Posted On: 11-07-2016
The newly expanded Panama Canal has significant implications for LNG trade, reducing travel time and transportation costs for LNG shipments from the US Gulf Coast to key markets in Asia and providing additional access to previously regionalized LNG markets, according to US Energy Information Administration (EIA).
Furthermore, the canal will be able to accommodate 90 percent of the world’s current liquefied natural gas (LNG) tankers with LNG-carrying capacity up to 3.9 billion cubic feet (Bcf), while, prior to the expansion, only 30 of the smallest LNG tankers with capacities up to 0.7 Bcf, which make up 6 percent of the current global fleet, could transit the canal.
With the new locks, which provide access to a wider lane for vessels, only the 45 largest LNG vessels, 4.5-Bcf to 5.7-Bcf capacity Q-Flex and Q-Max tankers used for exports from Qatar, will not be able to use the expanded canal.
Transit through the Panama Canal will considerably reduce voyage time for LNG from the US Gulf Coast to markets in northern Asia.
A transit from the US Gulf Coast through the Panama Canal to Japan will reduce voyage time to 20 days, compared to 34 days for voyages around the southern tip of Africa or 31 days if transiting through the Suez Canal. Voyage time to South Korea, China, and Taiwan will also be reduced by transiting through the Panama Canal.
Additionally, the new canal will cut the travel time from the US Gulf Coast to South America, declining from 20 days to 8-9 days to Chilean regasification terminals, and from 25 days to 5 days to prospective terminals in Colombia and Ecuador.
In addition to shortening transit times, using the Panama Canal will also reduce transportation costs, EIA informs.
Transit costs through the Panama Canal for an average 3.5 Bcf LNG carrier are estimated at USD 0.20 per million British thermal units (MMBtu) for a round-trip voyage, representing about 9 percent to 12 percent of the round-trip voyage cost to countries in northern Asia.
Currently, about 9.2 billion cubic feet per day (Bcf/d) of US natural gas liquefaction capacity is either in operation or under construction in the United States. By 2020, the United States is set to become the world’s third-largest LNG producer, after Australia and Qatar, according to EIA.