During a recent customer trip to Asia, the Panama Canal Administrator made headlines when he shared expectations that the waterway would transit five times its current volumes of liquefied natural gas (LNG) by 2020. Less surprised were those who have followed the segment’s growth since the Canal Expansion first brought it to the waterway, and the steps the Canal continues to take to ensure shippers have more than enough capacity to meet their demand. But while many continue to closely follow the US-Asia LNG trade, the segment’s growing role in Central America and the Caribbean cannot be understated. The two regions have become increasingly interested in natural gas to meet their energy needs – thanks to its lower environmental impact and cost – and for supporting their local economies.
Take Peru and Trinidad and Tobago, the region’s leading LNG exporters. In the 2018 fiscal year (FY18), Peru has transited 575,529 tons of LNG to European destinations, and Trinidad and Tobago has exported 1,340,396 tons to Asia, Mexico’s west coast and Chile. Together, the two exporting nations account for nearly one fifth of all LNG transits at the waterway – not surprising given its savings for shippers. An LNG vessel departing Trinidad and Tobago for Chile, for example, saves more than six days travelling through the interoceanic route compared to other journeys. Vessels leaving Peru for Spain can save up to eight days each leg.
Central American and Caribbean importers similarly benefit from their newfound ability to receive LNG shipments via the Canal. Since the opening of the Neopanamax locks, Mexico has imported an estimated 3.1 million tons of LNG, while Chile has imported about 1.1 million tons. In addition to receiving exports from other Latin American nations, both Mexico and Chile are taking in LNG from the United States as it increasingly grows its exports. And, as LNG exporters in both the United States and Trinidad and Tobago vie for importers’ attention in Mexico and Chile, the Panama Canal stands at the ready to receive increased LNG transits.
Over the past two years, the trade winds for LNG have shifted considerably. For example, in FY18, South Korea and China became top importing nations, bringing in 1.7 million tons and 1.6 million tons to their countries, respectively. And as demand continues to grow, trends shift and shippers seek to capitalize on new time and cost savings, so too will the Panama Canal offer the capacity, as needed, to ensure its partners in Central America, the Caribbean and around the world benefit from this burgeoning segment.