dismay of gas producers. But now it emerges that the magic formula is in fact, optional.

Shortfalls in the supply of natural gas and drought due to El Niño weather could mean that thermal electrical generators will have to increase their use of diesel to generate energy, says a report.

The decision by the Ministry of Mines of Energy (MinMinas) to modify the formula used to figure natural gas prices on the Caribbean Coast has left few content. Proponents of the change now want more action, the gas industry says it threatens investment and observers comment on how it impacts long term projects.

Despite signs of advances over the second half of this year, regulations for how to proceed with the production of Coal Bed Methane (CBM) are still not ready, although the government says it is working intensely to address the issue.

The Minister of Mines and Energy Tomás González said the government has agreed to link the natural gas price for the Caribbean coast to the WTI crude oil price index and to start infrastructure work to connect the region. Meanwhile the Colombian Petroleum Association (ACP) blasted the pricing modifications as a change of the rules, and questioned what would happen when WTI rises again.

As part of its deal with business sectors of the Caribbean coast, the Ministry of Mines and Energy (MinMinas) is moving forward with plans to hold a tender to build a gas pipeline that will connect the Atlantic coast.

The Colombian country manager  of Gas Natural Fenosa, González Santos, said that the supply of natural gas is assured and the matter is “not so complicated”, but the country must be ready to import gas when the hydro-electric grid is short on water.

The director of the Energy and Gas Regulation Commission (CREG) Jorge Pinto Nolla defended the regulatory structure around the natural gas industry in an interview, and said that consumers will not suffer price hikes in their energy bill, nor will the industry be left without the essential fuel.

The Minister of Mines and Energy Tomas González and business representatives grouped under the National Business Owners Association (ANDI) in the Caribbean coast have agreed to review the formula and increase in natural gas rates that had been planned for November 30, 2015. It is not the first time that MinMinas has balked on price adjustments due to political outcry.