Under the terms of the agreement, BP has leased a total of 5.4 million barrels of PTP’s storage located on the Caribbean and Pacific coasts of Panama and committed to east-to-west crude oil shipments averaging 100,000 barrels per day through PTP’s trans-Panama pipeline.

Crude oil tankers too large to navigate the Panama Canal sail around Cape Horn in South Americato reach the US West Coast. Under the new agreement, BP-chartered Very Large Crude Carriers (VLCCs) can now sail to the Caribbean port of Chiriqui Grande where the oil will be stored and piped to the Pacific coast port of Charco Azul and loaded on tankers bound for the West Coast.

The presence of onshore storage on the Panamanian coasts also provides for crude oil blending and optimized cargo volume and delivery window to meet individual refiners’ needs. For example, BP’s dedicated crude oil storage at these ports can help West Coast refineries reduce demurrage costs associated with having VLCCs waiting in port for prolonged periods while discharging crude into limited tankage.

“BP’s ability to utilize new dedicated tankage at terminals on both coasts and the reversed pipeline will provide U.S. West Coast refiners with more diverse and flexible supply options, and also grow our business in Latin America. This overland route greatly reduces transit times and lowers freight costs for many of our customers,” said Paul Reed, chief executive of BP’s integrated supply and trading organization at a commissioning ceremony today in Panama City. “This is also good news for Panama. It creates new jobs on both coasts of the pipeline bringing increased prosperity to the region.”

Today’s ceremony was also attended by representatives of the Panamanian government, and senior executives from BP, PTP, Northville Industries, who are the managing partner of PTP, and other local businesses.