President Mulino announces $4-8 billion gas pipeline project alongside Panama Canal, creating 15,600 jobs and establishing Panama as regional energy hub.
Historic infrastructure project to transform Panama's economy
President José Raúl Mulino has announced one of the most ambitious infrastructure projects in Panama's history: a $4-8 billion gas pipeline that will run alongside the Panama Canal, creating an interoceanic energy corridor. The announcement, made during an official visit to Japan on September 3, 2025, marks the beginning of what officials describe as the canal's largest investment since its expansion.
The pipeline will be the first major project in a new infrastructure platform aimed at strengthening Panama's competitiveness and addressing strategic needs in the global energy market. The Panama Canal Authority's board has already authorized the selection process for the project, with prequalification of interested parties expected to begin this year and the final concessionaire to be chosen by the fourth quarter of 2026.
This massive undertaking represents part of the Panama Canal's revenue diversification strategy, which seeks to expand service offerings and increase cargo capacity without requiring additional water use – a critical consideration given recent drought challenges.
Economic impact: Jobs and revenue
The pipeline project promises extraordinary economic benefits for Panama:
Employment generation: The project will create over 6,500 jobs annually during construction and nearly 9,600 permanent positions once operational. These aren't just construction jobs – they include high-skilled positions in engineering, logistics, operations, and administration.
Government revenue: The pipeline is expected to generate approximately $160 million for the state during construction and over $1.5 billion annually once operational. This represents a significant addition to Panama's fiscal resources, comparable to about 30% of current canal revenues.
Economic contribution: The project will contribute approximately $590 million annually to the economy during construction and $2.7 billion during operation, creating multiplier effects throughout various sectors.
Strategic importance for global energy markets
The pipeline addresses a critical need in global energy distribution. It will transport liquefied petroleum gas (LPG), ethane, butane, and propane from the Atlantic side to a Pacific-side terminal, where vessels can then carry products to Asian markets.
This creates an alternative to ships transiting the canal, which is particularly important given water-level constraints that have periodically limited canal operations. The pipeline ensures energy products can move between oceans regardless of canal conditions, providing reliability that energy markets require.
Japanese financial institutions, including Sumitomo and Mizuho Bank, have already expressed interest in the project, reflecting confidence in its viability and strategic importance. Japan, as a major energy importer, has particular interest in secure and efficient energy supply routes.
Addressing Panama's infrastructure challenges
The pipeline project comes at a crucial time for Panama. The 2024 drought that restricted canal operations cost approximately $800 million in lost revenues and highlighted the vulnerability of depending solely on water-based transit. The pipeline provides a drought-resistant alternative for energy products, one of the canal's most valuable cargo categories.
The project also positions Panama as more than just a maritime transit point. By adding energy infrastructure, Panama evolves into a true multimodal hub, capable of moving products by sea, land, and pipeline. This diversification strengthens Panama's competitive position against other regional logistics centers.
The energy corridor will include storage terminals and logistics facilities, creating a comprehensive energy hub that can serve Central American markets. This positions Panama as a regional energy distribution center, not just a transit route.
International partnerships and expertise
The scale and complexity of the project require international expertise and financing. The selection process, beginning with prequalification this year, aims to attract world-class companies with experience in major pipeline projects.
The three-phase selection process includes:
- Prequalification of interested parties (starting 2025)
- Interaction and dialogue with prequalified companies
- Final selection of concessionaire (Q4 2026)
This transparent, competitive process aims to ensure Panama gets the best possible partner for this critical infrastructure project. The involvement of Japanese financial institutions and the announcement in Tokyo signal strong Asian interest, but the process remains open to qualified companies globally.
Environmental and social considerations
The pipeline project will follow existing canal infrastructure, minimizing environmental impact and land acquisition needs. Using the canal corridor means the pipeline won't require new rights-of-way through pristine areas, an important consideration for environmental protection.
The project includes commitments to use modern technology and best practices for pipeline safety and environmental protection. Given Panama's growing focus on environmental conservation, as evidenced by the Ocean Month campaign, ensuring the pipeline meets high environmental standards is crucial.
Local communities along the pipeline route stand to benefit from jobs, improved infrastructure, and economic development. The project includes provisions for local employment and training, ensuring Panamanians can access the opportunities created.
Timeline and next steps
The project timeline extends over several years:
- 2025: Begin prequalification process
- 2026 Q4: Select concessionaire
- 2027-2030: Construction phase
- 2030-2031: Begin operations
While this timeline means the pipeline won't be ready for the next El Niño event expected in 2027, some elements of the broader land bridge project may be completed earlier, providing partial relief for canal constraints.
What this means for Panama
The pipeline project represents a transformational opportunity for Panama. Beyond the direct economic benefits, it:
- Establishes Panama as a regional energy hub
- Reduces vulnerability to climate-related canal restrictions
- Attracts international investment and expertise
- Creates high-quality employment opportunities
- Generates substantial government revenue for public investment
- Strengthens Panama's position in global supply chains
For residents, the project means job opportunities, economic growth, and enhanced international connections. For businesses, it creates new possibilities in energy, logistics, and support services. For the country, it represents a bold step toward economic diversification and resilience.
As the selection process moves forward, more details will emerge about specific routes, technologies, and development plans. What's clear already is that this project will significantly impact Panama's economy and infrastructure for decades to come.
