Ever Larger LNG Tankers Head for Panama Canal
A 'Q-Flex' LNG tanker, the world's second-largest class of liquefied natural gas carriers, is set to pass through the Panama Canal for the first time, the canal's CEO said, expanding the Americas to Asia trade route for the fast-growing commodity.
The 'Al Safliyah', which can carry about 210,000 cubic metres of LNG, is on its way to Panama from the North Pacific after discharging a cargo from Qatar into Korea Gas Corp's (KOGAS) Tongyeong terminal on April 21, shipping data in Refinitiv Eikon showed.
"This is the first Q-Flex to transit the Panama Canal," Jorge Quijano, chief executive of Panama Canal Authority told Reuters.
It comes after the canal was expanded in mid-2018 to handle larger oil and gas tankers.
"This size of vessel ... could be deployed to carry LNG from the natural gas liquefaction plants in the U.S., Trinidad and Tobago and Peru," Quijano said.
The ship is on a long term charter to Qatargas, the world's biggest LNG producer, according to LNG trading and broker sources. Qatargas did not respond to a query for comment.
The vessel's owner, Qatar Gas Transport Co (Nakilat), said in March that it had assessed the ability of 'Q-Flex' class LNG carriers to safely pass the Panama canal's new locks in the near future.
At 120,000 deadweight tonnes, the 'Q-Flex' LNG tanker, is not the biggest ship to have passed through the Panama Canal, which has accommodated container ships of around 140,000 tonnes.
'Q-Flex' type tankers are able to carry up to 50 percent more volumes than conventional LNG tankers, and are typically used by Qatargas to export its LNG to Europe or Asia.
The biggest LNG carriers, known as 'Q-Max', are able to carry up to 266,000 cubic metres of LNG, but are too large to use the canal.
"Qatar has been pushing to use 'Q-Flex' to utilize their vessels more efficiently," a source with a North Asian buyer said.
Qatar and partner Exxon Mobil Corp earlier this year gave the go-ahead for their jointly-owned U.S. Golden Pass LNG project, which could boost demand for such vessels when the project starts up in 2024.
"If it can successfully transit Panama even if empty, it could in the future be used for triangulations where it discharges a cargo in Japan or Korea and then from there goes to load a new cargo in the U.S. Gulf," said Ralph Leszczynski, head of research at ship broker Banchero Costa in Singapore.
Quijano said 687 LNG tankers have transited the Panama Canal since July 2016 following an earlier expansion. Volumes rose to 11.5 million tonnes last year from just 300,000 tonnes in 2016.
"We expect further growth this year of another 22 percent over last year," he added.
Reporting by Jessica Jaganathan