LNG reservations becoming difficult for Panama Canal

Booking transit for LNG vessels through the Panama Canal in advance has become increasingly difficult as some companies are finding a majority of the slots already taken, according to market sources.

One shipping source said it appears that bookings have been made as far as into the first quarter of 2018.

Multiple market sources said portfolio seller Shell, US-based Cheniere and Spain’s Gas Natural Fenosa have taken up most of the reservations, although this could not be immediately confirmed.

Cheniere’s trading subsidiary Cheniere Marketing has offtake from its Sabine Pass plant in Louisiana, which is now commissioning its fourth train.

Shell has offtake from all four trains but primarily Train 1, and Gas Natural Fenosa has long-term offtake from Sabine Pass Train 2.

The expansion of the locks at the Panama Canal just over a year ago was designed to allow for larger container ships, but LNG vessels were also able to take advantage of the shorter route.

This cuts most routes from the Atlantic to Pacific by a third in terms of voyage days.

According to LNG Edge, 139 vessels, both ballast and laden, have passed through the Panama Canal by mid July this year, since the expansion in July 2016 made it wide enough for LNG tankers.

Of those vessels, 78 voyages were from the Atlantic to the Pacific, all laden, and 61 vessels travelled from the Pacific to the Atlantic, with 52 of them ballast and nine laden, all from Peru LNG.

There were 23 LNG vessels that crossed the Panama Canal in December 2016, both ballast and laden, the highest peak of traffic since the canal opened.

This coincided with a price arbitrage due to a spike in East Asian spot prices following a series of outages at the Australian Gorgon plant and competing demand from buyers.

In January and February 2017, there were 19 LNG canal transits each month, and then an average of 10 transits each month in March to May, before stepping down to five transits in June.

However, even with the downturn in transit numbers this summer, market sources in the Atlantic said that looking ahead to this winter may be difficult in securing advanced reservations as most of the slots appear to be already taken.

One trading source spoke of recently attempting to book a Panama Canal slot and was unable to secure passage at least 60 days out.

Starting on 1 October or potentially earlier, the Panama Canal Authority (PCA) will lift restrictions on daylight transits of the canal by LNG vessels, which could ease congestion, and allow for night-time transit.

Presently, LNG transits are restricted to daylight hours, according to the authority.

Two vessels that loaded from Sabine Pass in the US Gulf appear to be taking longer routes to their destinations than using the Panama Canal, according to LNG Edge.

The 155,000 cubic metre (cbm) Provalys, chartered by France-based seller ENGIE, lifted a cargo from Sabine Pass on 28 July and is expected to sail around southern tip of South America to reach the port of Mejillones in Chile.

The voyage would take over 24 days, compared with 12 days via the Panama Canal, a shipping calculation showed.

The 146,000cbm K Jasmine, chartered by South Korean incumbent KOGAS, is sailing around the southern coast of Africa to deliver its Sabine Pass cargo to Tongyeong in South Korea.

The journey would take over 37 days, compared with around 25 days when travelling via the Panama Canal, according to LNG Edge. adam.yanelli@icis.com, ruth.liao@icis.com