LNG carriers must be modified to transit the enlarged Panama Canal - 03/07/2014

SHIPS carrying liquefied natural gas through the widened Panama Canal will need to be modified to transit, requiring owners to take some ships out of service to do so, a leading gas shipping industry body today told Lloyd’s List.

 “Most LNG carriers will need modifications to go through,” said Society of International Gas Tanker and Terminal Operators general manager Andrew Clifton.

Speaking from SIGTTO’s London headquarters, Mr Clifton said some LNG carriers might need to be taken out of service to be modified.

Historically, size restrictions have prevented LNG carriers transiting the Panama Canal and the widened waterway enables them to transit for the first time.

Modifications to the ships include changes to pilot platforms and moorings, said Mr Clifton.

Vessels will need to be moored before going through the canal’s new locks, he explained.

However, many LNG carriers do not have the required mooring lines, so owners would have to decide whether to change the moorings on a temporary or permanent basis.

This will, of course, cost money. Details on the investments owners will need to make are being studied.

SIGTTO has just published a book that offers guidance to LNG carriers and other vessel types on transiting the widened Panama Canal, with co-operation from the Panama Canal Authority.

US allure

LNG carriers are a particular focus because the US is poised to start exporting LNG, and transiting the Panama Canal will cut voyage times for vessels shipping cargoes out of the US Gulf.

“The obvious passage is shale [gas] exports to Asia,” Mr Clifton said.

“But this won’t change the market overnight — it’s another option for LNG vessels.”

He compared the new US-Asia gas carrier route with the opening of the northern sea route in summer, which enables more ships to carry cargoes from Europe to Asia in a shorter time.

However, a major factor that will restrict LNG ship traffic through the widened canal is that only six ships a day will be able to enter the locks in each direction.

LNG ships will compete for transit through the canal against other vessel types, including dry bulk carriers and containerships.

“The scheduling and prioritisation issue will be a challenge at times,” said Mr Clifton.

“It remains to be seen how many of these six ships will be LNG vessels.”

He was unable to go into detail on tolls, as SIGTTO offers technical, rather than commercial, advice.

However, he said that transit fees would be based on the volume of gas carried, rather than the gross tonnage of a vessel.

Smaller liquefied petroleum gas vessels can now transit the canal but the widened canal will allow very large gas carriers for the first time as well as LNG carriers, he said.

Issues regarding moorings and modifications would apply to these VLGCs as well, he said.

The expansion of the Panama Canal, one of the world’s major engineering projects, saw costs overrun by $1.6bn, causing delays to work.

At the end of February, the parties involved in the expansion said the lock construction will be completed by December 2015.

in www.lloydslist.com 03/07/2014