Panama Canal expansion to simplify US exports

27 April 2016 20:02 Source:ICIS News


The new, bigger key transport route officially opens in June, allowing larger tanker ships to pass and simplifying export records from the US Gulf Coast to Asia. (MAURICIO VALENZUELA/REX/Shutterstock)

HOUSTON (ICIS)--The Panama Canal expansion, due to be inaugurated on 26 June, will make US propane exports to markets in Asia simpler, cheaper and more transparent, the US Department of Energy’s Energy Information Administration (EIA) said in a report on Wednesday.

Only a limited number of very large gas carriers (VLGCs) with narrower, more upright hull designs now are able to pass through the current Panama Canal lock dimensions.

Therefore, much of US Gulf Coast propane exports through the canal to customers in Asia involve ship-to-ship transfers, with propane cargo being moved to smaller ships that can transit the canal.

With the expansion, the larger set of Panama Canal locks will allow VLGCs to pass through and avoid ship-to-ship transfers, the EIA said.

At the same time, the trade data for US propane exports to Asia will become much more transparent and accurate.



Much of EIA's energy export data are based on information from US Customs and Border Protection, which collects the final destination of an export, if known. Despite this requirement, some of the propane cargoes exported from the US that undergo a ship-to-ship transfer cite the jurisdiction of the transfer, not the cargo's actual final destination.

Thus, US export data show increased propane exports to countries in the Caribbean and Central America where the ship-to-ship transfers are taking place, but these countries do not have sufficient domestic demand for – nor the infrastructure to store and distribute –such large quantities of propane, the EIA said.

For example, based on trade data, the US exported 31,000 bbl/day in 2014 and 23,000 bbl/day in 2015 of propane to Panama. However, Panama reported total national propane consumption of only 1,671 bbl/day in 2014 and 1,736 bbl/day in 2015.

Likewise, the Caribbean island of Aruba, which hosts no major source of propane demand, such as a petrochemical facility or a propane-fired power plant, reported 23,000 bbl/day of propane imported from the US in 2015.

At the same time, both China and Japan have reported propane imports from Panama, even though that country does not produce any propane. These volumes were likely US-sourced propane that underwent ship-to-ship transfers in Panamanian waters, the EIA said.

The new, larger Panama Canal locks will allow the majority of VLGCs to transit, which will likely reduce or end the practice of ship-to-ship transfers of US propane destined for Asian markets. This will reduce discrepancies between import and export statistics, and provide greater clarity on the major markets for growing US propane exports, the EIA said.

Last year, Asia was the largest destination for US propane, reportedly importing 220,000 bbl/day or slightly more than one third of total US propane exports. Given the ship-to-ship transfers, real volumes were likely much higher.

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