‘First of Many’: Ship Carrying LNG from U.S. East Coast to Japan Transits the Panama Canal

The LNG Sakura approaches the Agua Clara locks on Panama’s Atlantic side enroute to Japan on Saturday, April 28, 2018. Photo: Panama Canal Authority

The first shipment of liquefied natural gas from Dominion Energy’s Cove Point LNG export terminal on the U.S. East Coast has completed its transit of the Expanded Panama Canal as it heads for Japan.

The Dominion Cove Point terminal in Maryland is the second U.S. LNG export terminal to come online after Cheniere’s Sabine Pass began exporting American-produced LNG in 2016. 

The Bahamas-flagged LNG Sakura left the Cove Point terminal on April 22 carrying the “first of many” cargoes to be shipped from the East Coast terminal to Japan. 

Dominion has agreements to sell gas produced at the Cove Point facility to GAIL India Ltd. and a joint venture of Sumitomo Corp. and Tokyo Gas Co., but LNG cargoes can sometimes be resold in transit.

The LNG Sakura is loaded with the first shipment of the 0.8 million tons of LNG contracted per year by the Japanese energy company Kansai Electric.

The Panama Canal has emerged as an important link in the global LNG supply chain ever since the opening of Expanded Panama Canal in 2016, allowing LNG vessels to use the 100-year-old waterway for the first time. 

According to the Panama Canal Authority, in FY 2018, the Canal’s LNG traffic is expected to grow by 50 percent compared to FY 2017, increasing from 163 to approximately 244 transits.

Today, the Panama Canal averages approximately 5.5 LNG transits per week, but with seven weekly LNG booking slots available, the Canal has also proven that it can ramp up operations during periods of high demand. On April 17, a total of three LNG vessels transited the Panama Canal, marking a first for the waterway.

In February 2016, Cheniere Energy Inc’s Sabine Pass terminal in Louisiana became the first LNG export facility in the United States’ lower 48 states to begin commercial operations. Japan is already the fifth largest importer of U.S. LNG, having bought 20 cargoes as of April 18 from Sabine Pass, according to Bloomberg. 

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