News

The U.S.-based AES Corporation has officially opened its first liquefied natural gas terminal in Colon, the latest step in Panama’s development as the LNG capital of the region.

LNG has become a major driver for the local economy, in large part due to the expansion of the Panama Canal, which can handle the super-sized LNG tankers from the United States.

The AES terminal is part of a $1.15 billion facility, which includes a 381-megawatt power plant. The company’s LNG tank will be “the largest in the Caribbean, which will serve the growing need for natural gas in Central America and the Caribbean belt,” according to Zack’s coverage.

To coincide with the launch of the facility, the U.S. and Panama announced a new deal, “paving the way for more private investment to expand the importation and distribution of U.S. liquefied natural gas in Latin America,” according to Reuters.

The framework agreement sends a signal that Panama “welcomes investment, in particular, private sector funding of projects,” according to Reuters.

The AES Colon project will help turn Panama into an LNG distribution hub, “with cargoes imported from the United States sent to other countries in the region, including Guatemala, Honduras, Nicaragua,” David Malpass, Treasury undersecretary for international affairs, told Reuters

The company plans to expand its LNG exports from the United States to “drive economic development in the region with cleaner and more cost-effective energy as it will replace the expensive petroleum-based and oil-based fuels,” the company said.