Panama Canal: More LNG is Transiting than Expected
One year ago on June 26 2016, the expanded Panama Canal opened up, providing a short route for US and Atlantic basin LNG exports to Asia.
On the first anniversary, the Canal administration says that LNG transits have far exceeded original expectations.
"Although we don’t have a breakdown of origin and destination, we can share that 9.4% of all transits over the past year have been LNG vessels," a spokesperson for the Panama Canal administration told NGW.
"Further, traffic of LNG through the expanded canal has far surpassed the Canal’s original expectations of one weekly transit. On average, 5.2 LNG vessels have transited the canal per week. This figure is set to increase, as shippers are expecting an uptick in US LNG exports by 1Q 2018."
Next year initial trains at Freeport LNG and at Cheniere's Corpus Christi complex are scheduled to start exports. So far, all US LNG shipped in 2016-17 came from Cheniere's Sabine Pass trains 1-3, with train 4 to start up this year, with T5 following in 2H 2019. All three are on the US Gulf Coast.
LNG transits began July 2016
It wasn't until July 25 2016 that the first LNG transit was made by a Shell cargo aboard Maran Gas Apollonia, followed the next day by a BP cargo. However by April 2017 the canal's administrator said on a trade mission to east Asia said that over 100 LNG vessels had already transited.
Analysis by the US Energy Information Adminstration (EIA) as early as last June noted that the expanded Panama Canal could accommodate 90% of the world's current LNG tankers, whereas prior to the expansion, only 30 of the smallest LNG tankers (6% of the current global fleet) could transit the canal.
EIA also noted that a passage from the US Gulf via the wider Panama Canal to Japan now takes 20 days – compared to 34 days for voyages around the southern tip of Africa or 31 days via the Suez Canal – with journeys to South Korea, China and Taiwan similarly reduced. Likewise a voyage from the US Gulf to Chile or west Mexico now takes roughly a week, instead of three weeks before. Export cargoes from Trinidad can realise similar time savings.
All this has led to a shift in newbuild orders for LNG carriers, as traders and shipowners recognise the growth to come from US LNG exports.
Many of the new LNG tankers now being built are being built with a cargo hold of up to 175,000 to 180,000 m³ LNG, rather than the larger Q-Flex and event larger Q-Max (up to 266,000 m³ LNG) sized tankers that built primarily with Qatari trade in mind that dominated orders earlier this decade.
Mark Smedley