The Panama Canal Authority is studying the possibility of constructing a 1 million b/d pipeline to transport LPG from the Caribbean Sea to the Pacific, with a decision expected by summer to move forward with the next steps, Administrator and CEO Ricaurte Vasquez told Platts, part of S&P Global Commodity Insights, on March 4.
"I think my expectation is by this summer. By this summer, we will have the approval to move to the next steps. Once we get the approval from the board, we [can] openly talk about these spec discussions," Vasquez said in an interview on the sidelines of the LPG International Seminar 2025 in Tokyo.
"We have to make an important roadshow to talk to potential buyers, to talk to the industry to see the volumes [and] how we are going to structure the commitments because, in the end, the Panama Canal has to tender out the concession," he said, adding that a final investment decision "is probably going to be next year."
Vasquez said the ACP's consideration of building the pipeline is part of its response to a drop in transits through the canal for the fiscal year ended September 2024, as well as the expected growth in LNG shipping from US terminals.
"So, it is clear that under the current administration in the US, energy products will have a very high priority," he added. "So, this is a window of opportunity that Panama must capture to ensure we remain relevant for international trade."
Vasquez added that a possible LPG pipeline could replace part of the product transit through the canal with LNG.
"That would be a possibility. There will be customers that go by water from origin to destination, but there will [also] be the possibility of incremental volume through the pipeline, which competes with how many vessels you want to build," he said.
When asked whether the pipeline could be commissioned within this decade, Vasquez said, "I'm positive that this could be the case once we make a decision."
Free up LNG carriers
The potential pipeline proposed by Vasquez during his presentation at the Tokyo LPG conference would be designed to target ethane and LPG, freeing up Panama Canal capacity for LNG carriers.
According to the ACP, annual transits of propane and butane through the canal are expected to decline by 2035, although ethane transits are projected to increase during the same period.
Ethane demand in Asia is expected to rise over the next several years due to low US prices and a growing Asian petrochemical sector. This is especially true in China, where increasing ethane demand has led some Very Large Ethane Carrier owners to consider doubling the size of their fleet over the next three years, sources told Platts.
It is due to this expected ethane export demand that the ACP continues to discuss what a pipeline system might look like.
"That is something we are looking at, and that is why I showed ethane, because essentially, how many pipes do you want to put into the system?" Vasquez said.
'A state issue'
In addition, on a day when US-imposed tariffs went into effect on goods imported from trade partners Canada and Mexico, Vasquez said the ACP would continue to act as a trade partner for ships coming from the US.
Vasquez was referencing past statements made by the US Department of State in early February, which described the Chinese Communist Party's influence over the Panama Canal as a "threat to the canal and represents a violation of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal."
Vasquez said that clarifying which entities own which facilities in and around the Panama Canal is crucial and "a state issue."
"Port facilities are managed by the maritime authority," Vasquez said. "Land is handled by the central government, and the canal itself is managed by the Panama Canal Authority," he added.
"But that distinction is not clear to US leaders -- so when you get claims that the Panama Canal is run by China or any other country, the Panama Canal is run by the Panama Canal Authority and is run by Panamanians."
