Expanded Panama canal 'should be in operation' by Jan 2016: ACP

Tokyo (Platts)--7Mar2014/225 am EST/725 GMT

The Panama Canal Authority expects the expanded canal "should be in operation by January 2016" after a trial period, Silvia de Marucci, ACP's manager of marketing and forecasting, said Friday.

Marucci made the comments in response to a question at the International LP Gas Seminar in Tokyo.

"In January 2016, we are expecting to be operational" after a period of testing at both the Atlantic and Pacific side of locks, Marucci said. At the moment, the expansion is 65% complete, she added.

The latest target is seven months behind a previous estimate of June 2015. The project was originally scheduled for completion this year.

Next week, ACP intends to sign a final agreement with its contractor for the expansion project, Marucci told Platts ahead of the conference Friday.

"Works were stopped about a month ago but resumed two weeks ago and we are very optimistic that we will sign the agreement by next week," she said.

ACP expects to seal the final agreement with the expansion project contractor, Grupo Unidos por el Canal, S.A. or GUPC, following their February 27 preliminary agreement, she said.

Under the final agreement, ACP expects to complete the canal expansion by December 2015, she added.

On February 27, ACP said it had ended talks with the new locks project contractor GUPC, through which a "conceptual agreement" had been reached for the expansion project.

The conceptual deal included a commitment by ACP and GUPC to complete construction of the Panama Canal by December 2015, with GUPC paying $100 million and ACP advancing $100 million, which would allow work to resume at a normal pace in March, ACP said in a statement at the time.

Under the agreement, construction of the third set of locks is slated to be completed by December 2015, with the 12 lock gates from Italy expected to arrive in Panama in staggered shipments by December 2014.

The performance bond for $400 million may only be released to insurer Zurich North America, to obtain financing to complete the work.

The upgrade, which will significantly widen and deepen the 80-km (50-mile) waterway, will allow many more very large LPG tankers, known as VLGCs, to use the 100-year old canal.

Commenting on LNG tanker transits, the expanded canal would be able to take up to new 180,000 cu m vessels, Marucci said.

"We have some restrictions for [Qatar's] Q-flex and Q-Max type of LNG carriers," Marucci said. "Those vessel will not be able to transit at least for the first year of operations and this restriction will be relaxed in the future ... depending on experience we are getting."

Marucci said that still leaves 90% of the LNG fleet able to transit.

--Takeo Kumagai, takeo.kumagai@platts.com
--Edited by Meghan Gordon, meghan.gordon@platts.com

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