What is the importance of this cryogenic LNG storage and regasification project for Panama?
The project allows for the introduction of natural gas as a fuel in Panama, improving the energy matrix of the country. Thus today, it is not just a case of coal, bunker oil, and diesel; there is also gas. The most important impact will be on energy prices. The cost of energy in Panama will go down, as a result of the projected prices for natural gas in the future. We tendered natural gas energy at a price (capacity plus energy) of 13 cents kW/hour, linked to the Henry Hub index. We believe that a supply linked to this index will be highly competitive in the future. This project will have a favorable impact on energy prices, and will change the configuration of the energy market. It was predicted by industry players that this project would not be necessary until after 2023; now, all the actors involved admit that they were wrong in their estimations by several years, given the way demand is behaving in Panama. This estimation error is so huge that the country needs this plant today.
What is the potential of this energy for residential and automobile use?
All regasification projects are tied to thermal generation projects, so as to guarantee natural gas consumption and make them financially viable. As we have seen in other parts of the world, the evolution of these facilities leads to the development of projects for the supply of natural gas to industries. This goes hand in hand with the construction of small cryogenic storage and regasification plants at ambient temperature, tailor-made to meet specific industrial demands. There is also the potential to supply gas to small towns, housing developments, or buildings, and also to create an entire system to introduce gas-powered mass transit and private vehicles, by building small storage and regasification plants at ambient temperature, all the way up to complex gas pipeline systems. The US, Europe, and also several countries in Latin America are already familiar with and use this source of energy. I am sure that Panama will follow suit. Furthermore, Panama has the political stability needed to make investments of this magnitude, with a dollarized economy and the enormous influence of the country's geographic location, which is a huge advantage for possibly exporting energy to its region of influence.
Panama has an Energy Partial Scope Agreement with Trinidad & Tobago to buy natural gas. What is your assessment of these kinds of agreements?
Bilateral agreements are generally great. They create the framework for a working relationship between both parties, but projects like ours must be tied to long-term and versatile supply contracts. For that reason, LNG Group Panama negotiated and signed a supply contract with Gunvor Group. Likewise, we think that a plant of this kind and of this size needs companies with enough experience to develop a project of this scope. Accordingly, we selected the Spanish firm Duro Felguera to carry out the EPC side, and we signed a turnkey contract. On the other hand, as the core of energy consumption is electric generation, we chose the company Alstom to design the configuration for this combination of turbines, heat exchangers, and boilers. We also signed an O&M contract with it, and Alstom is now responsible for all operations and maintenance aspects of the plant for the 20 years of validity of the PPA.
What is the true potential of the natural gas resources of the country?
In the future, many thermal generation companies will consider gas as an alternative source of energy. Our storage and regasification facilities have a capacity that could easily meet the demand for natural gas from a similar project. We also have room to grow, and are convinced that any firm developed from now on will consider the environmental and price advantages of gas generation and choose this fuel as its main source.