Currently the canal, which links the Pacific and Atlantic oceans, can accommodate only 8.6% of the world`s existing LNG fleet, and about a quarter of the current orderbook for vessels on order. This will rise to 88% of the global fleet by 2015 and close to 100% of the orderbook by then, according to Silvia Marucci, Senior Specialist for the liquid bulk segment at the Panama Canal Authority, in a presentation to the Gas Asia Summit as part of Singapore International Energy Week.
"Currently the vessels that can be accommodated are only some small, regional ones," Marucci said on the sidelines of the conference.
Ongoing expansion of the Panama Canal includes the construction of two sets of locks, as well as the widening and deepening of existing navigational channels.
However the industry`s largest vessels -- Qatar-Max and Qatar-Flex sized ships -- will still not be able to pass through the canal, Marucci said. "Basically anything wider than 49 meters will be tough". This equates to 160 feet.
But she said the increased capacity of the Panama Canal will be a game-changer for global LNG trade, particularly with the prospect of more North American LNG destined for Asian consumers.
"We have been in the market for a long time now, enabling trade between the Gulf of Mexico and the east coast of the US into Asia, which is about 60% to 70% of our market, and we have been doing that competitively for a long time, so we don`t see why it will not happen after we expand the canal." SHAVES 11 DAYS OFF JOURNEY
Compared with the route using the Suez Canal, a vessel travelling from the Gulf of Mexico to Asia via the Panama Canal would save about 5,300 nautical miles each way, shaving off 11 days from its journey, Marucci said.
A vessel travelling from the US West Coast to Bilbao in Spain will likely save 12 days of travel one way using the Panama Canal compared with the Suez Canal, she added.
Marucci said the authority is now about to start a "tolls process" which will eventually shed some light on a fee structure for LNG vessels.
"By some time early next year we will have something announced," she said. "Our tolls process is a very lengthy process because we consult with many different industries to reach a reasonable price that is good for us and good for the industry.
Marucci conceded that while there are now plenty of LNG export projects being proposed in North America, growing transits through the Panama Canal will depend on several key factors, including demand and supply dynamics of gas in Latin America, demand growth for LNG in China, the extent of LNG development in Australia, and how the US government`s LNG export policy evolves.