Soaring Fees At Panama Canal Have LNG Shippers Taking Long Route - gCaptain
Soaring Fees At Panama Canal Have LNG Shippers Taking Long Route
Shipping
CMA CGM Urges Industry to Avoid Price War
By Tara Patel (Bloomberg) — CMA CGM SA, the world’s No. 3 container carrier, urged the industry to avoid a price war as the delivery of new vessels threatens to push...
Photo credit: Flystock/Shutterstock
By Ruth Liao
(Bloomberg) –Liquefied natural gas shippers increasingly are opting to travel up to two weeks longer and almost 6,000 nautical miles further to bypass the Panama Canal as transporters of other fuel pay nearly $4 million to jump the long queue.
For the first time in two years, LNG shippers preferred using the Cape of Good Hope more than any other route, BloombergNEF data show. The preference to prolong journeys illustrates how drought and rising costs to transit the canal are changing global energy trade routes.
The canal’s low water levels have led authorities to restrict the number of slots available for shippers. There also is less market incentive to pay millions of dollars to jump the backlog of waiting vessels — on top of the usual canal transit fee – given Asian spot LNG prices are not trading at a level that would justify paying such record fees.
European gas prices are much lower than the record highs seen year ago in the wake of Russia’s invasion of Ukraine. This year, full storage levels and mild temperatures have eased prices. Asian demand for the fuel also has been lackluster given the absence of an economic rebound in China.
Keeping LNG vessels laden on the water – known as floating storage – also has risen to record high levels for the second winter in a row, according to BNEF research.
© 2023 Bloomberg L.P.
Join the 95,589 members that receive our newsletter.
Have a news tip? Let us know.
Maritime and offshore news trusted by our 95,589 members delivered daily straight to your inbox.
Related Knowledge Center: Liquefied natural gas
Driven by plentiful natural gas produced from shale plays, the United States began exporting liquefied natural gas in 2016 when the Sabine Pass terminal in Louisiana opened and shipped its first cargo. Since then, additional capacity, or trains, have been added to Sabine Pass, and terminals have become operational in Cameron Parish, La.; Hackberry, La.; Cove Point, Md.; and Corpus Christi, Texas. The Energy Information Administration projects that U.S. LNG export capacity will reach 8.9 billion cubic feet per day (Bcf/d) by the end of 2019, making it the third largest in the world, behind Australia and Qatar. The tariff war with China has the potential to impact some final investment decisions for additional terminals in the coming months.