delaying LNG shipments via the Panama Canal is expected to last through the
peak demand winter months, traders close to the situation said, although the
canal’s regulator said it had made changes to speed up transit.
The price of
liquefied natural gas (LNG) and shipping rates have hit record highs because of
the bottleneck, supply constraints and heavy demand from Asia, where freezing
weather has placed the energy supply system under strain.
Ships with LNG from US waited two weeks in Dec to navigate the canal
Ships carrying LNG
from the United States to meet the Asian demand waited for up to two weeks in
December to navigate the canal. The authority told Reuters by email the wait
had halved to one week.
It said it had
changed its transit reservation system on Jan. 4 to reduce the logjam and allow
LNG vessels to reserve two slots 80 to 15 days ahead of transit, rather than
Auctions introduced to sell of slot available due to last-minute
The authority has
also introduced auctions to sell off any slot that becomes available within two
to three days before transit due to last-minute cancellations.
So far, five
auctions have been conducted and four slots have been awarded to LNG vessels,
the authority said.
traders say they still expect congestion until March, when northern hemisphere
temperatures rise and heating demand eases as there is a shortage of slots.
Traders have canceled some LNG tenders because of the delays
canceled some LNG tenders because of the delays, but there are too many vessels
for the three sets of locks that lift and lower vessels carrying all kinds of
products through the 80 kilometer canal that spans the narrowest part of Panama
and connects the Atlantic and Pacific Oceans.
A trip to Asia
through the canal Reuters takes 15 days.
exporters that have been ramping up LNG supplies to meet the high demand, can
send their cargoes round the Cape of Good Hope, South Africa.
A route LNG vessels usually avoid; yet LNG vessels from US took that
route in Dec
That more than
doubles the time of the journey to Asia to around 38 days and is a route LNG
vessels usually avoid.
research firm said around one third of LNG vessels loading from the United
States took the long route in December.