Special Report: LNG Update: Panama Canal expansion will loosen LNG trade

March 15, 2010
LNG traded from Asia's current and future producers and to its burgeoning markets will likely broaden after 2014.

LNG traded from Asia's current and future producers and to its burgeoning markets will likely broaden after 2014. That's when the ongoing expansion of the Panama Canal will be completed.

At an LNG conference last year, an official with the Panama Canal Authority said the expansion will permit more than 80% of the global LNG fleet to move through the canal, compared with only 6% of the fleet currently.

Effectively, however, no LNG vessels now traverse the waterway because that 6% of the fleet is too small to engage in large, long-haul trade, said the authority's Silvia de Marucci.

Currently, locks are 1,000 ft long, she said, precluding vessels longer than 965 ft. Beam, or width, must also not exceed 106 ft with drafts less than 39.5 ft. Marucci said the expansion will permit passage of ship lengths of 1,200 ft, beams of 184 ft, and drafts as deep as 49 ft.

The enhancement to connections between the two major LNG basins is obvious: Cargoes from producers in Trinidad & Tobago, Algeria, Nigeria, and Angola will be able to move to Asia. If Canada moves ahead with installing an LNG export plant at Kitimat, BC, its cargoes would also have Atlantic Basin markets as alternatives to Pacific Basin terminals.

Asian cargoes will be able to access Atlantic Basin markets, especially the new LNG terminals in the US Gulf Coast and upper East Coast and Canada's new Canaport terminal at St. John, NB.

And it is likely no coincidence that in January, Panama announced it would spend $300 million on an LNG terminal and another $130 million on a gas-fired generating plant. A government official said the terminal would permit Panama to receive, store, and regasify LNG cargoes in Colon, near the Atlantic entrance to the Panama Canal.

Expansion of the Panama Canal will open in 2014, linking Atlantic and Pacific basins more closely than ever. Photo from the Panama Canal Authority.

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