The cost of shipping LNG through the Panama Canal from the US Gulf Coast to ports east of Singapore should beat the cost of shipping it across the Atlantic, UK BG Group's commercial manager for shipping, Paal Thorsen, said Tuesday.

The caveat is that with less than a year to go until the canal is due to be opened at the very latest, the tolls have yet to be finalized, he said.

So far, no vessels have carried LNG through the canal, but some are capable of doing so, he told the Gastech conference in Seoul Tuesday.

These vessels are the smaller and older ones, comprising a fleet of 21 out of the total 380 LNG carrying vessels currently in operation worldwide.

Once the canal has been expanded, by the installation of bigger locks, all but the Q-Flex and Q-Max vessels will be able sail through, he added.

There is a possibility of the Q-Flex vessels being allowed through -- the maximum physical width for ships sailing through the canal is 55 meters while the Q-Flex is 51 meters wide -- but the authority regulating the canal has set a limit of 49 meters, Thorsen said.

The Q-range of LNG tankers are all tied up with the Qatar LNG export projects, but that could change, Thorsen told Platts on the sidelines of the conference.

The distance from the US Gulf to ports east of Singapore is the same across the canal or the Atlantic. But traveling to ports like Tokyo Bay could see savings by using the canal and the Pacific Ocean, rather than heading east across the Atlantic, as it takes 51 days to sail to Tokyo Bay from the US gulf Coast via the Panama Canal versus 78 days across the Atlantic.

Also, fuel cost for traveling via the canal would be about $2.20-$2.50/MMBtu, excluding the still-to-be-finalized tariff, as opposed to close to $4/MMBtu across the Atlantic.

Thorsen came at these figures taking into consideration a vessel going at a relatively slow speed of 16.5 knots, carrying a cargo of 3.4 trillion Btu and using heavy fuel oil at $600-900/mt for bunkering.

The toll for LNG is likely to be charged on the basis of the volume being carried, so Moss-style tankers will not be paying for the space between the spherical storage tanks, he said.

But ballasting on return trips will be charged for, and the tariff would need to be competitive or the canal would not be used, Thorsen said.

BG has two offtake agreements with Cheniere Energy for LNG from its Sabine Pass terminal in Louisiana, which is two years away from start-up. It also plans to export LNG from its Lake Charles terminal, also on the US Gulf Coast, which could start in 2019.

The BG Group currently has the exclusive right to import and sell 3 million mt/year of regasified LNG in Singapore until 2023, Platts has reported previously.