LNG

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.

The attractive spot LNG charter rates in the West of Suez market remained mostly limited to the 2-stroke segment, though most of these deals were being concluded for loadings in late March 2023.

Owners of large and small LNG carrier fleets are maintaining robust order books with the latest ship to be delivered being for shipowner Minerva Gas along with four other vessels for various owners that emerged from the shipyards in June.

Greek shipping line Minerva has just taken delivery of the 173,400 cubic metres capacity carrier, the “Minerva Limnos”, from South Korean shipbuilder Daewoo Shipbuilding and Marine Engineering.

The vessel left DSME's Geoje shipyard on June 30. The “Minerva Limnos” features M-type electronically controlled, Gas injection (ME-GI) propulsion, a No. 96 GW LNG containment system from GTT and a PRS-FRS re-liquefaction system.

The vessel is flying the Malta flag and is classed by European classification society DNV.

“We wish to convey to the Master, Chief Engineer and all Officers and ratings of ‘Minerva Limnos’ our warmest congratulations and wholehearted wishes for safe, smooth and prosperous voyages and calm seas,” said a statement from Athens-based Minerva.

Off Japan

The new Minerva carrier was shown in latest shipping data as being just off the coast of Japan and was expected to head for the Panama Canal before lifting its maiden cargo in the Atlantic Basin.

The vessel delivery brings Minerva's LNG fleet numbers to three carriers, following deliveries of two vessels in January and February 2021.

The shipowner has ordered two further carriers, both of 174,000 cubic metres capacity, the “Minerva Chios” to be delivered in the weeks ahead and its sister ship, the “Minerva Amorgos” to be handed over by August 2022.

The four other LNG carriers delivered from shipyards in June were for Danish owner Celsius Shipping and Greek owners Alpha Gas, Gaslog and Capital Gas.

The expectations of growing shipping demand in the LNG market is supported by the lengthening of shipping routes on the
ramp-up of export capacity from the United States and Russia.

The bulk of additional sanctioned liquefaction capacity entering the market will be in the 2021-2024 period.

At the end of 2020 as many as 150 LNG vessels were on order, which represents a quarter of the active carrier fleet, excluding floating storage and regasification units.

Of these, nearly 60 ships are scheduled for delivery in 2021, adding close to 10 million cubic metres of capacity, an 11 percent year-on-year increase.

The market entry of the remaining 15 million cubic metres of capacity on order is spread across the period between 2022 and 2025.

Sept 24 (LNGJ) - Shipping charter rates for LNG carriers in the spot market increased over the past week by around $7,000 per day. Rates were quoted at an average of between $59,000 per day and $61,000 per day West of Suez and at rates of between $56,5000 per day and $58,500 per day East of Suez for vessels of between 155,000-165,000 cubic metres capacity, according to various brokers. One-year time charter rates were little changed for the most modern vessels and were seen at around $47,000 per day.

Gaztransport and Technigaz (GTT), the French technology firm and designer of liquefied natural gas storage tanks, has received an order from two South Korean shipyards for tank designs for six LNG carriers for Asian and European owners.

The France-based International Group of Liquefied Natural Gas Importers (GIIGNL) has issued its annual report with landmark statistics, including more than 10,000 cargoes delivered without incident and the global LNG carrier fleet passing the 600-vessel mark.

“LNG flows experienced a shift in patterns,” said GIIGNL President Jean-Marie Dauger in his executive overview of the 2020 publication.

“Northeast Asian demand growth moderated due to economic slowdown, milder weather and competition from nuclear and coal-fired power generation, while most of additional LNG volumes were absorbed into Europe which played a balancing role thanks to its abundant infrastructure and well-connected gas market,” he explained.

The GIIGLN constitutes a forum for exchange of information and experience among its 88 members with the aim of enhancing the safety, reliability, efficiency and sustainability of LNG import activities and in particular the operation of regasification terminals.

The GIIGNL said that while no new country joined the ranks of importers in 2019, several countries made sound progress on infrastructure development and are set to begin importing in the coming year or two.

“At the start of 2020 eight new floating terminals and 18 new onshore terminals were reported to be under development,” said the GIIGNL President.

“Total regasification capacity under construction at year-end reached 131 million tonnes per annum,” added Dauger.

“About 63 percent of the capacity under construction was located in Asia, of which nearly half was in China and India,” he said.

Global regasification capacity stood at 920 MTPA at the start of 2020 and there were 42 importing countries.

Seven new terminals were commissioned, adding a combined 13 MTPA of new regasification capacity.

Two terminals are based on a floating solution and four are small-scale facilities with a regasification capacity of less than 1 MTPA.

“Three expansion programs were completed in India, Taiwan and Thailand, adding 5 MTPA of LNG regasification capacity,” said Dauger in his overview.

In Asia, demand was characterized by two diverging trends: on the one hand, it continued to be boosted by China despite the US-China trade frictions and the slowdown of the coal-to-gas switch in the industrial sector.

On the other hand LNG demand declined in Japan and South Korea, where increasing levels of nuclear power generation and the pace of renewables deployment influenced the role of LNG in the power mix.

“In Europe, the absorption of surplus volumes was enabled by a combination of lower pipeline imports, declining domestic production, increased storage use and additional gas-fired power generation,” he explained.

“Imports dwindled in the Middle East as Egypt increased its exports. The same dynamic occurred in South America as Argentina started LNG production and exports,” added Dauger.

The GIIGNL report also noted that for LNG sellers and buyers, business models and contractual arrangements are becoming increasingly diversified.

“Traders continue to take advantage of seasonal and local supply tensions and integrated portfolio players are displaying impressive growth, aiming to bridge the disconnect between LNG seller and buyer interests,” it said.

“We see competing interests, a world in which sellers require long-term commitments to support their investments, whereas buyers need shorter contract durations, diversified pricing structures, increased destination flexibility and greater volume flexibility in order to manage demand uncertainty,” added the report.

LNG commercial operations over the previous near enabled the delivery of 100,000 cargoes without major incident, showing a remarkable track-record of safety.

“As we enter a new decade and as GIIGNL is approaching its 50th anniversary, our association remains committed to promoting cooperation between LNG players and to supporting the development of safe, efficient and sustainable LNG imports for a responsible energy transition,” stated President Dauger.