Given the difficulties experienced by the natural gas sector in Colombia due to factors such as: (i) the El Niño phenomenon; (ii) the decrease in hydrocarbons exploration activities; (iii) the high prices of electricity and natural gas; and (iv) the shortage of natural gas in the short and medium term, the government has enacted Resolution 400052 of the Ministry of Mines and Energy ("MME") which sets out the legal framework for the creation of an Indicative Gas Supply Plan that will set out the policy actions required to ensure gas supply in the medium and long term..
The Plan intends to promote reliability of supply through the development of priority reliability projects and the promotion of the timely expansion of the national gas transportation system through expansion of existing capacity of development of additional capacity.
For this purpose, the plan identifies certain key projects, including new supply sources such as a new regasification plant on the Colombian Pacific Coast (in addition to the existing regasification plant that will supply LNG to thermal generators located on the Caribbean coast, which is being built in Cartagena) and the expansion of certain sections of the national gas transportation system, such as: (i) Jobo - Cartagena Gas Pipeline; (ii) Ballena - Cartagena pipeline; (iii) El Porvenir - Vasconia pipeline; (vi) Cusiana - Apiay pipeline; (v) Mariquita - Gualanday pipeline; and (vi) Buenaventura - Cali and Cali - Vasconia pipelines;
It also seeks to improve the following gas transportation segments: (i) Ballena - Barrancabermeja; (Ii) Cusiana - Bogota, (iii) CQR (eje cafetero); and (iv) Suroriente, as well as create the conditions for natural gas transportation demand to be satisfied by agents other than gas transportation companies in an efficient way by ordering the Energy and Gas Regulation Commission ("CREG") to create the regulatory framework to this end.
In this context, on March 15, 2016, CREG issued resolution CREG No. 038, which made public a draft resolution, "which sets out the procedures to be followed for the development of natural gas supply plan projects trough bidding processes" (the "Resolution").
The Resolution establishes the parameters for bidding processes to be carried out for the award and development of projects identified to in the Natural Gas Supply Plan, which will be applied to: (i) all natural gas transportation agents, (ii) those interested in participating in the bidding...