Our series examining other countries in the Western Hemisphere continues with a look at the Central American country of Costa Rica. This post explores the country’s resources, energy usage, and connections to the global LPG markets.
Located between Panama and Nicaragua, Costa Rica is the third smallest country in Central America. The country’s mild climate has made agriculture an important part of its economy. However, Costa Rica’s beautiful natural features have made it a popular travel destination and have helped the country develop a thriving tourism industry.
Costa Rica does not have significant oil and gas production. Although exploration has been carried out in the past, no viable commercial reserves have been found. Furthermore, oil and gas exploration and development are prohibited in the country until 2050.
With 86.8% of its total energy produced being renewable, Costa Rica is the country with the fourth highest production and dependence on green energy. In 2021, the country generated 99.92% of its electricity from renewable sources, such as hydroelectric power, geothermal, wind, solar, and biomass.
Thanks to its clean energy matrix, Costa Rica has been able to maintain stable electricity prices. The country has been able to preserve this stability even during international crises such as the increase in oil prices due to the Russian invasion of Ukraine.
Costa Rica has been a world leader in the production of electricity from non-polluting sources, surpassing countries such as Switzerland, Norway and Sweden. In addition, the country has guaranteed its electricity supply from renewable sources until at least 2035.
Despite being a world leader in producing clean, green and affordable energy, Costa Rica still has a need for LPG.
A significant consumer of LPG in Central America, Costa Rica’s demand is about 2.6 million MMbbls/Year. Demand growth has been maintained over the last decade, reaching year-on-year growth of up to 4.5%. This growth is expected to be sustained, and estimates project a ceiling in 2024 where it could reach about 3.0 MMbbls/Year.
Demand and usage of LPG in Costa Rica is spread across four main sectors, as shown below.
| Sector | Usage |
|---|---|
| Industrial | 40% |
| Residential | 37% |
| Commercial | 14% |
| Autogas | 9% |
For more than a decade, Costa Rica has been consistently importing LPG from the United States. The country has imported significant volumes that have exceeded 2.5 MMbbls per year. This volume allows Costa Rica to meet its domestic demand, based on population growth and the conversion to cleaner energy. These imports enable the country to move toward energy with less impact on the environment. The graph to the right demonstrates how imports of LPG have increased since 2007.
The company in charge of managing hydrocarbons in Costa Rica is the Refinadora Costarricense de Petróleo (RECOPE). RECOPE is a state-owned company responsible for the importing, processing, storage, distribution and sale of fuels, asphalt and naphtha’s. Its mission is to ensure the continuous supply of these products, which is crucial for the economic development and stability of the country.
In addition, RECOPE plays an important role in Costa Rica’s energy security, managing the National Fuel System, which includes specialized facilities and equipment to ensure an efficient and safe supply.
Analyzing the link between consumption and the infrastructure capacity for LPG storage, we found that there is an ability to house approximately 150 Kbbls of LPG throughout Costa Rica. Looking at the relationship between available capacity and demand, we found that the infrastructure only has the capacity to store 5.85% of annual consumption. This means that, based on national usage, Costa Rica only has the capacity to store the amount of fuel required to meet 21 days of usage (about three weeks).
The LPG market in Costa Rica is constantly growing. The country’s population maintains a reasonable growth, compared to other countries in the region, and that generates pressure on supply and demand.
Local LPG prices in Costa Rica reference Mont Belvieu as a standard price level and are affected by global trends. The LPG market in Costa Rica has vital import needs to cover domestic demands with a stable demand since 2007.
Committed to clean, green, affordable energy, Costa Rica is an important consumer of LPG in Central America. Because it has no significant oil and gas production, the country is dependent on imports to meet its demand. This dependence on imports makes Costa Rica sensitive to global market dynamics.
LPG demand is increasing in both industrial and residential sectors due to population growth. Additionally, LPG use allows the country to prioritize using renewable sources to generate electricity. In recent years, the country has generated enough electricity to meet not only its own domestic needs, but also to export electrical energy to its neighbors.
These factors could have a significant impact on the global propane markets in the coming years, which is why Westlark Advisors is watching this market with interest. The Westlark Advisors team continues to observe Costa Rica’s energy market and will keep you informed about global developments as well as local changes. Our goal is to provide you with expert advice to help you make smart decisions every day.
By Gabriel Amundarain
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