The administration of the Panama Canal is in active negotiations with producers of liquefied natural gas (LNG) in the United States. These talks aim to increase the number of LNG cargo transits through the canal, in response to growing industry demand.
Rising water level in the Panama Canal
The words of Ricaurte Vásquez, the administrator of the Canal, mention that these conversations take place at a time when ” the canal’s water levels have returned to optimal levels ,” after a period of drought that affected operations.
We must not forget that the Panama Canal has been a critical route for LNG exporters from the U.S. Gulf Coast, seeking markets in Asia. However, last year, the administration was forced to reduce the number of daily crossings due to low water levels , leading many to consider alternative, more expensive and extensive routes .
In the month of April, LNG transits through the Neopanamax locks represented only 4.9% of the total, while container ships dominated with 61.6% of the transits . With the recent recovery of water levels, the Canal is evaluating adjusting the distribution of time slots to facilitate more transits of LNG producer ships.
The new negotiations and exports
Vásquez also highlighted that exports of new LNG facilities in the United States are being contemplated, which could require new permits. In addition, he noted that the companies involved, including large players such as Cheniere Energy, have expressed frustration over the long waiting periods to cross the channel.
Industry representatives are expected to meet in Panama this month to discuss and define points of collaboration. For example, creating an exclusive channel for LNG is not viable due to the need to keep the route open for all types of international trade.
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Source: worldenergytrade.com
Photo: Shutterstock
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