RE: Where we are11 Dec 2025 13:55
Panama power generation is not a completely simple story, as the HFO plants do not generate base load; they are load-following plants, meaning they play second-fiddle to cheap and clean hydro, so the consumption from year to year will be highly variable depending on rainfall. At least from my conversations at the AGM, refiners want guaranteed minimum sales volumes before they will commit, so some additional effort will be required.
There are a few key aspects here, as I understood it from the conversations I had:
- Other countries in the region, such as Honduras and El Salvador, use HFO as base load. These offer opportunities to secure minimum volumes. Once you have that secured, you can easily secure the additional volumes required over the minimums (e.g. for Panamanian variable requirements).
- There is common ownership between the private companies operating power stations in Panama and those in Honduras, El Salvador, etc. We've already talked about that over the years with our discussions about Lufussa Group, etc. So the successful testing efforts in Panama will translate across. There's a lot of research on the QED Shareholders' Forum in the Panama thread about these interlinkings.
- Panama is a bunkering hub, and in combination with the above, could offer opportunities to bring those volumes together to make it even more attractive. Perhaps we'll find out a bit more about that if/when the full details of the MSC-Cargill project start becoming more public.
- Panamanian HFO plants are slowly being shuffled further and further down the deck in the order they are 'called' onto the grid by the generating authority (e.g. currently after LNG plants). This is because of anti-pollution mandates; so less polluting capacity would be called on before dirty old-school HFO. If/when MSAR qualifies and is permitted as a cleaner fuel, it would allow them to move back up the deck and be called more frequently/earlier. For now, you can see this is mostly an economic argument and MSAR Classic does the job nicely, but in future as more regulations arrive, bioMSAR may also become relevant.
Just my recollections, analysis, and opinion. Please do not take these as canonical, and do your own due diligence, as needed :-).
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