Colombia Risks a Gas Squeeze Just as a Dry El Niño Looms
Energy
Key Facts
—The ruling. On June 24 a court in Alberta let Canacol Energy walk away from its Colombian gas contracts as part of its restructuring.
—The deadline. The company has told the court it has cash to operate in Colombia only until July 10 without a sale or fresh funding.
—The stake. Canacol supplies about 7.5 percent of Colombia’s gas and much of the Caribbean coast’s demand.
—The timing. A strong El Niño is forecast for the second half of the year, which would force gas-fired plants to work harder as hydro output falls.
—The buffer. Colombia has almost no gas storage, so any sudden loss of supply lands straight on households and industry.
A troubled Canadian company is about to test how fragile Colombia’s Colombia gas supply really is. A foreign court has let it drop its contracts here, and the timing could hardly be worse.
For a reader abroad, the mechanics are unusual. A firm domiciled in Canada, restructuring under Canadian law, has won permission from a court in Alberta to tear up supply deals that keep the lights and stoves on across a stretch of Colombia.
Canacol Energy is Colombia’s largest private gas producer and one of its most important after the state’s Ecopetrol. It feeds households, industry and power plants across several Caribbean-coast departments.
Why Colombia gas supply suddenly looks exposed
The company entered creditor protection late last year and has been running low on cash ever since. As it told the Alberta court, its money will not stretch past the tenth of July without a sale or new financing.
On the twenty-fourth of June, the judge agreed to let Canacol shed the long-term contracts that would-be buyers saw as a deal-breaker. The decision hands the company relief but throws the question of supply back onto Colombia.
The reason it matters so much is the country’s slim margin. Colombia keeps almost no gas in storage, and its only regasification terminal already runs near its limit, so there is little cushion if a major supplier falters.
The strain is already showing. Large industrial users have cut their gas consumption by more than a quarter this year, switching to costlier and dirtier fuels, a quiet retreat for a country that had cast gas as the bridge of its energy transition.
A Colombian decision, not a Canadian one
The final word now rests at home. Colombia’s company regulator can invoke a public-order exception under the country’s cross-border insolvency law to refuse to enforce the foreign ruling, so the outcome will be decided in Bogotá as much as in Alberta.
The weather adds urgency. A strong El Niño is expected in the second half of the year, which would sap the hydroelectric dams that supply much of Colombia’s power and force gas plants to burn more just as gas grows scarce.
For residents and investors, the read-through is a country with too little slack. Whatever happens to Canacol, analysts warn the likeliest outcomes are higher tariffs and bigger subsidies, with outright shortages the darker risk if the timing turns against it.
There is a deeper worry about the rules themselves. Colombia’s gas market was built on the idea that contracts are honoured, and a supplier walking away through a foreign court sets a precedent that regulators fear could spread if it goes unanswered.
The roots of the trouble are geological as much as financial. Canacol’s fields have been depleting for years, its output sliding from close to two hundred million cubic feet a day in 2023 to around seventy-five now, and recent exploration failed to replace what was lost.
That leaves the state as the likely backstop. Ecopetrol has signalled interest in buying the business, a move that would fold a failing private supplier into public hands precisely when the government can least afford a gap on the coast.
Why is Colombia gas supply at risk?
Canacol, which provides about seven and a half percent of the country’s gas, has won court permission to end its Colombian contracts and says its cash lasts only until mid-July. With almost no storage and a strained import terminal, the country has little buffer if that supply falls away.
What does El Niño have to do with it?
A strong El Niño is forecast for the second half of the year, which cuts hydroelectric output and forces gas-fired plants to run harder. That raises gas demand at the very moment supply looks least secure.
Who decides what happens next?
Although a Canadian court approved the contract terminations, Colombia’s own regulator can refuse to enforce that ruling under a public-order exception. The country’s authorities, not the foreign court, will ultimately decide the impact on users.
Frequently Asked Questions
Why is Colombia's gas supply suddenly at risk?
Canacol Energy, which supplies about 7.5% of Colombia's gas, has won court permission to cancel its Colombian contracts and says it will run out of cash by July 10 without a sale or new funding. Colombia has almost no gas storage and its only import terminal is already near capacity, so there is very little cushion if that supply disappears.
What does El Niño have to do with Colombia's gas situation?
A strong El Niño is forecast for the second half of the year, which would reduce hydroelectric output and force gas-fired power plants to burn more gas. That means demand for gas could rise sharply at exactly the moment supply looks most uncertain.
Can a Canadian court actually force Colombia to lose its gas supply?
Not necessarily — Colombia's own regulator can invoke a public-order exception under the country's cross-border insolvency law to refuse to enforce the Alberta court's ruling. The final decision rests with authorities in Bogotá, not with the Canadian court.
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