Colombia and Venezuela to sign natural gas supply accord

Jul 13, 2004 02:00 AM

Colombia would ship natural gas to Venezuela under a preliminary agreement the presidents of the two countries are scheduled to sign during a summit.
The accord sets a deadline of six months for the countries to agree on terms for the shipments and would clear the way for construction of a 147 km (91-mile) pipeline, Daisy Cercera, director of the natural-gas department at Colombia's Mines and Energy Ministry in Bogota, said.

"We will provide gas to Venezuela for seven years," Cercera said. The flow through the pipeline would be reversed after Venezuela begins producing gas from fields in the Gulf of Venezuela, allowing for sale of the fuel to nearby countries, she said. "All of this is part of the strategy to connect with Central America," Cercera said.
Terms for the gas shipments, including pricing and volumes, still must be negotiated, she said.

The agreement would help Venezuela, the world's fifth-largest oil supplier, stem a decline in oil output in the western part of the countrycaused by a shortage of natural gas, which is injected into wells to push oil to the surface. Also easing the shortage will be the completion later this decade of a national pipeline grid to transport gas from the east.
Colombia would send between 250 mm and 300 mm cfpd of natural gas to Venezuela under the agreement, or as much as half of its daily output of about 600 mm cf. Venezuela, which has Latin America's largest gas reserves, produces about 6.3 bn cf of the fuel a day, mostly in its eastern region.

The agreement is scheduled to be signed by Venezuelan President Hugo Chavez and his Colombian counterpart, Alvaro Uribe, at a summit set for the El Tablazo petrochemical complex in north-western Venezuela.
ExxonMobil, the world's largest publicly traded energy company, agreed in May to return to Colombia after a nine-year absence to explore for natural gas in a joint venture off the country's northern coast.

Source: Bloomberg
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