Frontera Announces Agreement Between Puerto Bahia and GASCO To Pursue LPG Project in Cartagena, Colombia

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Jul 22, 2024, 08:15 ET

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 /PRNewswire/ - 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