THE COLOMBIAN GAS MARKET AND ITS DEVELOPMENT STRATEGY 2012 CURAÇAO CONFERENCE/EXPO ON THE FUTURE OF DURABLE ENERGY 29-31 March 2012
1
Consejo Nacional de Operación de Gas Natural
Content
Drivers of growth in the Colombian Gas Market
Components of the Gas Policy Programme
Main results and transferable lessons
2
Consejo Nacional de Operación de Gas Natural
Drivers of growth in the Colombian gas market
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Consejo Nacional de Operaci贸n de Gas Natural
POWER BLACKOUTS 19921993
The country was subjected to the most intense and prolonged rationing in its history, more than 4 hours daily.
Duration: March 2/92-Apr 1/93 (13 months)
Energy not supplied: 5183 GWh (2 months of consumption), 14% of demand.
Voluntary industry rationing: 15%.
FUENTE: ACOLGEN
Composition of Colombian Electricity Generation Capacity
Breakdown of the Colombian Power Capacity 1994 (MW)
INSTALLED CAPACITY 1994 Gas Coal Hydropower Fuel Oil TOTAL
Gas
Coal
Hydropower
Fuel Oil
MW 1.135 617 7.863 465 10.080
% 11% 6% 78% 5% 100%
Energy sources used for cooking (1992) Cost (USD/MBTU)
Final consumption (%)
49
30
29 21 16
16 7
WOOD
ELECTRICITY
KEROSENE
6
PROPANE
7
4
NATURAL GAS
FUENTE: Perry (1992) 
The residential sector used the most expensive energy for cooking.
800
Cost, price and subsidy of energy sources 1991 US$/TEP ECONOMIC COST
PRICE
100%
% SUBSIDY
90%
700
80%
600
70%
500
60%
400
50%
300
40% 30%
200
20%
100
10%
0
0% Electricity
Propane
Cocinol
Gasoline
Kerosene Natural Gas
Coal
FUENTE: DNP (1991)

All the energy sources were heavily subsidized except coal.
Drivers of growth in the Colombian Gas Market
Inefficient pattern of energy consumption :
Excessive consumption of high cost energy sources High subsidies for all the energy sources
High social and macroeconomic impact of unnecessarily high energy costs
High level of dependency on hydroelectricity with consequent exposure to climate change risks
Major new gas reserves had been declared by 1993 (e.g. Cusiana)
Components of the Gas Policy Programme
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Consejo Nacional de Operaci贸n de Gas Natural
Key elements of public policy
Support for pipeline construction Support for the development of new electricity generation capacity Concessions to increase the market penetration of natural gas Subsidies for low income customers New industry structure New fiscal regime New regulatory regime 10
Consejo Nacional de Operación de Gas Natural
Government support to pipeline construction
•Subscribe and pays a long term BOMT contract
TRANSPORTATION UTILITY •Sell pipeline capacity •Pays ECOPETROL´s fees
PROJECT DEVELOPER •Build, Operate, Maintain an Transfer the pipeline •Collect the Bill
•
2.600 km of main pipelines.
900 km of regional pipelines.
USD $ 1000 Investment.
Millions
of
Government support for the development of new thermal generation plant COLOMBIAN GOVERMENT •Support PPAs with sovereign guarantee
EMPRESA GENERADORA •Sell power to the market •Pays capacity fees •Buy fuels
PROJECT DEVELOPER •Build, Operate, Maintain •Collect the Bill
Through PPAs (Power Purchase Agreements), the following projects were developed:
Termobarranquilla (Gas), 747 MW.
TermoValle (Gas), 232 MW
Termopaipa (Carbón), 150 MW.
Concessions to increase natural gas penetration MINISTRY OF MINES AND ENERGY •Subscribe long term contract •Grant subsidies
PUBLIC UTILITY •Extends coverage •Provides the service
The service has expanded to more than 1.0 million users
Subsidies for low income customers Solidarity Fund for Income Redistribution
Contributions from high income customers
Public Funds
Tax imposed on gas transported
3 % of transportation bill Subsidies for lifeline consumption of low income customers
Distribution Networks
Connection of low income customers
Conversion costs of internal facilities.
