By Michael McDonald and Naureen S. Malik

(Bloomberg) — Panama mentioned it expects 20 million tons of liquefied pure fuel to go by means of its canal yearly as soon as the newly widened waterway is opened this month. That’s nearly a tanker of fuel a day touring by means of, primarily based on Bloomberg calculations.

“The canal opens the possibility for that gas to reach Asian markets in a more competitive way because the Panama Canal route is the shortest,” mentioned Manuel Benitez, deputy administrator of canal authority, in an interview in Panama City on Wednesday. “We’ve already seen that many very large gas carriers have already made reservations.”

The $5.3 billion growth to the canal is ready to be inaugurated June 26, permitting it to deal with the form of large tankers that transport liquefied pure fuel. Its debut is fortuitous for U.S. fuel producers because the shale increase has despatched home provides surging and drillers wish to get their gasoline to markets overseas.

The expanded canal will assist U.S. fuel producers by reducing the transport time to markets in Asia, in line with Skip Aylesworth, who manages $1.5 billion in holdings at Hennessy Funds in Boston, and who holds shares in LNG producer Cheniere Energy.

10 Days

“It helps the shipping company if you can cut ten days rather than going around South America,” Aylesworth mentioned Wednesday in a cellphone interview. “It is more profitable for the shipper and that’s good for Cheniere.”

The quantity projected by the Panama Canal Authority represents about 8 % of worldwide LNG commerce and is equal to almost 300 ships a 12 months, mentioned Bloomberg New Energy Finance analyst Anastacia Dialynas. Next 12 months the U.S. will export about 8 million tons, she mentioned. Prices within the Pacific aren’t at present excessive sufficient to create a big arbitrage alternative to ship fuel from the U.S. Gulf Coast to Asian markets, in line with Madeline Jowdy, director of worldwide fuel and LNG at PIRA Energy Group in New York. LNG costs in Asia and Europe have plunged in step with oil costs, the surge of recent fuel export capability and weakening demand from China and different Asian markets.

Price Collapse

“Most of the LNG produced in the U.S. will remain in the Atlantic Basin for the foreseeable future because of the price collapse and the sheer amount of volume that is going to be appearing in Asia,” Jowdy mentioned. “There are no arbitrage opportunities.”

Total transport passing by means of canal will rise to 389 million tons subsequent 12 months, from 336 million tons this 12 months, in line with Benitez. The variety of ships going by means of per day will drop to 30-31, from 34-36, as transport firms ship by means of larger vessels, he mentioned. The canal forecasts that its revenues will rise 17 % to $2.8 billion subsequent 12 months.

–With help from Anna Shiryaevskaya.

© 2016 Bloomberg L.P