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Panama Canal officials meet with Cheniere as waterway prepares for new US LNG

Officials with the Panama Canal Authority met with U.S. LNG export pioneer Cheniere Energy Inc. to talk about how the waterway can prepare for a wave of American natural gas liquefaction capacity that will enter service over the next few years.

The Panama Canal could see LNG tanker transits increase 50% as early as September, said Jorge Quijano, administrator of the Panama Canal Authority, the autonomous agency that manages the canal. In addition to Cheniere's Sabine Pass terminal in Louisiana, five other projects are set to bring total U.S. LNG export capacity to more than 9 Bcf/d by the end of 2019.

"The meetings with Cheniere allowed us to hear about customers' experience transiting [the canal] firsthand, and to collaborate on ways we can continue meeting this growing demand from the LNG industry," Quijano said in a Feb. 20 news release.

Cheniere used the canal 62 times in 2017, said Eric Bensaude, Cheniere's managing director of commercial operations and asset management.

"The Panama Canal and the LNG industry are, together, going through a learning curve," Bensaude said. "Cheniere is confident in the Panama Canal's capabilities to adapt in addressing the needs of the growing LNG sector."

In 2016, the canal added a new set of locks on both the Atlantic and Pacific, part of an expansion that created a third lane of traffic and doubled the cargo capacity of the canal.

While Cheniere has maintained that it has not had issues moving LNG cargoes from the U.S. Gulf Coast to Asia through the expanded canal, Sempra Energy, which is developing the Cameron LNG export terminal, has called on the U.S. government and Panama Canal Authority to fix what it calls "growing pains" in logistics.

The Panama Canal officially offers one slot per day to LNG tankers. At times, in an effort to accommodate customer needs, the authority has allowed two LNG vessels to pass through the waterway on the same day. That is becoming more frequent as traffic scheduling and coordination with canal customers improves, the agency said.

The Panama Canal Authority said it is also working to become more flexible, offering slots for LNG tankers that had not originally planned to use the waterway. Many industry experts expect growing LNG supply to spur more fluidity in the market, with tankers increasingly switching routes at sea in response to a new tender.