An Energy Pipeline to Boost Capacity for the Panama Canal is now to be a Bidding Process

A bidding process is now underway for a new energy products pipeline by the Panama Canal Board of Directors.  This has been brought about as a result of shifting global energy shipping patterns and drought-induced operational challenges.  CEO Ricaurte Vasquez, the Panama Canal Administrator, has stated that this proposed pipeline would be able to produce a million barrels a day and be specifically designed to transport Liquefied Petroleum Gas between the oceans, Atlantic and Pacific. This initiative comes about following a decrease in canal transits due to low water levels during the El Niño droughts of 2023-2024.

The pipeline project represents a strategic response to evolving maritime trade, particularly the expected growth in United States Liquefied Natural Gas exports. The infrastructure will be integrated into the Panama Canal’s West Bank route development plan, offering alternatives to traditional maritime transport methods. The bidding process, initiated following a private sector proposal evaluation by the Panama Canal Authority and external advisors, will prioritize transparency and seek participation from technically and commercially qualified companies.

The selected operator will be responsible for both the development and eventual operation of this pipeline infrastructure.  A key feature of the project is its potential to optimize canal operations by redirecting specific cargo types. The pipeline would primarily handle ethane and LPG (Liquefied Petroleum Gas) transport, effectively freeing up canal capacity for LNG (Liquefied Natural Gas) carriers, Vasquez said in an interview at the March 2025 LPG International Seminar in Tokyo.  “Under the current administration in the US, energy products will have a very high priority,” Vasquez stated.

“This is a window of opportunity that Panama must capture to ensure we remain relevant for international trade.”  The Panama Canal Authority emphasized that this strategic initiative aims to strengthen the waterway’s long-term competitiveness and sustainability.  Beyond its immediate operational benefits, the project is expected to contribute to Panama’s social investment programs and reinforce the country’s position as a crucial node in global maritime trade.