Building Pressure

Victor Carlos Urrutia, Panama’s National Secretary of Energy, told TBY that, “LNG pricing in different regions differs considerably. There is currently no cost-effective means of transporting LNG from the Atlantic to the Pacific. The largest consumers of LNG, such as Japan, obtain it from the Atlantic, where prices are more favorable.“ However, the expansion of the Panama Canal will yield major benefits for the commodification of LNG, which has so far not been deterred by long-term contracts and point-to-point deliveries, according to Urrutia. “There is not really a fluid commodity market for LNG today, although strong potential exists to develop one. We have hopes of Panama becoming a center for storage solutions. In the long term, ships will be using LNG for propulsion, and that will make the LNG business more flexible. The government is actively assessing the situation and its alternatives, and the moment it is deemed favourable we will make our move.“

The expanded canal will be able to handle estimated 12 million metric tons of LNG on a yearly basis. Once completed, the widened waterway will be able to handle ships as long as 1,200 feet and as wide as 160 feet: today the current size of the canal allows transit for ships up to 965 by 106 feet. According to data and calculations published by Panama Canal Authority (ACP), LNG ships will cross the 77km long canal 350 times on a yearly basis, shortening the route between US and Asia by 24%. As a consequence, the routes between Trinidad NS Tobago and Chile, between Peru and Spain will be shortened

Leading countries in Latin America and North America are currently focusing on encouraging the installation of new sources of energy, based on natural gas, in order to the availability of energy and to satisfy the increasing demand of energy.

Exporting LNG from North America is turning into a reality and it is an important source for Latin American importers. Latin American buyers and North American sellers are now forging new alliances in order to achieve commercial success.

The US is the leading producer of LNG worldwide. The new potential for LNG from the US is appealing for Panama, as one of the main buyers of LNG in the world is Asia, which historically uses the canal for the transit of goods coming from the eastern coast of the States. Instead of crossing the Suez Canal, the Panama Canal will shorten the route by 5,356 nautical miles.

In June 2015, the US Trade and Development Agency signed an agreement with Panama Canal Authority (ACP) to support the planning of an LNG import terminal, that will support the implementation of maritime and energy projects, allowing the canal to boost its activity over the medium term

At a global level, usage of natural gas is growing more and more. According to Agencia Internacional de Energí­a (AIE), the demand for LNG will increase at a rate between 1.7% and 2% by 2035.