WASHINGTON, May 5, 2016 - A limited number of ships
designed to transport large quantities of propane over long distances are able
to pass through the current Panama Canal. To cut voyage times and costs
within the constraints imposed by the existing Panama Canal locks, market
participants use ship-to-ship transfer, where the propane cargo of a larger
vessel, called a very large gas carrier (VLGC), is transferred to a smaller ship
that can pass through the canal. Once through the canal, the smaller ship will
either continue on to its destination or transfer the cargo back to a larger
ship.
This cargo transfer activity is likely affecting trade data,
resulting in import and export data abnormalities affecting U.S. propane
exports to Asian countries, says the Energy Information Administration (EIA). Much
of EIA's energy export data is based on information from U.S. Customs and
Border Patrol, which collects the final destination of an export, if known.
Despite this requirement, some of the propane cargoes exported from the U.S.
that undergo a ship-to-ship transfer will cite the jurisdiction of the
transfer, not the actual final destination.
Asia, the largest regional destination for U.S. propane,
imported 220,000 barrels per day (b/d) of the fuel in 2015, or slightly more
than one-third of total U.S. propane exports, says EIA. Most of these exports
originated from the U.S. Gulf Coast and traveled through the Panama Canal.
The EIA says that U.S. export data show increased propane
exports to countries in the Caribbean and Central America where the
ship-to-ship transfers are taking place, but these countries do not have
sufficient domestic demand or infrastructure to store and distribute such large
quantities of propane.
This discrepancy is also affecting import data in Asian
countries, notes EIA. Both China and Japan have begun to report propane imports
from Panama, even though Panama does not produce any propane. The EIA says that
these propane volumes were likely U.S.-sourced propane that underwent
ship-to-ship transfers in Panamanian waters.
The EIA says that the new, larger Panama Canal locks,
expected to be completed in the coming months, will allow the majority of VLGCs
to transit, which will likely reduce or end the practice of ship-to-ship
transfers of U.S. propane destined for Asian markets. That outcome would reduce
discrepancies between import and export statistics, says EIA, providing greater
clarity on the major markets for increasing U.S. propane exports.
#30
For more news, go to: www.Agri-Pulse.com
