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Panama is important to world energy markets because the Panama Canal is a major transit center for oil shipments and a potential choke point. Panama has major petroleum free zones with large capacity to store petroleum products as well as a strategic location for small refineries to serve regional export markets. Panama is key to plans to connect the electricity and natural gas grids of North and South America.
New Opportunities
The energy sector had a growth of 3.9%. Panama has negligible hydrocarbon energy reserves and imports over 70% of its energy. Virtually all oil is imported, and the country neither produces nor consumes natural gas. Although for the next few years, three important areas will be: oil refining, the use of natural gas to supply the markets of Panama, Colombia and Venezuela, in addition to the exchange of energy with the Republic of Colombia, through a multi-million dollar project interconnection of two systems, which will cost approximately 215,000,000, and expected to be ready by the end of 2012. Considerations are centred in minimizing the impact on the environment, through surveys, actions and changes intended to preserve the country’s rich biodiversity.
Prestigious institutions from around the globe are interested in investing in the isthmus and entering to participate in energy production. The European Investment Bank (EIB) will finance works related to alternative forms of energy forms, in addition to projects which are beneficial to the environment.
In the first half of the twenty-first century, there were multiple transactions made in the energy sector. El Paso Corporation, which along with Hydro Quebec Possessed 49% of the shares of Fortuna, sold its participation in the plant located in Panama to Globeleq Ltd. In this transaction several other plants in Central America and the Dominican Republic were included. Globeleq has put most this plants and energy assets for sale.
Electricity
Energy generation accounts for most of Panama's domestic energy production, with hydroelectric generation accounting for 80% of the country's total energy production. The other 20% corresponds to thermal generation and the Panama Canal Authority. Investment projections for the next 5 years in Panama's energy sector are estimated in more than U.S. $ 1 billion. Excessive rainfall has increased production and will have an effect on fares reduction, especially the first half of 2009.
The total amount of governmental subsidies on oil and energy in 2008 was of U.S. $ 222.9 million, an increase of 52.2% compared to the year 2007. In 2008, the government spent this money to cope with rising prices of energy and gasoline, diesel and liquefied gas. For the next year it could reach up to 300 million. Energy accounts for 36.9% of the subsidy on energy or the equivalent of 82.3 million dollars annually in 2008.
The Government and the energy distribution companies Union Fenosa - Electra Noreste, entered an agreement to supply energy to 23 rural communities across the country by March 2009; all families will enjoy a network of electric power service.
According to the Comptroller General of the Republic, the production of energy and the water sectors grew by 5.1% annually, as a result of the increase in energy production especially that obtained by means of thermal generation, which rose by 20.0%, while hydraulic generation rose at 4.0%. The water billing showed a positive variation of 6.6%.
 In September 2008, peak demand reached 1064 megawatts (MW). Available capacity in the Panamanian energy market is of 1,430 MW. Over the next four years during the period 2009-2012, installed energy capacity in the country, should grow to over 1,000 MW by the inauguration of new hydroelectric plants. 90% of projects under construction are located in the provinces of Chiriquí and Bocas del Toro.
Plants schedule to be working in Chiriqui by the year 2009:
Los Algarrobos: Investment of 26.5 million dollars. Water sources will be the ravines of Algarrobos Oeste, Algarrobos Este and Casita de Piedra, 60% of its contracts are with Elektra and Edemet. Another contract was signed with Union Fenosa. This last will be supplied by the hydroelectric plants of Dolega, La Yeguada and Macho de Monte.
Los Planetas I: a mini-hydroelectric plant located in Dolega, Regiment of Los Anastacios will get its water share from the David River. It has entered a 10 year term contract with the Edechi Company. Los Planetas II is being developed at this time and will start operations in 2011.
Also are planned to operate under concessions granted by the National Authority of Public Services (ASEP): Paso Ancho, Bajos de Totuma and Alto Lino.
Will be operating soon:
Dos Mares project: formed by the Gualaca, Lorena and Prudencia Plants. It is a project developed by Bahia Las Minas Company, and will begin operations in 2010.
Changuinola I: considered the biggest hydroelectric project, will begin operations in 2012. It is located in Valle del Risco, District of Changuinola in Bocas del Toro. Representing an investment of $ 560 million and owned by AES, it has a 35% advance in construction works, it is expected to contribute to cover 15% of Panama’s energy demand by the year 2011, when it should enter into operation. This hydroelectric dam has an extension of 300 thousand hectares to be flooded with water from the Changuinola River. 71% of the project’s workforce comes from the Province of Bocas del Toro. Changuinola II will follow with an investment of 600 million.
Still in Panama, nearly a hundred projects are been planned in the area of energy generation. This is an important sector of the national economy that continues to grow both in technology and production capacity.
The country's energy demand is growing annually at a rate of 4%. It is also known that in the next 10 years an approximate of 500 MW more will be required. These previsions justify the high cost of investment and the haste with which these type of projects are been developed.
The Sistema de Interconexion Electrica para America Central (SIEPAC) project calls for the construction of transmission lines connecting 35 million consumers in Panama, Costa Rica, Honduras, Nicaragua, El Salvador, and Guatemala. SIEPAC cost an estimated $300 million.
Panama has become increasingly concerned about its environment. With the 1998 electricity restructuring, the government also restructured its environmental regulatory framework. National Environmental Authority (ANAM) became the government agency responsible for the implementation and administration of environmental law. ANAM holds significant enforcement authority, in contrast to the regulatory body that preceded it.
