Suez Canal amends fee rebate terms for LNG carriers

The Suez Canal Authority (SCA) has amended the terms of toll rebates that it grants to LNG carriers, as it continues its attempts to make transit via the waterway more competitive than routes via the Panama Canal.

Under the revised terms, firms have up to one year to submit the rebate request. The deadline had already been extended in April to 180 days from the original 60 days. The new terms apply to vessels that have yet to transit the canal as well as ships that have already done so but have yet to complete their journey and have not yet submitted a rebate request.

In March, the SCA increased the toll rebates it offers to LNG carriers travelling between the US Gulf coast and Asian markets. The rebate for tankers travelling from the US Gulf to ports east of Singapore was increased to 75pc, from the 70pc originally set for October 2019-September 2020 and 65pc in October 2018-September 2019. The rebate for those travelling from the US Gulf to ports between India's Kochi and Singapore was increased to 55pc, from the initial 50pc and 40pc in October 2018-September 2019. Vessels carrying US Gulf coast LNG to be delivered between the Omani port of Muscat and Kochi — an area including most of India's LNG terminals — are able to claim a 35pc toll rebate (see table).

The rebates currently in force were originally set to expire at the end of this month, but in June were extended until 31 December.

The SCA has in recent years tried to take advantage of increased LNG trade flows between the US and Asia. The rebates it has introduced since 2018 were aimed at making the Suez route more competitive with the Panama route, which is typically a quicker way for US LNG deliveries to northeast Asia. Assuming vessels are travelling at an average speed of 19.5 knots, delivering a US Gulf coast cargo to northeast Asia via the Suez Canal requires 30 days, compared with 21 days using the Panama route. But when vessels are not under pressure to shorten their delivery times, they have typically opted to travel through the toll-free Cape of Good Hope route, which adds less than three days to the journey compared with the Suez route.

That said, higher rebates may make the Suez route more competitive with alternative routes for deliveries to southern Asia and the Middle East. Travelling via South Africa adds three days to a delivery to Singapore, and at least four days for a delivery to India, Pakistan or the Mideast Gulf.

By Antonio Peciccia