Project Aims to be Colombia's Lowest Cost LPG Importer, Capturing
Significant Market Share
20,400-ton LPG Refrigerated Storage Facility
Expected to be In Service by 2027
CALGARY,
AB, July 22, 2024 /CNW/ - Frontera Energy
Corporation (TSX: FEC) ("Frontera" or the "Company")
announced today that its subsidiary, Sociedad Portuaria Puerto
Bahía S.A. ("Puerto Bahia") and Gasco Soluciones Logísticas
y Energéticas S.A.S. ("GASCO") have entered into a Framework
Collaboration Agreement (the "Agreement") to jointly pursue
a liquified petroleum gas ("LPG") project at Puerto Bahia's
state-of-the-art liquids and dry cargo port terminal strategically
located in the Bay of Cartagena, Colombia. The Agreement covers the
construction and operation of the LPG project and is expected to be
in service by 2027. Frontera owns a 99.97% equity interest in
Puerto Bahia.
Orlando Cabrales, Chief
Executive Officer (CEO), Frontera, commented:
"We are excited to enter into this Agreement with Gasco to
build and operate LPG facilities at Puerto Bahia. Through the
Agreement, Puerto Bahia and GASCO will bring LPG facilities on-line
in 2027 to capitalize on increasing LPG supply deficits in the
Colombian market at a time when the LPG market is expected to grow
at 4% per year. These supply deficits present a unique opportunity
for Puerto Bahia, in partnership with GASCO, to become the
strategic destination for Colombian LPG imports.
Leveraging Puerto Bahia's infrastructure and strategic
location and GASCO's experience and current domestic LPG
distribution market share, the LPG project aims to be Colombia's lowest cost importer and will
capture a significant share of this market over time, generating
total project yearly EBITDA of $10-
$15 million once it reaches its
target capacity."
Cristian Aguirre, General
Manager (CEO), Gasco, commented:
"This is an important project that we have been working with
our team in Colombia, Puerto Bahía
and Frontera. We consider that this project can fill a large part
of the needs for LPG imports of the Colombian market, in the near
future and in the long term. Let us remember that LPG
is a base fuel for the energy transition and for the reduction of
emissions worldwide; Additionally, in Colombia it is part of the fuel base used by
industry, energy generation and residential use.
We will continue working with all this great team -GASCO,
Puerto Bahía and Frontera- to achieve the complete development
of this important project and to start to offer to all the
Colombian market a magnificent import facility for LPG as soon as
possible."
Puerto Bahia and Gasco have signed a Collaboration Agreement to
develop of a 20,400 tons LPG refrigerated storage facility at
Puerto Bahia. The estimated cost of the project is between
$50 to $60
million, which will be shared between Puerto Bahia and
GASCO. Puerto Bahia's contributions are expected to be largely
in-kind.
As part of the Agreement, Puerto Bahia and GASCO will establish
a joint venture to develop, construct and operate the LPG
facilities at Puerto Bahía's port terminal in Cartagena,
Colombia. The project may include
additional phases to capture larger volumes, depending on market
demand for LPG.
According to the Colombian Mining and Energy Planning Unit
("UPME"), Colombia consumes
approximately 700 thousand tons of LPG annually and will require 1
million tons by 2031. It is estimated that under the base case
scenario, approximately 160,000 tons per year of the entire
Colombian market could be imported and supplied through this new
facility, increasing annually to 340,000 tons per year by 2030 and
beyond. Once constructed, the facility will accommodate two Very
Large Gas Carriers ("VLGC") per month to supply LGP to the
Colombian domestic market.
This collaboration is a significant step forward in meeting
Colombia's growing energy needs
and demonstrates the commitment of Puerto Bahía and Gasco to
investing in the country's energy infrastructure.
About Puerto Bahia
Strategically located on the Bay of Cartagena, Colombia. Puerto Bahia features both liquid
and dry cargo terminals, enhancing its strategic importance. Puerto
Bahia's liquids terminal exports and imports vital crude oil and
refined products from Frontera Energy Colombia Corp. (Sucursal
Colombia) and, other domestic and international crude oil
shippers. With a natural draft of over 18 meters and multimodal
connectivity, Puerto Bahía provides competitive advantages in
Cartagena´s port.
In 2023, Puerto Bahía and Refinería de Cartagena S.A.S.
("Cartagena Refinery") entered into an agreement to connect
Puerto Bahia's port facility and the Cartagena Refinery. The
connection will transport crude oil and other hydrocarbons between
Puerto Bahía's port facility and the Cartagena Refinery. The
Connection is anticipated to be online by year-end 2024.
In addition, Puerto Bahia's dry terminal is the largest hub for
roll-on, roll-off cargo in Colombia, accounting for more than 55% of the
Colombian car import/export market. The port has significant
expertise in break-bulk and project cargo and currently acts as a
key supply shore base supporting Colombia's active offshore oil and gas
industry.
About GASCO
Gasco Soluciones Logísticas y Energéticas S.A.S. is a company
owned by Empresas Gasco S.A, a leading Chilean energy provider with
a business model that integrates supply activities, logistics
management, gas commercialization and energy solutions. Gasco
distributes and markets liquefied gas and natural gas, both
directly and through subsidiaries and affiliates, to residential,
commercial, and industrial customers.
For over 160 years, Empresas Gasco S.A. has offered competitive
and innovative energy solutions through a group of companies whose
activities encompass various segments of the gas business value
chain, contributing to the sustainable development of the societies
in which it operates.
About Frontera
Frontera Energy Corporation is a Canadian public company
involved in the exploration, development, production,
transportation, storage and sale of oil and natural gas in
South America, including related
investments in both upstream and infrastructure facilities. The
Company has a diversified portfolio of assets with interests in 24
exploration and production blocks in Colombia, Ecuador and Guyana, a participation in a crude oil
pipeline and the exclusive operation of multi-purpose port
facilities in Colombia. Frontera
is committed to conducting business safely and in a socially,
environmentally, and ethically responsible manner.
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SOURCE Frontera Energy Corporation