Panama Redefines LNG Transport

by on November 7, 2013 2:30 am GMT

Panama looks to redefine transport for liquid natural gas (LNG) by widening the Panama canal that will handle an estimated 12 million metric tons of liquefied natural gas annually, The canal will reopen in 2015.

This will be significantly more beneficial for LNG carriers because it will cost 24 percent less for transporting cargo from Asian to the United States. The new, lower cost route will allow LNG cargo to make its way to Japan in order to replace nuclear-power generation lost during the 2011 tsunami.

The United States is 86 percent energy independent, a 27-year high, according to Morgan Stanley. The new Panama route will allow increased trade to the large LNG market in Asia.

This route will now accommodate 89 percent of the global LNG carriers by 2015. The canal’s construction is about 64 percent complete, said the Panama Canal Authority.

In terms of cost, the trip from Sabine, La to Fukuoka, Japan will take just over 43 days and cost $8 million opposed to the 63 days and $11.4 million around Africa.

Prior to the Canal’s widening project, only four percent of the 369 tankers could fit at once with only six tankers making the journey this year. Teekay LNG Partners LP has already booked two tankers to carry exports from the United States on a five-year contract. Teekay’s gas services division president, David Glendinning said that these tankers will be designed to carry as much cargo as possible.

The new route will help both buyers and sellers of LNG through lowering costs and time per trip. The new canal width will improve competitive between United States LNG and provide Asian buyers more supply opportunities by further facilitating trade, said Diane Haggard, a spokeswomen for Cheniere Energy.