First U.S. LNG shipment to cross expanded Panama Canal next week

MILAN (Reuters) - The United States will ship its first liquefied natural gas (LNG) cargo through an expanded Panama Canal next week.

A container ship sails on the Panama Canal after passing a set of locks in Panama City in this file photo dated August 14, 2014. REUTERS/Rafael Ibarra

The waterway shaves distances between export plants dotted along the Gulf of Mexico and Asia to 9,000 miles from 16,000, allowing U.S. producers to better compete in one of the world’s biggest gas consuming markets.

The size of most LNG tankers had previously prevented them from squeezing through, forcing them to sail around South America instead.

Royal Dutch Shell’s Maran Gas Apollonia tanker loaded up at Cheniere Energy’s Sabine Pass LNG export plant in Louisiana and will arrive at the Panama Canal on July 25, according to Kpler LNG, a shipping analysis firm.

Shipping data shows the vessel to be heading in the direction of Panama.

Shell owns the entire output of Sabine Pass’s first production line.

A day later BP Plc’s British Merchant will begin passing through the Panama Canal carrying a cargo from Trinidad and Tobago to Manzanillo on Mexico’s Pacific coast.

It is not known where in the Pacific Shell’s vessel will sail.

The Panama Canal Authority confirmed the Maran Gas Apollonia tanker will transit the expanded canal on July 25, and the British Merchant is scheduled for July 26.

A surge in U.S. natural gas production thanks to the shale revolution stimulated billions of dollars of investment in building LNG export terminals, transforming the United States from an importer of LNG to an exporter of the fuel.

By 2019, the United States will be pumping out around 60 million tonnes of LNG annually.

So far only Sabine Pass is exporting LNG and output will double to 9 million tonnes per annum as Cheniere adds a second production line later this year.

(Story corrects to show British Merchant cargo is from Trinidad, paragraph 7.)

Reporting by Oleg Vukmanovic in Milan, Marianna Parraga in Caracas and Scott DiSavino in New York; Editing by Ruth Pitchford and Andrew Hay