News

Now that the expansion of the Panama Canal is finished, liquid national gas (LNG) is emerging as one of the next big drivers of the Panama economy. Hundreds of millions of LNG-related dollars are flowing into the country to build new facilities and infrastructure to meet global demand.

A few days ago International Finance Corp, a member of the World Bank Group, announced the completion of an agreement to invest $150 million for construction of Central America’s first integrated LNG-to-power facility. The $1 billion facility, which will be located on the Atlantic coast, will provide a cleaner power source for Panama, replacing oil and diesel and avoiding an estimated 1 million tons of carbon dioxide emissions a year, which is “roughly equivalent to taking more than 200,000 cars off the road,” according to a news report.

“This LNG to power facility is a game-changer for Panama,” said Giancarlo Ortega, IFC’s principal investment officer, in a statement. “It leverages expected growth in natural gas and provides a low-carbon power source for Panama, which has been heavily dependent on seasonal hydropower and vulnerable to fluctuations in oil prices.”

The facility is the latest evidence of LNG’s impact on Panama. The growth of LNG imports around the world is one of keys to the expansion of the Canal. It is an industry creating more jobs—and more renters and buyers—in Panama City.

Thanks to the expansion, the Canal can now handle 90 percent of the LNG tanker fleet, compared to only 6 percent of the fleet before the $5.4 billion new channel was opened a couple of months ago.

The United States is going to be one of the big beneficiaries. The Canal will dramatically shorten travels times of LNG shipments from the U.S., which is set to become the world’s third-largest producer of LNG after Australia and Qatar by 2020, according to industry data.

Large tankers headed for Asia can save as much as $3.2 million per round trip, compared with travel through the Suez Canal, according one estimate.

“The Panama Canal expansion will mean Asia can meet its demand peaks with U.S. gas with lower prices,” Alex Tertzakian, an analyst with Energy Aspects Ltd. in London, recently told a reporter.

The Canal will cut the travel time of tankers from the U.S. Gulf Coast to Japan by 30 percent, and by more than half to many destinations on the west coast of South America.