New industry structure
……. ……. 15
New institutions for natural resource management
Institutional separation of regulation and operation roles. ECOPETROL S.A. ECOPETROL
Operator
(Operator and Regulator)
ANH
Natural Resource Manager
New E & P contract
Without mandatory participation by ECOPETROL
Specific measures to develop the gas market
Exploration phase: 6 years + 4 years of extension
Evaluation phase: 1-2 years + 3 years of extension
Exploitation phase: 24 years until depletion
Major achievements
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Consejo Nacional de Operaci贸n de Gas Natural
Rapid increase in customer numbers Customers served 1994 a 2010 7.000.000 6.000.000 5.000.000 4.000.000 3.000.000 2.000.000
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0
1994
1.000.000
FUENTE: UPME-PROMIGAS
Population served Population of the country Coverage FUENTE: PROMIGAS-DANE
A単o 2000 9.067.662 40.800.000 22%
A単o 2005 16.276.829 42.888.594 38%
A単o 2010 24.692.288 45.590.000 54%
Evolution of Demand Natural Gas Demand Evolution (MPCD) TOTAL
2000
Petrochemical
Power generation Industry and Commerce Residential Refinery GNV Petrochemical TOTAL
GNV Refinery Residential
2005 242 130 56 115 9 11 563
2010 189 235 87 82 33 11 637
FUENTE: PROMIGAS-MINMINAS
Industry and Commerce Power generation 0
200 2010

400 2005
600
800
1.000
2000
Demand has grown steadily over the decade in all consumption sectors.
295 274 109 99 72 12 861
Conversion to Vehicular Natural Gas in Colombia
500
250000
400
200000 300 150000 200
100000
100
50000
FUENTE: GAZEL
2.010
2.009
2.008
2.007
2.006
2.005
2.004
2.003
2.002
2.001
2.000
1.999
1.998
1.997
1.996
1.995
1.994
1.993
1.992
1.991
1.990
1.989
1.988
0
1.987
0
1.986
Vehículos convertidos
300000
600
Exención del IVA para kits Reducción de los subsidios a la gasolina Liberación del precio de la gasolina
Vehículos Diesel al mercado
EDS GNV
350000
Natural gas network in 1991 GUAJIRA
Venezuela Barranca
10 MPCD Bucaramang a
Bogotรก Neiva 20 MPCD
Apiay
FUENTE: DNP (1991)
Natural gas network in 2011 GUAJIRA 700 MPCD (actual) 535 MPCD
58 MPCD
Exportación 150 MPCD Capacidad gasoducto: 500 MPCD
190 MPCD Creciente
Venezuela
260 MPC/D
Barranca Vasconia
GIBRALTAR36 MPCD (VI – 2010) 280 MPCD
La Belleza Cogua Mariquita
FUENTE: NATURGAS
El Porvenir
210 MPCD
CUSIANA y 200 MPCD (2010l) 270 MPCD (Ener-11) CUPIAGA 410 MPCD (Jul-11) 22
Proven reserves and exploration activity
FUENTE: ANH RONDA COLOMBIA 2012
INSTALLED CAPACITY MW ENERGY RESOURCES Thermal Power Plants Gas Coal Heavy Fuel Oil Combustoleo Light Fuel Oil Biomass Hydro Wind Installed Capacity
1994 2.217 1.135 617 465
7.863
% 22%
78%
10.080
2010 4.227 2.478 1.073 434 187 0 55 9.044 18 13.290
% 32%
2010 15.591
% 28%
Power generation capacity (MW) 68%
ENERGY PRODUCED GWH ENERGY RESOURCES Thermal Power Plants Gas Carb贸n Fuel Oil Combustoleo ACPM Cogeneradores Hydro Wind Energy produced
1994 6.909 5.362 1.410
138 29.250 36.159
% 19%
81%
41.074 56.664
Composition of electricity generation
72%
10.000 9.000 8.000 7.000 6.000 5.000 4.000 3.000 2.000 1.000 0
1994
2010
Hydro
7.863
9.044
Thermal
2.217
4.227
Contribution of gas-fired power plants to the reliability of Colombian electricity supply
FUENTE:XM S.A.
