BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
COOKIE NOTICE

Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

IF you are a Platts Market Center subscriber, to reset your password go to the�Platts Market Center to reset your password.

In this list
Natural Gas

Choke points could emerge to inhibit global LNG trade expansion in 2018

Natural Gas | Oil | Metals

President Xi's Second Term

Natural Gas | Oil

Platts Wellscape P2P

Commodities | Natural Gas | LNG | Marine Fuels | Tankers | Banking

18th Annual LNG Conference

Agriculture | Biofuels

US boho factor falls below zero for first time since 2014

Watch: Choke points could emerge to inhibit global LNG trade expansion in 2018

As the market embarks on a second year of record level LNG supply from the Atlantic Basin and strong competition from Asia for those volumes, a potential choke point is emerging: the Panama Canal.


The canal can transit just one LNG vessel a day, laden or ballast, and only during daylight hours. The vessel transit restriction will be in place until October 2018 when capacity is expected to double to two vessels a day.


In this video, S&P Global Platts Senior Director for Global Gas and LNG Madeline Jowdy examines how concerns about the Panama Canal can affect trade flows and investment decisions.


For more information on Platts LNG Analytics, call +1 8557130658.

View Full Transcript

Video Transcript


Choke points could emerge to inhibit global LNG trade expansion in 2018

By Madeline Jowdy, Senior Director, Global Gas and LNG


Welcome to the Snapshot, a series examining the forces shaping and driving global commodities markets today.


As the market embarks on a second year of record level LNG supply injections from the Atlantic Basin and strong competition from Asia for those volumes, a potential choke point is emerging: the Panama Canal. Not eighteen months after the first LNG tanker transited the newly expanded conduit point utilization rates for LNG tankers have gradually crept up.


Current regulations stipulate that the Panama Canal can transit just one LNG vessel a day, laden or ballast, and only during daylight hours. In the first quarter of last year, Panama Canal utilization rates registered around 45%. By the fourth quarter, that shot up to 66%. In December, when margins on LNG shipments to Asia from the US broached $5.00/mmBtu, the utilization rate hit 81%, begging the question of when the Panama Canal becomes a choke point as opposed to an access point to Asia.


Here’s what has buyers and sellers alike in a quandary: the vessel transit restriction will be in place until October 2018 when capacity is expected to double to two vessels a day. But export capacity from the US is continually being added. After having ramped up a 4th export train at Sabine Pass in the fourth quarter, the US is gearing up for a second export facility at Cove Point to begin production by the end of the first quarter. By the fourth quarter, a third export facility could begin generating cargos. As with Sabine Pass, there are no destination restrictions on Cove Point volumes per se, but capacity holders have their own portfolios to manage. At Cove Point, half the capacity has been sold to Japanese gas and power utilities. These capacity holders have downstream obligations to meet and are therefore less flexible during seasonal demand spikes in the first and fourth quarters.


Exceptions to this rule have been reported: in December, the Panama Canal Authority reported an instance of two laden LNG carriers in the canal on the same day-but this is no way to manage a complicated portfolio. For buyers faced with downstream obligations during a seasonal peak, delays at the canal could prove disastrous. There is always the option not to use the canal, adding some 20 days to the round trip transit. In this case, the price tag for buyers would be higher. Concerns about the canal could impact the next generation of FIDs for US projects.


Until next time on The Snapshot – we’ll be keeping an eye on the markets.