Panama Canal
In 2004, approximately 24.2 million tons of crude oil and petroleum products passed through the Panama Canal, with crude oil contributing about 28 percent of the total. About 70 percent of petroleum shipments go from the Atlantic to Pacific Ocean. In 2003, less than 1 percent of total U.S. crude oil imports and 3.5 percent of U.S. petroleum product imports passed through the Panama Canal. Petroleum shipments represented 12 percent of total canal traffic in 2004, down from 16 percent in 2001.The relevance of the Panama Canal to global trade, especially petroleum, is currently threatened by the increasing size of modern shipping vessels. Some oil tankers, such as ultra-large crude carriers (ULCC), can be nearly five times larger than the maximum capacity of the Panama Canal. The Panama Canal Authority (ACP), an autonomous body that administers the canal, has made small, incremental upgrades to the canal to facilitate larger ships. For instance, the ACP has floated an $11 billion plan to pursue a significant expansion of the canal that would allow ships about twice as big as the current maximum. The Panamanian people must approve any such expansion of the canal, with a referendum scheduled for November 2005.
As mentioned above, many crude oil carriers are too large to fit thorough the Panama Canal. To remedy this situation, a joint venture of the Panamanian government and U.S.-based Northville Industries built the Trans-Panama Pipeline (TPP) in 1982. The original purpose of the TPP was to facilitate crude oil shipments from Alaskas North Slope to refineries in the Caribbean and U.S. Gulf Coast regions. The idea was for very large crude carriers (VLCC), ships too large to transit the canal, to offload Alaskan crude on the Pacific side, then move the crude oil to another VLCC waiting on the Atlantic side. However, the 800,000-bbl/d TPP was shut down in 1996, as oil companies began shipping Alaskan crude along alternative routes. In 2003, Canadas EnCana contracted the pipeline to ship crude oil from Ecuador to the Caribbean, but the company only utilized an estimated 15 percent of the systems capacity. In February 2005, Venezuelan President Hugo Chavez began talks with the Panamanian government on reversing the flow of the pipeline. This would allow for the possibility of Venezuelan crude oil exports to China by 2007.
Perenco operates a crude oil pipeline in Guatemala that links its production fields to the port of Santo Tomas. In January 2003, U.S.-based Phenix Pipeline and Oleoductos Premier de Nicaragua announced plans to build the 280-mile Central American Pipeline Project to transport petroleum products between the Pacific and Atlantic coasts. The company has submitted an environmental impact statement to the Nicaraguan government, but construction on the project has yet to begin.
In 1992, the Panamanian government created the Petroleum Export Zones (ZLP). Within these zones, all petroleum activities are exempt from all taxes and many regulations. Due to the large amount of shipping traffic in the area, the marine fuel industry has been the largest investor in the ZLP program. In 2001, vessels consumed some 52,000 bbl/d of residual bunker fuel from the ZLPs. Currently, there are eight ZLP areas in Panama, including the international airport outside Panama City and seven marine terminals.
In 2004, U.S.-based Cargill and Brazilian sugar trader Crystalsev announced that they would build a small ethanol plant in El Salvador. The plant would have an initial production capacity of 32,000 gallons per year, and it would export all of its production to the United States. According to industry sources, the companies hoped to take advantage of the Caribbean Basins Initiative (CBI), a trade agreement signed in 2000 that allows Caribbean and Central American countries to export up to 210,000 gallons per year of ethanol into the U.S. duty-free.