Expanded Panama Canal improves access to South Asian markets for LNGs

Published on July 05, 2016 by Alyssa Michaud

The U.S. Energy Information Administration (EIA) recently released data showing the impact of the newly expanded Panama Canal in dramatically reducing shipping times of liquefied natural gas (LNG) from the Gulf Coast to markets in Asia.

Despite the opening of the expanded Panama Canal taking place at a difficult time for international shipping, as prices for fossil fuels approach rock bottom, the new canal will still have a substantial effect on the economics and practices of shipping routes across the globe, whereas the old canal was capable of accommodating just six percent of the world’s LNG tankers, excluding larger ships with capacities more than 0.7 billion cubic feet (Bcf). The Panama Canal’s new locks are 180 feet across, allowing access to vessels with capacities up to 4.5 Bcf – all but 45 of the largest LNG tankers.

With the Panama Canal offering reduced travel time and transportation costs, LNG shipments to markets that have been relatively regionalized until now will become viable options for U.S. LNGs.

Japan, South Korea, China and Taiwan together comprise almost two-thirds of LNG imports worldwide, and the newly expanded canal will cut down travel times to these markets by more than 50 percent, from 31 or 34 days to just 20.