Panama Canal Expansion?

How a Mega Project Snafu Could Snarl America’s Gas Exports.

America’s energy companies want to sell LNG(liquefied natural gas) to Asia.  This will boost their profits and raise the price of gas – currently there is an oversupply, and the price is low.  The plan has run into a major sang, though.

The consortium building the third set of locks on the canal, which is the biggest part of the $5 billion canal expansion, said it can’t continue work unless the Panama Canal Authority picks up the tab for about $1.6 billion in cost overruns. The construction of the new locks is a $3 billion contract, won by an international consortium with firms from Spain, Italy, Belgium, and Panama. 

Currently only 6% of LNG-carrying ships can fit through the canal; after the expansion 90% will be able to transit it.

Japan, in particular, is eager to tap into the U.S. natural-gas boom: Since the 2011 accident at the Fukushima nuclear power plant, Japan has been importing energy at high prices. Japanese shipbuilders plan to spend about $18 billion on new LNG tankers through the end of the decade, which, needless to say, would require the expanded canal to shave shipping times. 

How will all this play out?  The companies have 21 days to respond to Panama’s declaration that the project must be finished, and that the companies must pick up the tab for the cost overruns.  Will the project stay on track to open (late) in a year, or will does delay foretell the end of the dreamed of expansion?

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