Panama Canal Considers Pipeline to Move U.S. Gas to Asia
(Reuters) — The Panama Canal is exploring the construction of a pipeline to move liquefied petroleum gas (LPG) across the trade passage, canal administrator Ricaurte Vasquez said on Monday, with Japan seen as a top potential client for gas coming from the U.S.
The canal, one of the world's busiest maritime trade passages, is looking to diversify its operations after getting the greenlight in a court ruling last year. A drought limited crossings and canal officials are planning to build a reservoir nearby.
Japan is one of the world's largest LPG customers, using the fuel for domestic and industrial use.
"We're exploring the possibility of rolling out infrastructure with the capacity to move up to a million barrels per day (bpd), but the market is much larger," Vasquez told Reuters following a press conference.
"Meeting the needs for growing volumes (of gas) through Panama is of the highest priority, but also of the highest complexity," Vasquez said.
The move comes amid a backdrop of escalating tensions between the U.S. and Panama, sparked by U.S. President Donald Trump's claims about reclaiming the Panama Canal.
Despite pushback from Panamanian President Jose Raul Mulino against Trump's claims, the U.S. leader and officials have hailed a recent deal led by U.S. firm BlackRock to buy most of the ports business of Hong Kong conglomerate CK Hutchison, including its assets near the Panama Canal.
Initial studies show that "possible traffic capacity through the Panama Canal could reach 2 million bpd (of LPG) in a decade," Vasquez added.
The canal expects to make a decision about the pipeline in the next 12 months, Vasquez said.
Investments of $8 billion in infrastructure and sustainability projects are already earmarked for the canal, spread out over the next decade.
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