Sinolam seeks arbitration over Panama LNG-to-power project

Singapore-based Sinolam said in a statement last week that the arbitration arises under the Panama-Singapore free trade agreement.

The International Centre for Settlement of Investment Disputes (ICSID), part of the World Bank Group, is an international arbitration institution established in 1966 for legal dispute resolution and conciliation between international investors and States.

ICSID is headquartered in Washington, D.C.

Sinolam noted that the project, known as Gas to Power Panama, was designed to deliver “reliable, efficient, and lower-emission” electricity to support Panama’s growing energy needs.

It involved development of a modern combined-cycle, gas-fired power plant, initially planned as a 325 MW facility and later expanded to 441 MW.

Sinolam made “substantial” investments to advance the project and prepare it for construction and operation.

“Despite this, Panama abruptly cancelled the project’s license through regulatory action taken in 2024. The cancellation was issued without prior notice that termination was under consideration and without affording Sinolam opportunity to be heard,” the company said.

“In the past 30 months, the government of Panama has cancelled several major foreign investment concessions owned by Asian companies valued at billions of dollars as well as a large Canadian-owned copper mine. This has eroded the trust of foreign investors in Panama,” Sinolam claims.

Sinolam said it seeks full compensation for the losses it has suffered, including invested capital and destruction of the project’s value.

The company presently values its loss at over $140 million.

$4 billion

This move follows a $4 billion lawsuit by Panamanian companies Sinolam LNG Terminal and Sinolam Smarter Energy LNG in Virginia against US energy firm AES and InterEnergy Holdings, alleging that the two firms coordinated an unlawful scheme to monopolize Panama’s growing LNG-to-power market.

Sinolam alleges it lawfully secured regulatory approvals, power purchase agreements, and long-term customer commitments to develop a major LNG-fired power plant and a corresponding LNG terminal in Colón, Panama.

These projects were designed to capitalize on Panama’s emergence as the LNG hub for Central America following the expansion of the Panama Canal, the company said.

“The company believes the claim lacks merit and intends to defend itself vigorously,” AES previously said in a response to this lawsuit.

GasLog FSU

In 2019, Greece’s GasLog signed a 10-year time charter with Sinolam LNG Terminal to provide a floating storage unit (FSU) to the latter’s gas-fired power project in Panama.

GasLog said at the time that the FSU would receive, store, and send out LNG to a gas-fired power plant being developed near Colon, Panama, by Sinolam Smarter Energy LNG Power, a subsidiary of private Chinese investment group Shanghai Gorgeous Investment Development Company.

The shipping firm also stated that the power project had entered into long-term power purchase agreements with leading Panamanian utility companies, as well as a 15-year LNG sale and purchase agreement with Shell.

Singapore’s Sembcorp completed the conversion of GasLog’s 155,000-cbm carrier GasLog Singapore in 2021.