The creation of a public-access liquids terminal for the import and export of petroleum, vegetable oils and chemicals is helping to enhance Colombia’s oil, gas and vegetable oils market
Colombia holds a lot of promise and potential within the oil and gas industry – particularly so for the storage sector with the growing need for international standards midstream infrastructure.
For executives at Zenith Energy, the need for such midstream assets in the country coupled with the business friendly environment and interesting market dynamics proved to be the perfect mixture for the development of a public-access liquids terminal.
Strategically positioned on the Magdalena River in Barranquilla, Palermo Tanks Terminals was born from a joint venture between Coremar Group and Zenith Energy. The 58,000 m3 facility provides petroleum terminal services across two tanks. The initial phase was complete and went on stream in April 2016.
Plans are in place to swell capacity to more than 300,000 m3 to service petroleum, vegetable oils and chemicals.
In an interview with Tank Storage Magazine Jay Reynolds, Chief Operating Officer at Zenith reveals that Zenith and its partner Grupo Coremar plan to invest between $20 to 40 million in the second expansion phase.
‘As industry players navigate through the low crude price environment, more efficient and versatile logistics systems are required throughout the Latin America region.
‘With Coremar, we were able to identify an opportunity to deliver an effectively placed, value added logistics system. We designed and constructed the terminal to be extremely flexible and efficient meeting international HSEQ standards. The tanks are heated, with internal floating roofs and can handle crude oil, fuel oil, naphtha, gasoline and diesel.
‘We continuously identify strategic locations where we can serve the industry by developing midstream infrastructure that lowers current logistics costs. Usual storage capacity in the region for a specific terminal oscillates depending on the market conditions and existing logistics.’
The wider market dynamics in Colombia have been favourable for the development of more midstream infrastructure. Since 2003, the country has seen a dramatic increase in oil and natural gas production following the implementation of a series of regulatory reforms.
This has helped to grow its importance as an energy producer in the western hemisphere and as such it is the third-largest oil producer in Latin America and the seventh-largest crude exporter to the US.
Since becoming operational, the Palermo facility has received its first vessel and it is now focused on dispatching the product to the domestic market. Demand for tankage comes from growing volumes to service specific industries such as power generation, exploration and production, and local distributors. Reynolds says that executives are now focusing on increasing tankage for clean products imports as well as growing volumes in palm oil.
Reynolds adds: ‘Colombia is a dynamic market and storage and logistics needs are constantly changing. Palermo Tanks is properly located to service the crude and fuel oil exports thanks to being on the east bank of the Magdalena River, the main river artery in Colombia, and just 11 miles from the river mouth.
‘Coremar has been a leader in developing ports and maritime logistics in Colombia and with them, we were able to identify an opportunity to deliver an effectively placed, value added logistics system that provides optionality to our customers as the Colombian transportation network continues to improve.
‘The terminal is very competitive to service the clean petroleum products import market since it is located in Barranquilla, between Santa Marta and Cartagena, the main cities in the Colombian Caribbean region, and close by to the mining industry and growing vegetable oil production areas.’
In the wider Latin America region, Zenith is keeping a close eye on potentially attractive midstream opportunity development and has a dedicated business development team specifically focused on this region.
Reynolds reveals: ‘We currently have an interesting pipeline of projects in place and plan to deploy significant equity in the region over the next two to three years.’