Panama Canal expansion could speed crude flows to Asia

PANAMA. The expansion of the Panama Canal could play a key role in the shipment of South American crude oil to Asia, especially as Venezuela has announced deals with Japan and China to increase exports to the region, according to an official with the Panama Canal Authority.

"Today, through the Panama Canal, we see cargoes of crude oil and products that originate in Venezuela, Colombia and the Caribbean with destinations on the west coast of the Americas," Silvia de Marucci, an official with the authority, told BNamericas.

"These shipments are done in Panamax vessels, which are the maximum size allowed by the present locks," she said, adding that the route was used mostly for regional trade.

The waterway, however, is being expanded and new locks built under a $5.25B project due to be completed in 2014. Vessels with beams of up to 49m will be able to transit the canal, and the maximum draft will rise to 15m.

Whether or not sending crude through the canal en route to Asia makes economic sense will depend on market conditions, but the point is, according to Marucci, that once the third set of locks is ready Panama will offer an additional route choice.

"In addition, we have also identified liquefied natural gas (LNG) as potential trade, which nowadays does not use the canal because of vessel dimensions," she said. "LNG vessels are perfect for the canal because a large part will fit through the new locks."