Panama Canal opens December LNG slot: Correction

Market: Natural gas
21/12/20

Corrects details on booking protocol in paragraph 4

The Panama Canal has made another Neopanamax transit slot available for LNG carriers in late December, with just two slots available until the start of March as of 16 December.

The new slot is available on 29 December in either direction for vessels in other market segments, but the direction available for LNG carriers — unspecified by the Canal Authority — will depend on the direction of the other LNG transit booking made for that day. The waterway offers only two daily transit slots to LNG carriers — either one in each direction or two northbound — although it has accommodated up to an additional two transits when demand for transit of the Neopanamax locks from other market segments has weighed on bookings.

Seven other bookings have been made for 29 December, suggesting the reserved slot for passenger carriers has not been utilised, leaving eight slots available for vessels from other market segments. A maximum of eight slots can be booked for the Neopanamax locks, one of which is reserved well in advance for passenger vessels.

The new available slot is in the second booking period, which is set to close by 25 December. But container vessels will take priority over LNG carriers during this period. The slot will be awarded according to ranking, with LNG carriers having second preference after container vessels. But if the slot goes unawarded, it will become available to any market segment on a first-come-first-served basis.

There is also an LNG transit slot available for 27 December — again offered in either direction through the canal, but the direction available to LNG carriers will depend on the direction of the other booked LNG transit. This slot is also in a second booking period that is set to close by 23 December. Seven slots have already been awarded, suggesting again that the reserved passenger vessel has gone unbooked.

And no other transits that may be used by LNG carriers were being offered as of 16 December by the Canal Authority until 2 March, likely as quick demand for transit from multiple market segments has emerged. This has been the case particularly for LNG freight market as northeast Asian demand continues to pull Atlantic basin supply for late December into the first quarter of 2021 into the Pacific, buoying transit demand for laden vessels heading southbound and empty vessels transiting northbound to load at US export terminals. A transit slot was available on 15 December for LNG carriers in mid-January but this has since been removed by the Canal Authority, suggesting the slot has been awarded.

Congestion at the Panama Canal in recent weeks has caused significant delays for LNG carriers en route to northeast Asia or returning to US export projects, particularly those carriers without pre-booked transit slots. These delays have led to a number of charterers opting to ship cargoes to Pacific markets through the Cape of Good Hope rather than Panama, despite the longer distance, in a bid to avoid the risk of multi-day delays at the central American waterway.

These charterers may seek to continue delivering through the Cape of Good Hope into the first few months of 2021, with only two bookable slots available until 2 March as of 16 December, tying up carriers on longer journeys and weighing on spot vessel availability over the period.

By Samuel Good

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