Variation of gas consumption in response to changes in rainfall
FUENTE:XM S.A.
Evolution of primary energy consumption in Colombia ENERGETICO PRIMARIO CARBON MINERAL GAS NATURAL HIDROELECTRICIDAD LEÑA Y ORGANICOS PETROLEO
1991 11% 8% 11% 27% 43%
2009 33% 18% 6% 9% 35%
Matriz Energética Colombiana (%) 2009
CARBON MINERAL GAS NATURAL HIDROELECTRICIDAD
FUENTE: DNP (1991), UPME(2009)
LEÑA Y ORGANICOS PETROLEO
The Colombian energy mix has changed substantially: natural gas and coal have increased their participation, reducing the share of firewood, oil and hydroelectricity.
Gas demand evolution (GBTUD) GBTU/D
4.2 DEMANDA DE GAS NATURAL POR AREA GEOGRAFICA 1.200,0
1.000,0
800,0
600,0
400,0
200,0
0,0 dic-2010 ene-2011 feb-2011 mar-2011 abr-2011 may-2011 jun-2011
28
jul-2011
ago-2011 sep-2011 oct-2011 nov-2011 dic-2011
Venezuela
195,2
189,6
208,6
173,4
174,2
214,0
260,6
226,3
223,0
195,9
201,0
165,3
223,6
Interior
506,7
492,1
533,9
498,3
476,3
506,4
475,8
487,6
505,8
480,4
464,5
481,8
472,2
Costa Atl谩ntica
337,2
357,1
326,0
298,7
321,9
303,5
316,2
329,2
357,2
377,9
387,9
373,0
358,1
Consejo Nacional de Operaci贸n de Gas Natural
How about Curaςao
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Consejo Nacional de Operación de Gas Natural
Fuel volumes and prices Fuel Transportation Mogas Low Sulphur Diesel Fuel Transportation Mogas Low Sulphur Diesel
Estimated volumes liters / year (2012)
Fuel costs in ANG / liter (march 2012)
110.000.000
2,38
60.000.000
1,98
Estimated volumes liters / year (2012)
Fuel costs in ANG / liter (march 2012)
110.000.000
2,38
60.000.000
1,98
Fuel Cooking gas
Estimated volumes (2012)
Fuel costs in ANG / liter (march 2012)
LPG 20 lbs
150.000 cylinders
14,8
LPG 100 lbs
55.000 cylinders
66,5
SOURCE: Oxperts consultancy 30
1 USD ~ 1,8 ANG Consejo Nacional de Operaci贸n de Gas Natural
Power generation installed capacity
Composition of installed capacity in Cura莽ao 2008 (MW) Wind turbines 5%
Diesel 52%
Vapor turbines 43%
Diesel
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Vapor turbines
INSTALLED CAPACITY 2008 MW Diesel Vapor turbines Wind turbines TOTAL Source: Nucapital Services
90 75 9 174
Wind turbines
Consejo Nacional de Operaci贸n de Gas Natural
Colombian relative prices against natural gas price
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Consejo Nacional de Operaci贸n de Gas Natural
Potential savings in Colombia Estimated volumes 2012 (Liters/year) TRANSPORTATION MOGAS LOW SUP
COOKING LPG 20 Lbs LPG 100 Lbs
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Fuel Costs in ANG/liter (March 2012)
Colombian Relative price
110.000.000 60.000.000
2,38 1,98
2,62 2,16
150000 55000
14,8 66,5
1,43 1,97
Consejo Nacional de Operaci贸n de Gas Natural
¡¡ Muchas gracias ¡¡
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Consejo Nacional de Operación de Gas Natural