Panama Canal expansion may hurt MidEast gas exporters

The expansion of the Panama Canal will allow US gas exporters to better-compete with the Middle East’s easy access to Asian markets.
The larger canal can now accommodate larger ships, with the previous limit of 5,000-teu for container vessels now increased to 13,000-teu, thanks to the US $5.2-billion expansion project.
The larger canal can now accommodate larger ships, with the previous limit of 5,000-teu for container vessels now increased to 13,000-teu, thanks to the US $5.2-billion expansion project.

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The Panama Canal Authority this week launched the newly expanded Panama Canal, the only waterway connecting the Atlantic and Pacific Oceans, cutting sailing times between US East Coast ports and Asia by more than two weeks.

The larger canal can now accommodate larger ships, with the previous limit of 5,000-teu for container vessels now increased to 13,000-teu, thanks to the US $5.2-billion expansion project.

LNG and LPG exports in the Middle East will be directly affected by this, according to senior petrochem shipping executives in the region, because the US is ramping up exports of these gasses through its investment in shale extraction.

“It will create competition for all producers in the Arabian Gulf because the new canal will allow US shippers to get LNG and LPG to Asia almost as quickly as from the Arabian Gulf,” said one executive who declined to be named.

Crude oil tanker operators in the Middle East won’t be affected because the super tankers used globally by the crude shipping sector remain too large, even for the expanded Panama Canal.

Looking at the global container shipping industry, the expanded canal is expected to put even more pressure on already depressed freight rates as shorter voyage durations will mean lower charter hire revenues, while fewer sea days will add further supply to an already saturated market.

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