First U.S. LNG shipment to cross expanded Panama Canal next week

By Oleg Vukmanovic

MILAN, July 21 (Reuters) - The United States will ship its first liquefied natural gas (LNG) cargo through an expanded Panama Canal next week.

The waterway shaves distances between export plants dotted along the Gulf of Mexico and Asia to 9,000 miles from 16,000, allowing U.S (Other OTC: UBGXF - news) . producers to better compete in one of the world's biggest gas consuming markets.

The size of most LNG tankers had previously prevented them from squeezing through, forcing them to sail around South America instead.

Royal Dutch Shell (Xetra: A0ET6Q - news) 's Maran Gas Apollonia tanker loaded up at Cheniere Energy (AMEX: LNG - news) 's Sabine Pass LNG export plant in Louisiana and will arrive at the Panama Canal on July 25, according to Kpler LNG, a shipping analysis firm.

Shipping data shows the vessel to be heading in the direction of Panama.

Shell (LSE: RDSB.L - news) owns the entire output of Sabine Pass's first production line.

A day later BP's British Merchant will begin passing through the Panama Canal also carrying cargo from the United States to Manzanillo on Mexico's Pacific coast, Kpler LNG said.

It is not known where in the Pacific Shell's vessel will sail.

The Panama Canal Authority was not immediately available to comment.

A surge in U.S. natural gas production thanks to the shale revolution stimulated billions of dollars of investment in building LNG export terminals, transforming it from importer to supplier for Japan, South Korea and China.

By 2019, the United States will be pumping out around 60 million tonnes of LNG annually.

So far only Sabine Pass is exporting LNG and output will double to 9 million tonnes per annum as Cheniere adds a second production line later this year. (Reporting by Oleg Vukmanovic; Editing by Ruth Pitchford)