LNG exports to Central America and Caribbean

Low-cost liquefied natural gas (LNG) is heralding new times for Central America, as the super-chilled fuel displaces costlier and dirtier oil-based products for power generation.

Central America has been one of the big losers of the petroleum age, and the region faces huge trade deficits in oil, a leading electricity source for the region along with hydropower.

The 2018 inauguration by AES Corp. of a $1.15 billion LNG-to-power project on the Caribbean end of the Panama Canal marked a decisive step away from oil-fired electricity for the region.

This year, plans for LNG imports on the Pacific side of the isthmus have begun to solidify as well.

Mexico’s government has in recent days cited Central America as a potential market for LNG export projects envisaged for the country’s Pacific Coast, and with good reason.

New Fortress Energy LLC this year announced an LNG-to-power project in Puerto Sandino, Nicaragua, that includes a floating storage and regasification unit (FSRU) and a 300 MW combined-cycle gas-fired power plant.

Under a 25-year agreement, New Fortress will supply an estimated 700,000 gallons (60,000 MMBtu/d) of natural gas to the power plant, which will in turn supply power to utilities Distribuidora de Electricidad del Norte SA and Distribuidora de Electricidad del Sur SA

Assuming that permits and licenses can be processed smoothly, the offshore facility and the power plant are expected to be ready in the second half of next year.

Nicaragua, with a per capita income of a little more than $5,000 a year, is second only to Haiti as the poorest nation in the Americas.

New Fortress is the latest company to join the LNG-fired energy revolution in Central America.

Chicago-based privately-held Invenergy LLC has a substantial cluster of solar, wind and natural gas projects heavily concentrated in the United States, but the company’s international portfolio of projects includes a natural gas-to-power project at the port of Acajutla in El Salvador.

Invenergy acquired the project from Energía del Pacífico Ltda de CV (EDP), a group of Salvadoran business leaders led by Alejandro Alle, an Argentine native who has been a consultant and adviser to several natural gas projects in Latin America for almost three decades. The Acajutla project includes a 378 MW combined-cycle plant and a floating storage regasification unit (FSRU).

Invenergy sealed the $1 billion financial closure for the project at the end of last year, and construction is underway. The project amounted to the largest-ever foreign investment for El Salvador, a country with a population of 6.6 million and a per capita income of less than $8,000 a year.

With billions of dollars in income from its Canal and its role of a center for global communications, Central America’s economic giant is Panama. It has a population of just over 4 million and per capita income of almost $24,000 a year. AES Panamá SRL, the local unit of U.S.-based AES Corp., has a 381 MW combined-cycle power plant and accompanying LNG terminal at Colón, on the banks of the Panama Canal which was the first project of its kind to be completed in Central America. 

AES Panama’s Colón facilities include 180,000 cubic meters of LNG storage, with provision for refueling of tankers passing through the canal and trucks by road distribution in Panama itself and nearby countries. In June, AES, in partnership with Panamanian firms and a subsidiary of the French transnational Total SE, launched a service that transports LNG by tanker trucks to Costa Rica by road.

Meanwhile, Spain’s Elecnor SA has secured a contract valued at 45 million euros, or about $53 million, that adds a regional dimension to Invenergy’s project in El Salvador.

Elecnor is to design, supply and build two part-underground transmission lines and substations to deliver the power from the Invenergy plant to the 1,800 kilometers of transmission lines operated by Sistema de Interconexión Eléctrica para los Países de América Central (SIEPAC). The whole project is expected to cost about $900 million to $1 billion.

SIEPAC itself is a major achievement in a region that in recent years has suffered extreme poverty in many areas, revolution and counter-revolution in Nicaragua, civil war in El Salvador, U.S. military intervention in Panama, and in many countries, political corruption and narco-terrorism.

For years, Mexican politicians have also urged the creation of a pipeline system to bring natural gas to Central America, although the infrastructure has yet to materialize.