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LNG carriers to undergo modification to transit Panama Canal

LNG Industry,

LNG carriers will need to be modified to transit the expanded Panama Canal requiring them to be taken out of service, a leading gas shipping group told Lloyd’s List.

“Most LNG carriers will need modifications to go through,” said Society of International Gas Tanker and Terminal Operators (SIGTTO) 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. In the past, size restrictions have prevented LNG carriers transiting the Panama Canal. However, recent work to widen the Panama Canal has enabled LNG vessels to pass through for the first time.

Mr Clifton said that modifications to the ships would include changes to pilot platforms and moorings. He explained that vessels will need to be moored before going through the canal’s new locks.

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 is an expensive process. Details on the investments owners will need to make are being studied.

SIGTTO has recently 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 exports

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, only six ships a day will be able to enter the locks of the Panama Canal in each direction, a factor that will restrict LNG ship traffic. 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 did say that transit fees would be based on the volume of gas carried, rather than the gross tonnage of a vessel.

Smaller LPG 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. Issues regarding moorings and modifications would apply to these VLGCs as well, Mr Clifton said.

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

In late February, the parties involved in the expansion said the lock construction will be completed by December 2015.

Adapted from press release by Ted Monroe

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