Panama Canal Advances Plans for LPG Pipeline and Port Terminals

The Panama Canal Authority (ACP) has announced the start of a competitive process to design, build, and operate a new liquefied petroleum gas (LPG) pipeline across the isthmus. The pipeline, expected to cost between $4 billion and $8 billion, will connect new port terminals on both the Atlantic and Pacific coasts. This development comes as part of ACP’s strategy to increase revenue, diversify services, and ensure resilience against challenges such as drought-related restrictions that have impacted vessel traffic in recent years.

The proposed pipeline will have a capacity of approximately two million barrels per day, with projected contributions of $1 billion to $1.2 billion annually to canal revenue. In parallel, ACP is advancing plans for two dedicated LPG port terminals, enabling shippers to transfer cargo between ships without direct canal transit. This system will alleviate constraints on very large gas carriers (VLGCs), which have faced draft restrictions in the waterway. By transloading LPG, the canal will free up additional slots for other vessel types, including LNG carriers.

A pre-qualification process for interested companies is underway, with global energy players already expressing interest. The winner of the bidding process is expected to be announced in late 2026. Alongside the pipeline, the project will include the development of a power transmission line to support operations.

The expansion reflects ACP’s broader goal of entering the port operations sector, marking a shift from its traditional focus solely on canal transit. Rising demand for LPG in Asia, particularly ethane imports for petrochemical industries, underscores the need for this infrastructure. Once operational, the pipeline and ports will enhance the Panama Canal’s role as a global energy corridor and provide added flexibility to international trade routes.