Gatun Lake to reach all-time high in Dec: Panama Canal

Spanish Market: Freight, LPG, Natural gas
08/11/24

Water levels at Gatun Lake that supplies the Panama Canal will reach an all-time high in December, according to forecasts from the Panama Canal Authority (ACP).

This is a significant shift from the start of the year, when water levels were at the lowest January level since 1965 following an extensive El Nino induced-drought in 2023 (see chart).

ACP expects water levels at the lake to hit 88.9ft on 7 December and then 89ft on 18 December, which if confirmed would break the 88.85ft record registered on 5 December 2022.

This time last year water levels were in an 80-82ft range, the lowest on record for the November-December months, which prompted ACP to enforce rigorous transit restrictions that sent shockwaves through LPG and other shipping markets.

The change in water levels reflects the transition from El Nino to La Nina, which typically brings more rainfall to Panama.

Higher water levels from the onset of the rainy season in May allowed the ACP to gradually lift transits back to full capacity by August. This has helped keep auction prices for transits at the larger Neopanamax locks near initial $100,000 bidding levels — and even outpace demand, with many slots turned away without receiving any bids.

Argus' average weekly auction prices have ranged from $112,900 to $209,389 since July, settling at $136,750 by last week. This is a complete turnaround from a year earlier, when shippers paid as high as nearly $4mn for a single transit. On average, Neopanamax auction prices cost $2.1mn in November 2023.

This probably helped support Panama Canal's profits in its financial 2024 year, to $3.45bn from $3.2bn a year earlier despite a 20pc fall in transits because of water-saving restrictions implemented. The ACP said the results reflected strategies such as the "freshwater surcharge, improved water yield through structural and operational upgrades, system enhancements for reservations and auctions, and maritime service operations."

Water levels are forecast to gradually decrease again from 23 December with the start of the dry season, which usually lasts by May.

By Yohanna Pinheiro

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

09/12/24

Shale M&A to pick up pace in 2025 after hitting pause

New York, 9 December (Argus) — A slowdown in shale deals in recent months is set to be reversed next year, helped in part by speculation that oil and gas mergers will have an easier time getting anti-trust approval under president-elect Donald Trump. The $12bn in upstream deals recorded in the third quarter was the lowest tally since the first three months of 2023, just before a record-breaking streak that reshaped the shale landscape and was dominated by blockbuster transactions involving ExxonMobil and Chevron. While buyers have been focused on winning approval from a zealous regulator and pushing deals over the finish line, attention is turning to the billions of dollars of unwanted assets they are likely to want to offload, with companies from ExxonMobil to Occidental Petroleum already active on this front. "You do one of these mega-mergers and now you have to pay for it," law firm Hogan Lovells partner Niki Roberts says. "You pay for it by selling off all the stuff you didn't really want to begin with." One potential upside from the Trump administration may be less attention from the Federal Trade Commission, which has paid closer scrutiny to oil deals in recent months as it cracks down on anti-competitive behaviour. Tie-ups have been delayed while the regulator has sought more details, and two high-profile oil executives were barred from the boards of their acquirers as a condition of approving deals. "The antitrust regulators have been viewed by particularly the traditional oil and gas industry of late as not being friendly to that industry," law firm Sidley global leader of energy, transport and infrastructure Cliff Vrielink says. "You're going to see less resistance to consolidation and you're going to see more people pursuing those opportunities." Oil market volatility has hampered mergers and acquisitions in the past, but observers say price swings are less of a factor these days. And more deals are needed to help companies boost their inventory of drilling locations for as long as cash flow remains king and growing through the drillbit is challenged. Lower interest rates, controlled inflation and regulatory reforms all point to a "robust" M&A market, Sidley partner Stephen Boone says. The majority of deal-making has been focused on oil in recent years, but natural gas is "having a bit of a moment", aided by the surge in demand from a boom in energy-hungry US data centres that are developing and supporting artificial intelligence, Boone says. Privates on parade Private equity is also making a gradual comeback, with teams looking to deploy fresh capital in oil and gas. Quantum Capital Group raised over $10bn in October and EnCap Investments has reloaded with about $6.4bn. "We are just now getting back to pre-pandemic levels of commitment," Boone says. "That bodes towards probably more private equity involvement in the oil and gas space." Fierce competition to get a foothold in the prized Permian basin of west Texas and southeastern New Mexico has sent valuations soaring, and prompted some would-be buyers to look further afield to plays such as the Uinta in Utah and North Dakota's Bakken. "The Permian stays of interest to many because of its consistent returns, but the Permian is a crowded place right now, and so I do think we'll see development of other basins," Roberts says. "But it's all going to depend on price." Close to $300bn in upstream deals were signed in the US over the past two years and this has whittled down the list of remaining targets. But the largest producers may not be done when it comes to seeking out potential acquisitions. "We don't stop looking," ConocoPhillips vice-president and treasurer Konnie Haynes-Welsh told the Rice Energy Finance Summit on 15 November. "We're always looking to be opportunistic." By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Atlantic LNG: US fob prices edge lower

