The World Bank’s private lending arm will help finance a $300 million liquefied natural gas export project in Colombia as demand for the super-chilled fuel in Latin America is forecast to double over the next decade.
The International Finance Corp. is leading a $240 million debt financing for the world’s first floating liquefaction plant to start operating in Colombia by mid-next year, Lance Crist, the IFC’s global head of oil and gas, said by telephone on July 9. The IFC will invest $75 million in the plant and the balance will be provided by other lenders in transactions expected to close “in the next several weeks,” he said.
Transport and power generation are boosting energy demand in Central America, where spending on petroleum imports more than tripled in 2013 from 2000, according to the Institute of the Americas. The Colombian plant is part of a $2 billion investment in energy projects that the IFC will back for Central America and the Caribbean basin over the next year, Crist said.
“The beauty of this is that it will basically enable Colombia to take advantage of some of its stranded gas and supply it to regional markets,” he said. “In the near term, they will be selling gas to the international market, but now that this kind of supply is available, you will start to see regasification units being built in the Caribbean.”
The Colombian plant, which will produce 500,000 metric tons of LNG a year, is a venture between Pacific Rubiales Energy Corp., the nation’s largest independent oil and gas exploration and production company, and Belgium’s Exmar NV, an LNG and LPG carrier owner in Antwerp. Peter Volk, a spokesman for Toronto-listed Pacific Rubiales, confirmed the company is in talks to receive investment from the IFC when reached by telephone today.
The IFC will probably supply at least $500 million in regional project funding over the next year, and the rest will come from other banks and partners, Crist said. The Colombian facility is under construction in China and will be brought to the Andean nation and commissioned next year, he said.
Pacific Rubiales said last year it was in talks to sell supplies from its plant to Gazprom Marketing & Trading Ltd., a U.K.-based subsidiary of Russia’s OAO Gazprom, for a period of five years, according to a statement on the company’s website. The two companies are still in negotiations, Volk said today.
Latin America, the world’s fastest-growing LNG market, will consume 28.9 million tons of the fuel by 2025, more than double the 13.3 million projected for this year, according to a forecast by Sanford C. Bernstein. That compares with global demand of 230.7 million tons last year. The Dominican Republic and Puerto Rico are the only Central American and Caribbean nations with LNG import terminals and Trinidad and Tobago is the only producer, according to the International Group of LNG importers.
The region spent $13 billion on petroleum imports in 2013 from $3 billion in 2000, the Institute of the Americas said in an October report, citing figures from the United Nations’ Economic Commission for Latin America.
“Both of these regions have been plagued by the lack of energy entirely or very high-cost supply and incremental supply in recent years has been largely provided by fuel oil and diesel in power generation, which is quite expensive,” Crist said, referring to Central America and the Caribbean. “We see that as a severe constraint on growth in the region across all sectors, job creation, you name it.”
The IFC is also in talks with Petroleos Mexicanos, or Pemex, to help the state-run company broker a deal to develop a pipeline that would take gas from Mexico to Central American nations, Crist said. Guatemala and Mexico signed in May an $800 million accord to build a link between the two nations.
“We are trying to address all facets of the value chain by promoting greater supply through gas development, greater transportation through pipelines and liquefaction and the access to the regasification,” he said. “We are putting a a big emphasis on gas because we see it as helping address the dual needs of energy security and being a more climate-friendly alternative.”