The Panama Canal Authority said it was trying to increase US liquefied natural gas transits and had invited energy company executives to Panama for discussions as water levels recovered on the Canal after a prolonged drought blamed on the “El Niño” weather effects.
The ACP, as it is known from its Spanish name Autoridad del Canal de Panamá, said traffic was recovering from a low point at the start of 2024 when booking slots for vessels were cut to 22 ships from all sectors.
During the Atlantic Basin-Pacific Basin transits the ships are lifted from sea level in locks up to the Panama Canal’s Gatun Lake where the water levels had dropped substantially and the levels have risen again.
Bottlenecks
However, during the first quarter most US LNG carriers looking to reach Asia were continuing to choose the longer trans-Atlantic route around South Africa to avoid shipping bottlenecks impacting transits via the Panama Canal, and as security concerns also increased in the Red Sea area to take the Suez Canal out of play.
During March and April up to 30 LNG carriers per month left US LNG plants with Asian cargoes and headed for the longer route to Asia rather than use the Panama Canal.
The latest ACP data showed that only 14 US LNG carriers reached the Asian market via the Panama Canal during the first quarter of 2024 compared with 40 LNG vessels during the same period of 2023.
LNG carrier transits through the Panama Canal's Neopanamax locks had amounted to under 5 percent of the total in the past two months compared with more than 60 percent by other large vessels like containerships.
The ACP said it was now working to modify transit slot allocations and has sent out a survey to all Canal users, including LNG customers, to identify their needs.
Panama invitation
Now that transits have returned to near normal the ACP said it was looking for ways to guarantee crossings for LNG carriers from the US Gulf Coast and other areas and said it had invited LNG companies to come to Panama later in May for talks.
“We will talk and define parameters and will listen to the very big aspirations of the companies,” a statement said.
The ACP has proposed building water reservoirs as medium-term to long-term solution to try and mitigate the drought and low-water conditions being repeated on a regular basis in the Canal system.
The project to widen the Canal at a cost of $5.5 billion was inaugurated eight years ago in June 2016 enabling the largest LNG carrier and containerships to transit the waterway.
While LNG from the US Gulf Coast has mostly pointed at an Atlantic crossing to Europe over the past year, Asia is still a key market for US LNG through the Canal.
Recovery plan
The Canal expansion work included two new lock complexes with a total of 16 gates, eight on the Pacific side and eight on the Atlantic side.
The primary action plan of the ACP is to tap additional rivers to join the Chagres River, the largest river in the Panama Canal's watershed.
The original Canal builders had dammed the Chagres River in two places to create Gatun Lake and the water used for the locks.
The ACP is now seeking to accelerate its plan to divert four additional rivers into the watershed by 2030.
