The drought in Panama significantly increases the costs of transporting LNG and LPG
The drought is causing significant delays to ships passing through the Panama Canal and is causing Very Large Gas Carriers' shipping rates to rise to record levels. So a drought in Central America affects energy prices throughout the Americas and beyond
That, in turn, is increasing the cost of shipping LPG from the United States, the Energy Information Administration said Tuesday.
The Panama Canal Authority said the water level of the Gatun Reservoir is the lowest it has been in 30 years due to below-normal rainfall. Gatun Lake is located between the Atlantic and Pacific locks and is the reservoir that holds the water needed to operate the locks. Nino, a periodic atmospheric phenomenon, signifies a dry period for Central America, which is particularly strong this year.
Earlier this year, the Canal Authority implemented water-saving restrictions, limiting the number of vessels that can pass through the canal to 32 per day starting July 30. In a week, the Authority will reduce the number to 24 boats per day, 12 fewer than typical levels.
Long lines of ships formed waiting to enter the canal. The delays have caused VLGC rates to soar, reaching $250 per ton for the Houston-Chiba, Japan route at the end of September, making it particularly expensive to ship American natural gas to the US. This will make the European route preferable as it does not present this problem.
“The Panama Canal is an important transit point for energy. The Panama Canal is important for trade between the United States and East Asia and the west coast of South America. Vessels carrying petroleum products, gaseous hydrocarbon liquids (HGLs) and chemicals account for a third of the trade passing through the canal,” the EIA said on Tuesday.
Ships can bypass the canal by taking another route, but this often lengthens the journey beyond the waiting time in the Panama Canal. The wait for a ship can last more than two weeks, the EIA explained, referring to the neo-Panamax-sized ships that passed through the locks in August.
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The article Drought in Panama significantly increases LNG and LPG transportation costs comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-siccita-a-panama-aumenta-sensibilmente-i-costi-del-trasporto-di-gnl-e-gpl/ on Wed, 01 Nov 2023 10:00:51 +0000.