The Panama Canal has begun a competitive process to select the company that will design, build and operate a pipeline to transport liquefied petroleum gas (LPG), its authority said on Thursday, following meetings with interested companies.
The project, expected to require an investment of between $4 billion and $8 billion, is part of the waterway's move to meet increased demand for services including trans-shipment and generate extra revenue, following the expansion of its area in a Supreme Court ruling last year.
The 2 million-barrel-per-day pipeline alone is forecast to contribute between $1 billion and $1.2 billion to the waterway's annual income, Ricaurte Vasquez, head of the canal, told Reuters in an interview after the meetings.
The pipeline project aims to move U.S. LPG bound for Asia from one side of the canal to the other. A power transmission line will be built as part of the plan.
Among companies that met with canal authorities about the pipeline were Exxon Mobil (XOM.N), Phillips 66 (PSX.N), Shell (SHEL.L), Energy Transfer (ET.N), Puma Energy, SK Energy, Vitol, Mitsubishi (8058.T), Itochu (8001.T), and Sumitomo (8053.T), the canal said in a release.
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"We had a room full of interested people," Vasquez said about the meeting, adding that a pre-qualification process will be the next step.
The winner of the competitive process is expected to be selected in the last quarter of 2026, while a parallel project to build and operate two new ports in the canal's area will be launched between late this year and early next year, he said.
The canal forecasts a $3.5 billion profit in the fiscal year ending in September, in line with the previous year's results, opens new tab, Vasquez said. A consolidation of cargo tonnage by receiving larger vessels is expected to offset a reduction in traffic towards the end of the year.
"We have had a different seasonality this year, with more cargo being moved to the United States now, instead of in October-December," he said.
Source: Reuters
