Article Courtesy from Business Panama

The Hydrocarbons Industry in Panama

Article courtesy of AmCham’s Hydrocarbons Committee

Background to the hydrocarbons sector in Panama

At the international level, the petroleum market is divided into two main streams: the crude market and the refined product. Both streams are independent of each other, but are strongly inter-related. The price of crude does not necessarily coincide time-wise with the prices of refined products, but eventually will influence them. The factors that result in this influence run from geopolitics in the production zones, the price of shares and movements in the futures markets to terrorism, fear of attacks and an unevenness between the forces of offer and demand.

Panama, as a non-producing country, is principally affected by the vagaries of the refined product market. The availability of refined products and the capacity to fill the specific demand of some of these is a very important element in the price before tax of hydrocarbons coming to our country.

Evolution of the hydrocarbons market in Panama

The hydrocarbon sector in Panama has developed into a highly competitive market. It is important to remember the historic events that shaped the development of this important sector and that have affected the way in which all participants operate in the commercialization chain in Panama (importer/distributor/transporter/retailer).

1962 – 1992 The State held a contract with Refinería Panamá. By means of this contract the refinery maintained a monopoly in the supply of finished product to the distributors in our country. One important consequence of having one refinery supplying the domestic market’s requirements was the possibility of having product specifications very different than those available in the region.

1992 – The market was liberalized which allowed distributors to import finished products directly from the refineries with the products that were available.

2002 – The contract with Refinería Panamá was totally ended and the sector became completely free at all levels of the market.

2003 – Decree 36 laid down the regulations for all players in the sector: Petroleum Free Zones; Importers; Distributors; Transporters; Retailers.

The liberalization of the market has resulted in the entry of 14 players in all steps of the commercialization process, including more than 9 brands of filling stations that sell directly to the public.





Article Courtesy of Business Panama
The American Chamber of Commerce (AMCHAM)
and Deal Inc.
 

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