Panama Canal to open bidding process for LPG pipeline in key diversification move

April 7, 2025, by Naida Hakirevic Prevljak

The Panama Canal is about to open a bidding process for developing a new pipeline for the transfer of energy products which will complement operations in the interoceanic waterway.

The pipeline will reportedly be able to transport liquefied petroleum gas (LPG) between the Atlantic and Pacific oceans.

The move seems to be prompted by climate challenges experienced in 2023 and 2024. The Panama Canal Authority (ACP) said earlier it experienced ‘decreased’ canal operations in 2024 deep-draft transits due to the impact of the drought season.

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In November 2024, Panama Canal administrator Ricaurte Vásquez unveiled a plan to diversify the canal’s operations and support Panama’s role as an “integral” shipping hub.

Panama Canal set to diversify operations to bolster ‘climate neutrality’ targets

Outlook & Strategy

“This complementary activity will be incorporated into the sustainable development of the Panama Canal’s West Bank route, which includes activities and alternatives to transporting products by sea,” ACP explained.

The development of this pipeline is expected to strengthen Panama’s strategic position and help keep the canal competitive by increasing its capacity.

The administration submitted its request for authorization to proceed with the bidding process, supported by a private initiative proposal, which was evaluated by the ACP and its external advisors to determine its viability.

Based on this proposal, the Panama Canal intends “to conduct a transparent bidding process that will promote the highest level of competition, while seeking the participation of companies that are technically and commercially qualified to execute the development of, and eventual, operation of the pipeline”.

“This decision was reached to strengthen the Canal and to ensure its long-term competitiveness and sustainability. All of this will help to facilitate international maritime trade and, above all, contribute to social investment in Panama,” ACP added.

In related news, ACP recently embarked on a new initiative that prioritizes vessels running on low-carbon fuels and ships fitted with energy-efficient technologies, aiming to ‘fortify’ its own as well as global shipping decarbonization goals.

Beginning October 5, 2025, the Panama Canal will implement the first phase of a weekly NetZero Slot for Neopanamax vessels that meet specific low-carbon emission requirements.