The Panama Canal expects to begin construction of a gas pipeline in 2027, a project whose first formal talks with companies interested in participating will start this week, the head of the interoceanic waterway reported Tuesday.
The 77-kilometer pipeline would transport propane, butane, and ethane from the east coast of the United States to China, Japan, and South Korea—business that the Panama Canal Authority (ACP) estimates will double in the next decade.
The fuel would arrive by ship to Panama’s Caribbean coast and, after crossing the isthmus via the pipeline, would be reloaded on the Pacific side for shipment to Asia. Construction will begin “possibly in 2027 if the timeline is reasonably met,” said ACP Administrator Ricaurte Vásquez at a conference.
Vásquez said that on Thursday, talks will begin with shipping, energy, and other companies interested in participating in this project, which the ACP announced a few months ago.
The pipeline could cost between $2 billion and $8 billion, according to preliminary estimates, depending on whether all three gases are ultimately transported. Roughly 5% of global maritime trade passes through the Panama Canal, whose main users are the United States and China.
Until 2023, more than 90% of propane, butane, and ethane shipped from the United States to Asia used the canal. However, that percentage has been dropping for several reasons, and to recover it, the canal authority says it needs to build the pipeline, which will allow the transport of 2 million barrels of fuel per day.
With the project, the ACP expects that nearly 53 million tons of fuel—mainly propane—will pass through this route by 2040. Vásquez believes that transport of this energy material will grow in the coming years due to India’s industrialization and the United States’ export capacity.
“That amount [of fuel] is going to double in the next 10 years,” and if Panama does not build the pipeline, “a different route” could emerge for its transport. The canal, inaugurated by the United States in 1914, links more than 1,900 ports in 170 countries. Its main route connects ports in China, Japan, and South Korea with terminals on the U.S. East Coast.
