Panama Canal congestion drives gas tankers to unusual routes

[PANAMA] Growing congestion at the Panama Canal is forcing some gas tankers into unusual journeys, from a rare detour around South America to the possible emergence of shuttling through the waterway.

Two supertankers were recently observed conducting an unusual ship-to-ship transfer off Balboa port on Panama’s Pacific Ocean coast, going by vessel-tracking data, traders and shipbrokers.

The process allows one of the tankers to shuttle back and forth through the canal to ensure the steady flow of liquefied petroleum gas (LPG) to Asian customers, traders said.

Wait times at the waterway have grown to as long as 19 days, the highest since 2022, Argus Media data showed, and some operators are paying millions of dollars to jump the queue.

The Iran war has diverted more traffic through the canal, while authorities tightened restrictions on how much cargo vessels can carry, along with the number of ships that can cross, due to drier conditions triggered by El Nino.

The biggest impact has been on wider Neopanamax vessels, which are typically used to ferry LPG from the US Gulf Coast to Asian customers. Traders said that rates and wait times for the narrower Panamax tankers, which go through a separate set of locks, have not increased as much.

Off Balboa, the Panamax Energia Grandeur is transferring its cargo to the Eneos Wisdom, a Neopanamax tanker. The Energia Grandeur was previously carrying LPG in the Pacific Ocean towards Japan before U-turning.

The move suggests its charterer deemed there to be more value in deploying the ship to shuttle gas through Panama, rather than tying it up on a month-long journey to Asia, traders said.

The two supertankers were chartered by TotalEnergies. The French oil and gas major, along with MOL Energia, the owner and ship manager of Energia Grandeur, and Eneos Ocean, the ship manager of Eneos Wisdom, did not immediately respond to queries.

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Separately, the Panama logjam has prompted another supertanker, Gas Scorpio, to embark on a rare voyage around South America in order to load a cargo in the US, a costly trip that adds around a month of transit time. The vessel is currently off Chile. A similar voyage was last made in 2023, after low rainfall snarled traffic through the waterway.

“The global LPG market is already stretched thin from Strait of Hormuz tensions, and the Panama Canal is one more disruption it simply couldn’t afford,” said Julian Renton, lead analyst covering natural gas liquids at East Daley Analytics.

“It’s a vivid illustration of how geopolitics, climate and energy security are colliding in real time.” BLOOMBERG