The Panama Canal expansion, slated for completion in 2015, will allow the transit of large tankers and put costs to ship U.S. gas liquids to Asia on a par with deliveries from the Middle East, according to Sanford C. Bernstein & Co. U.S. exports would jump to 20 million metric tons by 2020 from the current 5 million tons, making the country the world’s largest exporter of those fuels, ahead of Qatar and Saudi Arabia, Bernstein said.
Construction to double the canal’s capacity is 64 percent complete, the Panama Canal Authority said on its website Sept. 10. The expanded waterway will be able to handle ships as long as 1,200 feet (366 meters) and as wide as 160 feet, against the current 965 feet and 106 feet, data on the website show. Only seven of the VLGC fleet’s 154 vessels can use the canal now, according to data from IHS Maritime, a Coulsdon, England-based research company.
Once the canal project is completed, sailing time will be cut to 25 days, compared with 41 via Cape Horn, Bernstein’s Beveridge said. Freight costs will be reduced by 30 percent to 50 percent, he said.
The expansion comes as Asia’s appetite for lower-cost NGLs is increasing.China has approved the construction of 17 propane dehydrogenation units, which convert propane into propylene used to make plastics, antifreeze, deodorant and other consumer products. The new plants will require 12 million tons per year of propane, most of which will probably be imported from the U.S., Bernstein said.
Source: Sinocism newsletter, Bloomberg