06/12/24

Atlantic LNG: US fob prices edge lower

London, 6 December (Argus) — Fob LNG prices for loadings in the US Gulf coast slipped on Friday, adding to losses posted over Wednesday-Thursday to end the week lower. The Argus Gulf Coast (AGC) January fob price fell to $13.81/mn Btu, from $13.90/mn Btu a day earlier, and $14.16/mn Btu at the end of last week, following similar losses in European delivered markets. But the price continued to track European des prices, as the inter-basin arbitrage for US January loadings held shut with European markets holding at a discount to Asia that was too tight to cover the additional spot freight costs — which have been buoyed by a recent small rise in prompt spot charter rates over this week. The ARV3 prompt rate for US-northeast Asia by tri-fuel diesel-electric (TFDE) carriers was assessed at $14,000/d on Friday, up from $12,000/d a week earlier, while the corresponding ARV6 two-stroke rate rose to $28,500/d on Friday from $24,000/d. US LNG production this week has been steady at six of the country's operational liquefaction terminals. But Texas' 17.3mn t/yr Freeport LNG export terminal experienced a trip at its first of three liquefaction trains on 4 December, because of an unspecified issue at a compressor system, according to a state regulatory filing by the facility. That said, the terminal's feedgas receipts quickly rebounded a day later to reach 2.02bn ft³ over the day — the most received by the terminal since 13 November. Freeport was nominated to take 2.12bn ft³ on Friday, though the terminal has historically taken less at times than it has initially nominated to receive. Even with one day of downtime at a single train this week, Freeport's gas receipts were still greater than during the previous week, when deliveries over the opening three days of the week were also at levels suggesting one train of off line. Deliveries to the planned 27.2mn t/yr Plaquemines terminal — set to be the US' eighth liquefaction terminal — have held at low levels, suggesting that the facility may still be only receiving enough gas to meet its on-site needs rather than fully starting liquefaction operations. The 174,000m³ Venture Bayou remained at the facility on Friday, where it has been since mid-November. Plaquemines received a cool-down cargo in late September, for which it has regulatory approval to re-export, as well as a further two cool-down cargoes that have not been delivered to the facility. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Republicans weigh two-step plan on energy, taxes

06/12/24

Republicans weigh two-step plan on energy, taxes

Washington, 6 December (Argus) — Republicans in the US Congress are considering trying to pass president-elect Donald Trump's legislative agenda by voting first on a filibuster-proof budget package that revises energy policy, then taking up a separate tax cut bill later in 2025. The two-part strategy, floated by incoming US Senate majority leader John Thune (R-South Dakota), could deliver Trump an early win by putting immigration, border security and energy policy changes into a single budget bill that could pass early next year without Democratic support. Republicans would then have more time to debate a separate — and likely more complex — budget package that would focus on extending a tax package expected to cost more than $4 trillion over 10 years. The legislative strategy is a "possibility" floated among Senate Republicans for achieving Trump's legislative goals on "energy dominance," the border, national security and extending tax cuts, Thune said in an interview with Fox News this week. Thune said he was still having conversations with House Republicans and Trump's team on what strategy to pursue. Republicans plan to use a process called budget reconciliation to advance most of Trump's legislative goals, which would avoid a Democratic filibuster but restrict the scope of policy changes to those that directly affect the budget. But some Republicans worry the potential two-part strategy could fracture the caucus and cause some key policies getting dropped, spurring a debate among Republicans over how to move forward. "We have a menu of options in front of us," US House speaker Mike Johnson (R-Louisiana) said this week in an interview with Fox News. "Leader Thune and I were talking as recently as within the last hour about the priority of how we do it and in what sequence." Republicans have yet to decide what changes they will make to the Inflation Reduction Act, which includes hundreds of billions of dollars of tax credits for wind, solar, electric vehicles, battery manufacturing, carbon capture and clean hydrogen. A group of 18 House Republicans in August said they opposed a "full repeal" of the 2022 law. Republicans next year will start with only a 220-215 majority in the House, which will then drop to 217-215 once two Republicans join the Trump administration and representative Matt Gaetz (R-Florida) resigns. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US House panel approves river infrastructure bill

