The Egyptian government’s Suez Canal Authority (SCA) reported it plans to soon raise tolls on ships transiting the key waterway linking the Mediterranean and Red seas — with two notable exceptions: cruise ships and liquefied natural gas (LNG) carriers.

According to SCA, the 6% hike year/year takes effect in early Feb. 2022. Cruise ship and LNG carrier tolls will remain at 2021 levels, the canal owner and operator stated.

SCA Chairman Admiral Osama Rabea said that LNG carrier transit fees will remain at 2021 levels to align with recently approved action — effective Nov. 1 — to lower the toll rebate for such vessels from 25% to 15%. He added that keeping tolls flat for cruise ships stems from the SCA’s recognition that such vessels — as part of the travel industry — were hardest hit by the Covid-19 pandemic.

Earlier this year transits through the Suez Canal came to a standstill when a stuck container ship impeded the passage of hundreds of vessels. The blockade had a relatively minor impact on the LNG industry, though.

SCA said that it sets tolls based on “extensive studies by the economic unit experts” affiliated with its planning and research department. It noted the studies consider various indicators tied to the shipping market, global economy and global trade movements. 

For instance, it said the International Monetary Fund (IMF) expects 5.9% and 4.9% global economic growth in 2021 and 2022, respectively. Moreover, it said the IMF and World Trade Organization foresee world trade traffic growing 6.7% and maritime transport demand increasing 4.7% next year.

More LNG Cargoes Through Another Conduit

SCA is keeping its LNG transit tolls flat as another vital conduit for global shipping — the Panama Canal — reports strong growth in LNG cargoes.

Tim Daiss, founder of Vietnam-based APAC Energy Consultancy, told NGI that record-low winter temperatures in East Asia and a corresponding hike in gas usage for the power sector contributed to record-setting U.S.-based LNG exports through the Panama Canal. In January of this year Asian LNG spot prices surpassed the $30/MMBtu mark.

“Going forward, more new LNG exports from the Gulf of Mexico and the U.S. East Coast will lead to even more LNG tonnage pass-through in the canal,” he said. 

Daiss pointed out, however, that surging LNG spot prices have spurred buyers in Asia — particularly in China — to start “pivoting away from LNG spot cargoes…and turning back to long-term deals with oil-indexed pricing as well as other pricing benchmarks.”

For instance, Cheniere Energy Inc. recently said that it had won a 17.5-year LNG supply deal with Sinochem. Moreover, China Petroleum & Chemical Corp., or Sinopec, recently reached a 20-year agreement with Venture Global LNG Inc.

The bullish U.S. Gulf Coast LNG export market contributed to independent exploration and production firm Southwestern Energy Corp.’s recent decision to expand its Haynesville Shale position.