The Colombian government has issued a new timetable for the tender with respect to the design, construction and operation under a build, own and operate, or “BOO” scheme, of an LNG regasification facility in the Pacific seaport city of Buenaventura and the related pipeline to transport gas from this facility to the southwestern region of Valle del Cauca (the Project), where it will connect to the Colombian national gas transportation system. With an estimated overall value of USD 700 million, the Project is part of Colombia’s plan to enhance its gas supply infrastructure by providing for a second port of entry that would complement the country’s sole existing LNG import terminal in Cartagena on the Caribbean coast that commenced operations in 2016.
Colombia is facing a looming gas shortage, with internal demand expected to increase consistently in the coming years. Although opinions are divided as to when this gas deficit will ultimately occur, producers, industry experts and government agencies agree that a greater import capacity is required to meet the expected increase in local gas consumption. The Pacific LNG Import Terminal has long been championed by the Colombian government as a crucial milestone in its efforts to address this looming gas shortfall.
The initial draft tender documents for this Project were first published for public consultation in May 2018. During this first consultation period, the Mining and Energy Planning Agency (UPME) received comments from potential bidders, governmental agencies and other interested parties. Most notably, UPME received comments and requests from certain Colombian governmental authorities regarding certain key aspects of the Project’s feasibility, including its location.
On June 30, 2020, UPME published its answers to the first round of comments, together with a revised draft of the tender documents that is partly based on feedback received during the first consultation period. Under the new timeline, the most notable deadlines are:
Although the revised draft tender documents include several revisions, the overall structure of the Project remains largely unchanged. Below is a brief overview of some of its main features:
Despite the responses provided by UPME to the observations and comments by interested parties during the first consultation period, the new draft bidding documents (and some of the responses provided by UPME) still include hurdles and ambiguities that interested parties will need to carefully review. Some of these challenges include:
In spite of the challenges faced by this Project (exacerbated by the Covid-19 pandemic) and that crucial aspects still need to be further defined or clarified, it is clear that Colombia continues to strive for a stable and reliable gas supply to provide for its ever-growing internal demand. Colombia is experiencing a new momentum for investing in the country’s gas import infrastructure as other LNG related projects begin to appear on the horizon, such as the gas-to-power hub in the northern coastal region of Sucre. Hopefully, the success of these endeavors is equally driven by the country’s increasingly evident willingness to work with developers, lenders and other stakeholders in structuring crucial infrastructure projects that will help pave the way for Colombia’s continued development.
Please contact Gregory Tan and Christian Rudloff of Shearman & Sterling’s Project Development & Finance practice should you have any queries related with this matter.
Special thanks to visiting attorney Alejandro Medina, who co-authored this publication.
 The Project could be located in a restricted area neighboring naval bases and stations. Other concerns relate to the possible interference with the operation of existing port facilities in the area and its potential environmental impact.
 However, UPME reserves the right to amend the bidding documents until February 3, 2021.
 The initial COD approved by the Ministry of Mines and Energy (the Ministry) was January 2021. According to the Technical Studies for the Natural Gas Supply Plan published by UPME for public consultation on January 2020 (such plan needs to be approved by the Ministry), the COD would be September 2023 for the LNG terminal and January 2024 for the pipeline.
 At this time it is not entirely clear who would be considered “beneficiaries” (or demanda beneficiada) of the Project. Under the Technical Studies for the Natural Gas Supply Plan, UPME suggested certain composition of such beneficiaries to be distributed throughout the country’s regions, based on the fact that one of the main objectives of the Project is to enhance the country’s gas supply security and reliability. However, in its answers to the first round of public consultation, UPME mentioned that the base studies for the composition of the beneficiaries of the Project would be updated and submitted to the Ministry