The Gulf of Mexico-Japan Connection, Faster than Ever

Wed, 02/21/2018 - 11:21

The Japanese government expects annual economic growth of 1.7 percent until 2030. Although it only forecasts a 1.5 percent rise in electricity demand in that year compared to 2013 levels, the country nonetheless recognizes that hydrocarbons will remain important in meeting its overall energy demand, accounting for 30 percent of energy production.

With an expected increase of hydrocarbons production coming from the Gulf of Mexico and the east coast of the US, the Isthmus of Tehuantepec is emerging as an ideal connection point between the North American and Japanese markets. According to the National Hydrocarbons Commission (CNH) transporting hydrocarbons from Louisiana, US, to Chiba, Japan, takes 25 days, including an average two days’ wait to cross the Panama Canal. Meanwhile, transporting hydrocarbons from Coatzacoalcos to Salina Cruz through the Isthmus of Tehuantepec and from there shipping it to Chiba represents only 17 days.

Transporting oil through the Panama Canal is not only slower than through the Isthmus of Tehuantepec, but the former route also experiences significant bottlenecks. CNH estimates that Japan imported around 3.1 million b/d of oil during the Jan-Oct 2017 period, adding up for an approximate total of 940 million barrels. During that same period only 50 oil tankers, each one with a capacity to transport 500,000 barrels, passed through the Panama Canal. This means that, this route is only able to cover around 2.7 percent of the oil imported by the country.

PEMEX’s Teapa-Salina Cruz 48” pipeline can cover 11.3 percent of Japan’s oil demand, using its full 351,000b/d transportation potential along its 267.5km length. Beyond its current capacity to provide the oriental country with oil, the use of this route has the advantage of being able to increase its transportation capacity relatively easily to cope with an increase in demand coming not only from Japan, but from the entire Asian continent. Salina Cruz may soon become a critical logistics hub for oil and gas, connecting the western and eastern energy markets.