AES, Engie Extend LNG Pact to Panama

French global utility Engie and US merchant power group AES Corp said May 5 they are to jointly market LNG to third parties in Central America.

The joint venture will utilise the Costa Norte LNG terminal currently under construction in Colon, Panama, which is owned 50-50 by AES and Panamanian private investment fund Inversiones Bahía.

Costa Norte LNG terminal’s capacity is approximately 1.5mn mt/yr, of which 25% will be used for the 380 MW AES Colon combined cycle gas (CCGT) power plant being built on the same site. Engie will supply up to 0.4mn mt/yr of LNG to the CCGT starting 2018, under a supply deal inked in 2016.

Under the agreement now announced, remaining terminal capacity will be primarily available for the joint venture to market and sell to third parties, including up to 0.7mn mt/yr of LNG sourced from Engie mainly through the Cameron LNG export plant in the US.

This joint venture thus expands out from a joint marketing agreement signed by Engie and AES late last year whereby both agreed to jointly market 0.7mn mt/yr LNG in the Caribbean, from AES’ Andres regasification facility in the Dominican Republic; the latter entered service in 2003.

The combined regas capacity of Andres (Dominican Rep) and Costa Norte (Panama) will be some 3mn mt/yr. AES and Engie say they aim to provide a cleaner and more cost-effective alternative to oil-fueled power generation in the Caribbean and Central America, while developing industrial and small scale demand for LNG, including provision of bunkering to ships.

Potential for ship bunkering

Colon is at the Caribbean entrance to the Panama Canal so could be useful as a LNG bunkering port, especially as more large ships (including cruiseliners and container ships) are built or retrofitted to run the fuel -- in preference to more pollutive heavy fuel oil -- because of the impending IMO new 0.5% cap on sulphur in marine fuels starting January 2020.

LNG storage and bunkering projects as far afield as Florida are eying the growing market to supply ships plying between the US and Caribbean.

Elsewhere in the Caribbean, the US territory of Puerto Rico has had an LNG import terminal and gas-fired plant in operation since 2000, while Jamaica announced the arrival of its first ever LNG cargo on August 5 2016; these too are eying at the marine fuels market.

Mark Smedley