Buoyed by record low prices, natural gas is advancing farther south of Mexico and into the Caribbean, principally as a fuel for power generation.

One combined-cycle plant operates in Panama and another in the Dominican Republic, while a $1 billion deal has been closed for another in El Salvador. Two more in Panama are on the drawing board.

The plants in Panama and the Dominican Republican were built by Arlington, VA-based AES Corp. The one in El Salvador will be constructed by Chicago-based Invenergy LLC and a consortium of Central American regional investors.

What aims to be the second gas-to-power project in Panama is that of Sinolam Smarter Energy LNG Power Co Inc., a unit of Shanghai Gorgeous Investment Development Co Ltd, a private Chinese investment firm. GasLog Ltd., the Greece-based shipping firm, said it reached a deal with Sinolam to lease a vessel known as the GasLog Singapore floating storage unit (FSU) that will receive and store liquefied natural gas (LNG) off the coast of Colon, a port on the mouth of the Panama Canal, near where the AES facility, known as Telfers, is located.

The Sinolam project, known as Gas to Power Panama (GTPP), is to be supplied by LNG from Royal Dutch Shell plc, which has long-term contacts with Cheniere Energy Inc. Cheniere operates the Sabine Pass and Corpus Christi export terminals on the Gulf Coast.

The third such project of an LNG terminal and combined-cycle plant was mentioned by the Panamanian energy secretary, Jorge Rivera, at last year’s Americas Gas and Power Summit, though he gave no details.

The AES Telfers facility, also known as Costa Norte, has been supplied with LNG from France’s Total SA. The gas is replacing both fuel oil and hydropower. The AES Dominican Republic plant is 15 years older than Telfers, but follows a similar model of LNG to power.

AES is looking to export gas from its LNG terminal with small-scale barges, as used by Colombian shippers who say it is a much cheaper solution than pipelines. Little by little, the use of small-scale LNG solutions has eased the financial burden of the oil bill that weighed heavily on the fragile economies of most of the Caribbean islands.

Meanwhile, gas is becoming increasingly attractive as prices keep falling. According to a new Bank of America Global Research Report, analysts reduced their forecast for 2020 natural gas prices to $1.99/MMBtu on average.

The burden became particularly severe following the collapse of the Venezuelan economy and its Petrocaribe oil-export subsidy followed suit in 2014.

But, thanks to its canal, Panama dominates the Central American economy, and is an economic and political hub of the Americas. Income from the canal came to $3.4 billion in the 2019 fiscal year, a huge sum for a population of some 4 million people with a per capita income of $22,000/year.

The El Salvador project is being developed by Energia del Pacífico Ltda (EDP), and is now beginning the construction stage of its 378 MW combined-cycle plant. El Salvador has a population of 6.4 million, with a third of Panama’s per capita income.

EDP had an early Christmas on Dec. 23 when it announced it was closing the $1 billion financing for its project, led by Invenergy and its local partners: Grupo Calleja, a supermarket chain, VC Energy de Centroamerica, and Quantum Energy.

“This has been the biggest foreign investment ever in the history of El Salvador,” Mónica Flores, human resources manager of EDP, told NGI.

A natural gas pipeline might also be built from Mexico south through Central America, extending the fuel’s reach in the region.