International liquefied natural gas (LNG) provider Cheniere Energy will no longer use the Panama Canal for its LNG exports to Asia.

Cheniere CEO Corey Grindal explained that the prevailing market conditions make use of the canal unsustainable.

"We use the canal when it is economical to do so; right now it is not," Grindal said at an LNG conference. "Right now the market in the Far East is not supporting it, and the waiting time, with us not being a priority customer, is just not worth us using it right now."

The waiting time for vessels aiming to use the Panama Canal has increased in previous months as a result of a drought affecting the Central American country. Although prospective depth restrictions due to low water levels were postponed in June thanks to sufficient rainfall, multiple other depth restrictions have been in place throughout the year, restricting traffic.

In recent months, a number of future LNG sale and purchase agreements in Asia have been struck by Cheniere, including a 0.4 million tonnes per annum (mtpa) sale and purchase agreement with Korea Southern Power, plus a 1.8mtpa deal with China’s ENN Natural Gas, both agreed in May and June, respectively. 

These deals do not begin until 2026/27, which benefits Cheniere: were it forced to export the LNG now, it would have to incur a month-long detour via the Suez Canal or around the Cape of Good Hope, thanks to its divestment from the Panama Canal. 

Despite the delays, Cheniere has managed to maintain its operational capacity for 2023. According to its latest quarterly results, the 603 trillion British thermal units (TBtu) of LNG it exported in the first quarter of 2023 represents a 3% increase on last year’s figure of 584TBtu, as well as a 0.3% increase compared with the final quarter of 2022.