Cheniere and Shell fuel tankers change course to avoid congestion as oil tankers reroute routes

A dredger tries to free the stranded container ship Ever Given, one of the largest container ships in the world, after it ran aground on March 26, 2021 in Egypt’s Suez Canal.

Suez Canal Authority | Reuters

According to MarineTraffic and ClipperData, the companies are making efforts to divert shipping ships to avoid congestion on the Suez Canal, including at least two U.S. ships carrying natural gas for Cheniere and the Shell / BG Group.

At least ten tankers and container ships change course as the Ever Given, one of the largest container ships in the world, remains stranded across the canal along Egypt, said MarineTraffic spokesman Georgios Hatzimanolis in an interview with CNBC.

“We assume that this number will increase as the closure continues,” said Hatzimanolis.

The 1,300-foot ship ran aground on Tuesday en route from Malaysia to the port of Rotterdam in the Netherlands. The stranded ship has caused other ships to return in the canal, holding goods worth around $ 400 million an hour, according to Lloyd’s List shipping journal. That has slowly increased in recent days after Egypt’s repeated efforts to get the 247,000-ton container ship afloat again failed. There, officials use eight large tugs and excavation equipment on the banks of the canal to dig up sand around the grounded ship.

According to MarineTraffic, 97 ships are stuck in the upper part of the canal, 23 ships are waiting in the middle and 108 ships are waiting in the lower part. The traffic jam extends through the Red Sea, past the Gulf of Aden to the border between Yemen and Oman.

“Ships from Asia to Europe are being diverted in the Indian Ocean below the southern tip of Sri Lanka,” added Hatzimanolis. For Europe-bound ships from Asia, the journey through Africa instead of the canal can take up to seven days, he said.

The LNG tanker Maran Gas Andros took off from Ingleside, Texas on March 19, loaded with Cheniere fuel and a deadweight of 170,000 cubic meters of liquefied natural gas. Pan Americas’ LNG tanker carrying Shell / BG fuel left Sabine Pass on March 17 and can carry up to 174,000 cubic meters of liquefied natural gas. Matt Smith, Director of Commodity Research at ClipperData, confirmed which companies are using the ships.

Both tankers changed course in the middle of the North Atlantic before sailing around the cape.

ClipperData is also showing the Suezmax Marlin Santorini loaded with 700,000 barrels of Midland West Texas intermediate crude oil diverted away from the canal. Smith said the original route to Suez was an “unusual diversion”.

“The vast majority of US crude exports avoid the Suez Canal and instead head either to Europe or to Asia around the Cape of Good Hope,” said Smith. The Suezmax Marlin was at Magellan’s Seabrook Terminal in Houston, Texas on March 10, where it was replenished with 330,000 barrels of West Texas light crude before heading to Galveston, Texas the next day.

The ship then left the United States, declaring itself for Port Said in northeastern Egypt, but turned south on Thursday after passing the Azores near Portugal. “The ship has yet to update its declared destination,” said Smith.

ClipperData shows the number of fully loaded fuel tankers waiting outside Port Said and on the US Gulf Coast. As of Friday afternoon, two more tankers and a Suezmax, the largest tanker that can navigate the Suez Canal and transport vacuum gas oil from the USA, drove past Crete and anchored off the coast of Egypt.

Another ship, the container ship HMM Rotterdam, turned away from the canal shortly before entering the Strait of Gibraltar and changed course to circumnavigate Africa.

Peter Sand, chief shipping analyst at BIMCO, said the diversion pattern is similar for other ships.

“We see not only container ships diverting in both directions, but also LNG carriers and dry matter from the US Gulf of Mexico,” said Sand. “The ships turn sharply right in the middle of the Atlantic to head south to the Cape of Good Hope and avoid the traffic jam around Suez.”

Kevin Book, managing director of ClearView Energy Partners, says while a long Suez hiatus introduces latency into the utility system, the length of the delay depends on where the ship started, where it is going, and where it changed course in the voyage Has .

“For US golf exporters, circumnavigating the Horn means only three days or less at sea for the port of Tokyo,” Book said. “For cargoes from Doha to northwestern Europe, this route could take ten days.”

Cargo originating in the Gulf of Mexico and stuck in the Mediterranean Sea may face a ten-day diversion instead of three, he said.

At the time of publication, Cheniere and Shell / BG responded to CNBC’s request for comment.

The MSC Mediterranean Shipping Company announced that 11 of their ships were diverted, 19 ships were anchored on either side of the canal and two ships were turned back from Friday afternoon.

The blockade of the Suez Canal is one of the “biggest disruptions to world trade in recent years,” said Caroline Becquart, MSC’s senior vice president, in an email on Saturday.

“We expect the second quarter of 2021 to be more disruptive than the first three months and maybe even more challenging than the end of last year,” she said. “Companies should expect the Suez blockade to reduce shipping capacity and equipment in the coming months, and thus to some deterioration in the reliability of the supply chain.”

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