Shipments of liquefied %NaturalGas (LNG) through the Panama Canal enroute to Asia from North America have declined 65% in recent years.
The Reuters news agency is reporting that ships carrying U.S. liquefied natural gas to Asia have fallen sharply as demand shifted to Europe in the wake of Russia’s invasion of Ukraine.
Shipments through the Panama Canal have also dropped off due to a drought in the waterway and higher prices charged to traverse the route that is the shortest point between North America and Asian nations such as Japan and China.
However, the Panama Canal Authority that controls the waterway is now hoping that a new reservation system that allows shippers to reserve slots will lead to a rebound in %LNG shipments.
In recent years, gas exporters have opted for longer routes around South America even after the drought subsided and as U.S. gas exports to Asian markets have grown substantially.
The Panama Canal Authority charges a set fee per passage through the shipping lane, often making it more convenient for U.S. LNG producers to take longer routes to Asia.
However, the new reservation system, combined with lower transit costs and rising LNG demand across Asia might boost shipments through the canal moving forward.
The Panama Canal now offers two transit slots per day for LNG ships, but a new reservation system that goes into effect in January 2025 will allow producers to reserve transit slots up to a year in advance, says the Canal Authority.