Canacol negotiates new gas sales contracts

New gas sales contracts

Further to its 10 November 2016 announcement of a new transportation agreement with Promigas S.A. to ship 100 million ft³/d of new gas production, the corporation has negotiated four new 'take or pay' gas sales contracts totalling 100 million ft³/d existing and new thermoelectric, refining, industrial, and commercial customers located in Cartagena and Baranquilla. The contracts all commence in December 2018, have a term of between 5 and 10 years, and are with large, established offtakers. The pricing of these new contracts, combined with the Corporation's current multi-year take or pay gas contracts, and the private pipeline sales as described below, results in an average contract price of approximately US$5.00/ew Gas Sales Contracts Further to its November 10, 2016 announcement of a new transportation agreement with Promigas S.A. to ship 100 MMscfpd of new gas production, the Corporation has negotiated 4 new take or pay gas sales contracts totalling 100 MMscfpd with existing and new thermoelectric, refining, industrial, and commercial customers located in Cartagena and Baranquilla. The contracts all commence in December 2018, have a term of between 5 and 10 years, and are with large, established offtakers. The pricing of these new contracts, combined with the Corporation's current multi-year take or pay gas contracts, and the private pipeline sales as described below, results in an average contract price of approximately US$ 5.00/million ft³ for the anticipated 230 million ft³/d of production in December 2018, (or the anticipated 230 million ft³/d of production in December 2018.

Private pipeline

A Special Purpose Vehicle (SPV) has been formed to build a new private gas pipeline connecting the Corporation's gas facility located at Jobo to the Promigas operated pipeline at Sincelejo. The private pipeline will consist of approximately 80 km of flowlines and two compression stations, and is designed to transport 40 MMscfpd 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 in December 2017. The SPV is anticipated 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 upon the above mentioned new private gas pipeline, the new gas sales contracts, and the recently announced agreement whereby Promigas will add 100 million ft³/d of new transportation capacity to the existing pipeline to Cartagena and Baranquilla by December 2018, the Corporation is planning to increase current gas sales from 90 million ft³/d to 130 million ft³/d in December 2017, and to 230 million ft³/d in December 2018.

The corporation expects to have approximately 190 million ft³/d of productive capacity from the 11 existing wells drilled in its Nelson, Palmer, Nispero, Trombon, Clarinete and Oboe gas fields combined with two remaining 2016 development wells (Clarinete 3 and Nelson 8) being drilled prior to year end 2016. In addition, the Corporation's facility located at Jobo has 190 million ft³/d of gas processing capacity.

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/28112016/canacol-negotiates-new-gas-sales-contracts/