Panama Canal To Combat Future Drought With Larger Vessels & Expanded Reservoirs

The Panama Canal Authority’s Chief Ricaurte Vasquez revealed on August 26, 2024, that the canal is extending its water reservoirs and accommodating larger vessels to reduce the consequences of expected future droughts.

The measures come as the canal, the world’s second-largest waterway, faces more frequent droughts and seeks operational stability.

Vasquez stated that the canal plans to handle up to 36 vessel transits per day with a maximum draft of 50 feet (15 meters) by the end of the current fiscal year. Vasquez further stated that the frequency of droughts is faster now than in the past, adding that the canal still relies mostly on rainfall.

Vasquez predicts another severe drought within four years, based on current rain patterns and the impact of weather phenomena like El Niño and La Niña. The canal’s locks, which separate the Atlantic and Pacific oceans, use fresh water from rain-fed lakes.

The canal authority has implemented extreme water conservation measures over the past year, resulting in longer ship wait times. Despite these challenges, the authority intends to meet its revenue target of $4.78 billion for the fiscal year that ends September 30.

Revenue estimates for the next fiscal year, which begins in October, are $5.6 billion. Through November, active rainfall is expected to allow for an average of 34.5 transits daily, up from this year’s low of 24.

The Panama Canal is also preparing for a $2 billion extension of one of its water reservoirs that will be subject to clearance by Panama’s Supreme Court.

The project, including engineering studies scheduled for 18 to 24 months, aims to expand the canal’s water capacity while improving operational efficiency.

The canal intends to attract larger vessels and obtain dedicated passage for specific cargo types, including liquefied natural gas (LNG), petroleum gas (LPG), and refrigerated cargo. These adjustments are intended to handle the same tonnage while shortening delays under the water-saving system.

The average tonnage per transit increased to 43,000 metric tons this year from 38,000 tons in 2023, resulting in more effective water use.

In September, the canal authority will discuss further with LNG producers and market participants to assess the possibility of dedicated passage for these vessels.

Reference: Reuters

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