A proposed LNG export program in Colombia involving Canadian oil firm Pacific Rubiales (TSX: PRE) stands a chance of succeeding despite being relatively high risk in nature, according to TD Securities oil analyst Jamie Somerville.

“It is not going to be easy, but if you are as aggressive and efficient as Pacific Rubiales has been in the past with other projects in Colombia, you could probably make it work. The concept of ‘small-scale LNG’ could make it possible to deliver relatively small quantities of the product to industrial clients in the Caribbean,” Somerville told BNamericas.

Pacific’s May announcement that it would begin small-scale LNG shipments to the Caribbean from the La Creciente gas field on the SSJN-7 license surprised some LNG experts. The project would be Colombia’s first, and industry consensus has previously assumed gas volumes in the country were insufficient to support an export program.

Colombian authorities have also previously been hostile to the idea of exporting LNG due to frequent natural gas shortages experienced across the country.

In October 2009 the government was forced to intervene in gas markets and impose rationing to ensure supply to thermo plants in the face of low hydrology at the country’s dams. Rationing only ended in April this year, and previous talk about LNG programs in the country has mainly focused upon importing rather than exporting the fuel.

Pacific Rubiales says the company has the full backing of the government, pointing to the recent passage of legislation in Bogot incentivizing exports. The company has enlisted the help of Belgian LNG transport company Exmar for the exports, and aims to sell the gas at prices between US$4.50/MBTU and US$5/MBTU.

Despite the firm’s bullish stance, Somerville remains cautious on the likely success of the scheme, insisting that the project remains in the early stages of development.

“LNG projects have been proposed in lots of places around the world, however, that doesn’t mean they are all developed. I would not yet assume that the project is definitely going ahead, as it is currently just starting FEED.”

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