Petroleum
Petroleum is one of the largest commodities (by tonnage) shipped through the Canal and accounted for 16%-17% of total canal shipments during fiscal years 1996-1998. Some coal is shipped through the canal as well, accounting for 5%-6% of total Canal traffic. Over 10 million short tons passed through the canal in fiscal year 1998 (down from over 12 million short tons in fiscal years 1996-1997), with almost 80% going from the Pacific to the Caribbean.
In Puerto Armuelles, Qatar Petroleum and Occidental Petroleum are building a refinery that will cost 8,000 million dollars. It is expected to reach a capacity of 350,000 barrels of crude oil a day. The project consists of two phases, including studies, design, infrastructure, logistics and compliance adjustment.
Bahia Las Minas, Decal (Isla Taboguilla) and Petroterminales (operating Chiriquí and Bocas del Toro), which are terminals destined for transportation of fuel used by ships (bunkering), will invest about $ 200 million in the coming years for the extension its facilities. In 2008, it is estimated that bunkering transportation reached 3,300,000 metric tons. That is about 20 million barrels. Calculations also refer to income, which estimated in about 2,000 million dollars during 2008. It is a figure equal to projections made for the Panama Canal for the year 2009.
Three bunkering companies are operating at the Pacific: Pimpsa, Decal and Apsa. On the other hand, Apsa and Refineria Panama operate at the Atlantic side of the Isthmus. In 2008 Colon Oil and Services, S.A. (Coassa), which has invested US$25 million, and Petroport, began operations.
Chevron-Texaco Oil Company is developing a plan for enhancement of it oil dispatch capacity at its cargo terminal located at Bahía Las Minas.
Gas for cars
The company Combustibles Ecológicos de Panamá S.A is one of the companies that commercializes liquified petroleum gas (LPG), under the commercial trademark of Autogas. LPG is an alternative fuel that is already used in Italy, India, Turkey, Poland, Holland, United States, Thailand, Peru and Spain, among other countries.
Etanol and Biodiesel
In Panama, the bio-fuels issue is starting to have an increasing presence on this country’s. For example, the production ethanol production based on sugarcane, which is considered an investment alternative for major domestic sugarcane growers. Even for exportation, due to the fact that countries like the United States allow mixing gasoline with a 15% of ethanol.
Another alternative for investment, showing very promising results in Central America, is the production of palm oil to obtain bio-diesel. In Panama, there are numerous extensions of soil available to grow palm oil plantations making it possible to develop future biodiesel projects.
Texas BioDiesel Corporation, dedicated to the production of biodiesel with the most modern technology, announced its incursion in Panama with the hopes of installing a refinery in Puerto Armuelles. The plant, valued at US$40 million, will have the capacity to process 100 million gallons of biodiesel annually.
The first phase of the plan that Texas BioDiesel plans to finance the Cooperative Company Producer of Palm Oil (“Cooperativa Empresa Productora de Palma de Aceite”) of Chiriqui, the largest in the region with 68 partners and 400 employees, one oil extraction plant for US$3.5 million.
Energy Overview
Oil production (2001E): 1,000 bpd
Oil consumption (2001E): 58,000 bpd
Net oil imports (2001E): 57,000 bpd
Crude refining capacity (1/1/02): 60,000 bpd
Coal consumption (2000E): 70,000 short tons (all imported)
Electric generation capacity (2000): 1.35 mm kW (45 % hydroelectric)
Electricity generation (2000E): 4.9 bn kWh
Electricity consumption (2000E): 4.7 bn kWh
Environmental Overview
Total energy consumption (2000E): 0.16 quadrillion Btu* (<0.1 % of world total energy consumption)
Energy-related carbon emissions (2000E): 2.36 mm tons of carbon (<0.1 % of world total carbon emissions)
Per capita energy consumption (2000E): 54.4 mm Btu (vs. US value of 351.0 mm Btu)
Per capita carbon emissions (2000E): 0.8 tons of carbon (vs. US value of 5.6 tons of carbon)
Energy intensity (2000E): 16,602 Btu/$ 1995 (vs. US value of 10,918 Btu/$ 1995)**
Carbon intensity (2000E): 0.25 tons of carbon/thousand $ 1995 (vs. US value of 0.17 tons/thousand $ 1995)**
Sectoral share of energy consumption (1998E): Industrial (16.2 %), transportation (46.5 %), residential (36.3 %), commercial (1.0 %)
Sectoral share of carbon emissions (1998E): Industrial (24.7 %), transportation (41.0 %), residential (32.2 %), commercial (2.1 %)
Fuel share of energy consumption (2000E): Oil (75 %), hydro (23 %), coal (1.0 %), natural gas (0.0 %)
Fuel share of carbon emissions (2000E): Oil (98.5 %), coal (1.5 %), natural gas (0.0 %)
Number of people per motor vehicle (1998): 9.8 (vs. US value of 1.3)
Status in climate change negotiations: Non-Annex I country under the United Nations Framework Convention on Climate Change (ratified on May 23rd, 1995). Ratified the Kyoto Protocol on March 5th, 1999.
Major environmental issues: Water pollution from agricultural runoff threatens fishery resources; deforestation of tropical rain forest; land degradation.
Major international environmental agreements: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands, Whaling.
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(*The total energy consumption statistic includes petroleum, dry natural gas, coal, net hydro, nuclear, geothermal, solar and wind electric power. Sectoral shares of energy consumption and carbon emissions are based on IEA data.)
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