Talks between the Panama Canal Authority, or ACP, and the GUPC consortium building a third set of locks for the waterway have produced "a beginning of an accord" to resolve the dispute that has paralyzed work on the project, chief administrator Jorge Quijano said Wednesday.

Declining to offer details about the tentative pact, he told reporters that the main outstanding issue is what role insurer Zurich American - the guarantor of the project - will play in the settlement.

The insurer "still has not expressed itself decisively, we know it has the greatest willingness to do so and we expect it will happen in the coming days," Quijano said after a meeting with Panama's chamber of commerce.

The chamber's president, Jose Luis Ford, offered a fuller explanation.

"It's not that the resolution of the conflict is solely in Zurich's hands, it is to what degree Zurich can ratify what the parties have agreed and say: 'we are willing to come in, exchanging the surety for liquid (money) and under what conditions,'" Ford said in comments to journalists.

"This has to finish within a week at the latest," Quijano said when asked how much longer the ACP is prepared to negotiate with the GUPC while work remains suspended.

The locks are about 65 percent complete.

GUPC, led by Spanish builder Sacyr and Italy's Impregilo with stakes of 48 percent each, formally notified the ACP on Dec. 30 that it would suspend work Jan. 20 if the authority did not agree to pay the contractors $1.6 billion to cover cost overruns.

The ACP rejected the consortium's claim for more money as unsupported and at odds with the original contract.

After twice extending the deadline, GUPC last week halted work on the locks, which are the centerpiece of a $5.25 billion canal expansion scheduled to be completed in 2015.

Despite the progress in the talks, Quijano said, the ACP has not abandoned the option of taking over the project from GUCP, whose other members are Belgium's Jan de Nul and Panamanian firm CUSA.

He acknowledged, however, that a GUPC exit would entail "larger additional delays" in completing the project.

The focus of the negotiations is on points such as the delivery date for the Italian-made gates for the locks, an updated work schedule, the financial contributions needed from each of the parties and how much extra time GUPC will be given to repay $784 million in advances, the ACP said in a statement.

The contract for the locks was awarded to GUPC in 2009 and calls for the ACP to pay the consortium a total of $3.12 billion.

So far, the ACP says it has paid GUPC $2.83 billion, including repayable advances, plus an additional $160 million for cost overruns.

The ACP and GUPC both floated new proposals at the end of last week.

The Panama Canal, which was designed in 1904 for ships with a 267-meter (875-foot) length and 28-meter (92-foot) beam, is too small to handle modern ships that are three times as big, making a third set of locks essential. EFE