Panama Canal expansion trials in June but what about LNG?

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A vessel will trial the newly-expanded Panama Canal from 27 June as part of the project which will cut journey time and distance for new US LNG producers selling into Asia.

It has not been an easy path and development of the expansion has been slow and more expensive than planned. Numerous problems included leaks that were detected in some of the locks during testing in September 2015.

But this week’s news shows progress has been made in this huge project – even if the global focus surrounding Panama is more on its financial affairs than its waterways.

The big news for LNG is that a chunk of US Gulf production will have access to a shorter, more direct route to key Asian buyers.

Assuming a travel speed of 18 knots – pretty typical for an LNG vessel – the number of days travelled from the US Gulf to Japan could look like this:

–          From Sabine Pass to Tokyo ports via Panama: 21

–          If travelling east through Suez: 33

–          If travelling southeast and south of Africa: 36

The cost of heading through Panama will be offset by the time, fuel and charter costs saved.

The only problem? Demand for LNG in east Asia is weak and more local Australian plants continue to ramp up new production.

And before we become too focused purely on shipping economics and market fundamentals here is a link to the launch of a very large vessel. It’s certainly not common place in the LNG industry but a reminder of the good old-fashioned way of getting a ship from the land to the sea:

https://www.youtube.com/watch?v=GpbSIx1jJoc

ed.cox@icis.com

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