06/12/24

US House panel approves river infrastructure bill

Houston, 6 December (Argus) — A US House of Representatives committee has approved a bipartisan bill that authorizes improvements to navigation channels by the Army Corps of Engineers (Corps) and maintenance and dredging of river and port infrastructure projects. The House Transportation and Infrastructure Committee advanced the Water Resources Development Act (WRDA) after several months of political wrangling to integrate earlier versions of the legislation approved by the House and Senate . The bill will head to the full House next week, said committee chairman Sam Graves (R-Missouri). This would be the sixth consecutive bipartisan WRDA bill since 2014 if passed by congress. WRDA is a biennial bill that authorizes the Corps to continue working on projects to improve waterways, including port updates, flood protection and supply chain management. WRDA will also "reduce cumbersome red tape", which will allow for quicker project turnarounds, Graves said. The bill authorizes processes to streamline work, he said. The bill also adjusts the primary cost-sharing mechanism for funding for lock and dam construction and major rehabilitation projects. The US Treasury Department's general fund will pay 75pc of costs, up from 65pc, with the rest coming from the Inland Waterways Trust Fund, which is funded by a barge diesel fuel tax. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

S Africa EML gets 2-yr contract at Sunrise LPG terminal

06/12/24

S Africa EML gets 2-yr contract at Sunrise LPG terminal

Cape Town, 6 December (Argus) — South African terminal operator Sunrise Energy has awarded local firm EML Energy a 24-month storage contract at its 210,000 t/yr LPG import facility at Saldanha Bay. Eight companies participated in Sunrise's bidding process, of which five opted to proceed to full evaluation. After "a comprehensive vetting process," EML emerged as the preferred bidder, Sunrise's chief executive Rajen Singh told Argus . The contract will begin on 1 January 2025. EML aims to use the opportunity "to enhance its supply chain efficiency, expand its reach and solidify relationships with wholesalers and end-users," it said. Sunrise's facility is the Western Cape's only LPG import terminal, and the province is almost entirely reliant on imports because local refineries are unable to meet demand. EML replaced Vitol's local unit Vita Gas as the Western Cape's sole importer in June 2023, since when it has imported to Saldanha Bay on a temporary basis. Sunrise launched an invitation-only bidding round to find a new long-term supplier after EML's agreement ended in December 2023. Wholesalers in the province served by Sunrise's terminal have said they have to pay significant premiums since EML took over. This has pushed regional prices above the government-regulated maximum refinery gate price (MRGP), prompting the department of mineral and resources energy (DMRE) to review the formula it uses to determine domestic LPG prices. It currently uses Saudi state-controlled Aramco's monthly contract prices (CP) and Argus ' Ras Tanura-Richards Bay freight assessment to generate an import parity price. EML sells at about $280-320/t above the Aramco CP, while the MRGP is only around $160/t above the CP, a local trader said. The firm also varies prices between buyers and has no transparent methodology, revealing prices after the MRGP is published each month, according to a wholesaler that paid a premium of more than R2/kg, or around 14pc above an MRGP of R14/kg, last month. "Nothing justifies such a high premium", the wholesaler said. The price could be "optimised" through long-term contracts and by using a supplier with a sizeable footprint in multiple locations. EML said the MRGP as calculated by the DMRE does not include factors and circumstances such as demurrage and freight costs specific to the LPG terminal in Saldanha Bay. "DMRE is aware of this problem and is better placed to comment on this issue," EML said. DMRE deputy director of minerals and petroleum regulation Tseliso Maqubelo told Argus Saldanha is costlier than Richards Bay — where the Petredec-Bidvest 22,600t LPG terminal is located — because the size of vessel it can accommodate is much smaller. However, some LPG operators in the region have questioned the motivation behind EML's appointment given it has no operational experience and is unable to secure long-term agreements, which forces it to buy more expensive spot supply. At least one wholesaler with an international trading arm, which said it could bring LPG into the Western Cape in full compliance with the MRGP, took part in Sunrise's bidding round but was rejected. Another withdrew its bid because it found the process was not transparent. A second LPG import terminal will add competition once state-owned Strategic Fuel Fund (SFF) completes a pipeline to LPG supplier Avedia Energy's 2,000t storage facility in Saldanha Bay. A tender process to appoint a construction company for the pipeline is underway and work is expected to start in the first quarter of 2025, said the SFF, which acquired a 60pc stake in Avedia last year. The pipeline is expected to be completed by around August 2025, said Avedia chief executive Atose Aguele. This will allow initial imports of about 5,000-6,000 t/month, he said. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more