Information management: key in strengthening the gas market in Colombia

The El Niño phenomenon of 2009–2010 left a lesson as harsh as it was evident: a market without reliable and timely information complicates decision-making in the face of critical events. In that context, the country was forced to face a scheduled rationing of natural gas, in which a priority order was established for addressing demand according to its type and contractual modality. This decision highlighted the lack of transactional and operational information that made the market opaque and complicated management at decisive moments for the country.

As a result of this experience, two crucial decisions were made for the energy sector:

1. Ensure the availability of gas for the reliability of the electricity sector.
2. Consolidate a market in which demand could meet its needs at efficient prices and with optimal operation of the infrastructure.

In response, through a decree, the Government defined a public policy aimed at ensuring the national supply of natural gas and guaranteeing the management of operational and transactional information in the sector.

Consequently, the Energy and Gas Regulatory Commission (CREG) implemented mechanisms to ensure the supply of thermal demand with imported gas, issued the necessary regulations to organize the wholesale market, and selected a Market Manager responsible for collecting, centralizing, and publishing information, ensuring its timely availability for all interested parties. Since 2015, the Colombian Mercantile Exchange (BMC) has provided this service as the Natural Gas Market Manager.

In addition to centralizing and publishing operational and transactional information, the CREG assigned the Manager the functions of permanently monitoring the market, analyzing information, and disseminating reports with operational, economic, and prospective insights. It also tasked them with recommending regulatory adjustments and proposing improvements in information capture to promote efficient marketing of supply and transportation capacity. Understanding the dynamics and trends of the market reinforces the task of turning data into clear and timely signals that guide market decisions.

Information to anticipate challenges

At the beginning of 2024, the Market Manager published the Annual Report 2023, in compliance with its obligation to monitor the wholesale market. In the prospective balance between supply and demand included in this report, a warning was issued about a gas shortfall in the short, medium, and long term, primarily originating from the decline of the major fields that have supplied demand over the past decades.

These early signals were communicated with the expectation that the Natural Gas Production Declaration (DPGN) would incorporate new quantities of gas to help close the identified gaps. However, the DPGN of July 2024 did not show the required evolution and, on the contrary, reflected a reduction compared to the 2023 declaration.

In this new context, the Market Manager has taken on the responsibility of preparing and publishing prospective gas balances, with the purpose of providing quantitative information that allows identifying the available quantities and their capacity to meet demand. These balances have allowed, for the first time, to identify the actual gas shortages and confirm the need to resort to imports to ensure the continuity of supply.

The published analyses have contributed to the Government and market agents taking actions aimed at mitigating the identified shortages. The Government has adopted public policies aimed at facilitating the development of offshore sources and promoting the import of natural gas. Likewise, the CREG has made regulatory adjustments to streamline the supply marketing process, moving from an annual frequency to a quarterly one and even enabling shorter-term contracts.

These measures seek to optimize the use of all available molecules to meet demand, according to the prioritization order defined by public policy, in case the commercial balance is deficit. In this context, strengthening the wholesale market is not only a matter of reliability but also of competitiveness and sustainability of the energy sector.

In the prospective balance between supply and demand, included in the Annual Report 2023, a gas shortage was warned about in the short, medium, and long term, mainly originating from the decline of the major fields that have supplied demand over the last decades.

Perspectives and challenges

The initiatives of the agents have concentrated, in the short term, on proposals for the construction of regasification terminals that facilitate imports and strengthen supply security. At the same time, in the long-term horizon, the development of the offshore Sirius field represents a strategic opportunity to increase national supply. It is projected that this field could contribute significant volumes by the end of the decade, reducing dependence on imports and helping to close the structural gaps in the market.

However, the main challenge moving forward is to ensure clear and sustainable investment signals that drive the development of new supply. This involves options such as reactivating exploration, promoting onshore and offshore projects, streamlining import schemes to secure long-term contracts, leveraging unconventional reservoirs, and advancing enhanced recovery initiatives.

Additionally, it is essential to strengthen the infrastructure that allows for the efficient transportation of gas from all sources to consumption centers. The availability of infrastructure and the diversification of sources will be decisive in ensuring supply and maintaining confidence in the market.

The lesson learned since 2010 is clear: energy security does not depend solely on new molecules but on reliable and transparent markets supported by timely and symmetrical information.

The Manager has established itself as a source of official and institutional information, reducing asymmetries, making prices and quantities traceable, and supporting informed decisions in critical moments. Quality information and inter-institutional coordination are the pillars that allow anticipating supply risks, guiding decisions, and strengthening market resilience in the face of uncertainty scenarios.

As conceived, the role of the Market Manager, the commitment of the Mercantile Exchange of Colombia is to continue providing transparency and prospective analysis that allows agents to anticipate trends and authorities to design policies and regulations based on evidence.

Maintaining a robust and timely information system will continue to be key to sustaining the energy security of Colombians and to ensure that, within the framework of the energy transition, natural gas maintains its essential role as a backup source and transitional energy towards cleaner systems.

The lesson learned since 2010 is clear: energy security does not depend solely on new molecules but on reliable and transparent markets supported by timely and symmetrical information.