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Canacol Energy provides pipeline update

Published by
World Pipelines,

Canacol Energy Ltd. (Canacol) has provided an update regarding the execution of 100 million ft3 in both existing and new gas sales contracts for new customers located on the Caribbean coast of Colombia. It has also highlighted the initiation of a private pipeline venture that will deliver 40 million ft3 of new gas production to its customers on the Caribbean coast in 2017.

New gas sales

Further to a 10 November 2016 announcement of a new transportation agreement with Promigas S.A., Canacol negotiated four new take or pay gas sales contracts totalling 100 million ft3 of new gas production.

All of the contracts commence in December 2018, have a term of between 5 to 10 years.

Private pipeline

A special purpose vehicle (SPV) has been formed to build a new private gas pipeline connecting the corporation's gas facility in Jobo to the Promigas-operated pipeline in Sincelejo.

The private pipeline will consist of approximately 80 km of flowlines and two compression stations. It is designed to transport 40 million ft3 of Canacol's gas to new and existing customers located in Cartagena under take or pay contracts at existing prices. Surveying and permitting for the new pipeline is underway, with first gas transportation anticipated for December 2017.

The SPV is expected to raise approximately US$50 million in a combination of equity and debt, outside of Canacol, to construct and operate the pipeline.

Gas production forecast

Based on the new private gas pipeline, new gas sales contracts and the agreement whereby Promigas will add 100 million ft3 of new transportation capacity to the existing pipeline, Canacol is planning to increase current gas sales from 90 million ft3 to 130 million ft3 in December 2017, and to 230 million ft3 in December 2018.

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