Panama Canal to Boost LNG Transit After Scrapping Restrictions

The Panama Canal will boost liquefied natural gas (LNG) tanker traffic along the waterway from October in a boon to U.S. East Coast LNG producers chasing profits from sales to Asia.

As demand for LNG transit grows, the Panama Canal will grant night passage, and scrap its single-file rule to enable passage in opposing directions at the waterway's north end.

"By lifting these restrictions on October 1, the Canal will unleash even more capacity for LNG," Silvia de Marucci, Executive Manager, Economic Analysis and Market Research Division said in a statement.

"In addition to the one reservation it guarantees each day, the Canal will soon offer LNG shippers, for the first time, the opportunity to compete among our wider vessel segments to book a second daily slot," he added.

This is on top of the Canal's existing policy to allocate, where possible, passage slots to LNG tankers that arrive without a booking.

The waterway regularly transits two LNG vessels in the same direction in the same day, and in April transited three in a line.

LNG traffic through the waterway should grow by more than half by the end of this year compared with 2017, it said.

Demand for LNG has risen significantly in the last three years as the increase of supply, especially from onshore shale fields in the United States and offshore reserves in Australia, has made it more competitive. Many countries including China have also been switching to gas more rapidly than expected, away from dirtier coal, for environmental reasons. Shipments of LNG through the Panama Canal began to rise after a third set of locks was added in 2016, and the authority projects growing demand for the supercooled fuel will boost such transits through the early part of the 2020s.

Reporting by Oleg Vukmanovic