Suez Canal cancels 15% discount for LNG carriers effective Tuesday

Mai Ghandour, Tuesday 15 Mar 2022

The Suez Canal Authority (SCA) has cancelled the 15 percent discount for liquefied natural gas (LNG) carriers that pass through the Suez Canal, effective 15 March, the authority announced on Monday.

A man looks as the world s biggest Liquefied Natural Gas (LNG) tanker DUHAIL as she crosses through the Suez Canal. (File photo: Reuters)

Since last November, the SCA had been granting LNG carriers a 15 percent discount on the fees for transiting the canal, modifying the 2015 reduction of 25 percent granted to LNG carriers.

Now the rebate has been waived entirely, with LNG carriers expected to pay full transit fees.

The move is expected to increase the canal's revenues, which hit an all-time high last year, recording a historic $6.3 billion in 2021.

The Suez Canal, which is the fastest shipping route between Europe and Asia, is one of Egypt’s main sources of foreign currency.

The canal received in 2021 its largest annual net tonnage ever at 1.27 billion tonnes, according to the statement.

Work is currently underway to extend the two-way segment of the Suez Canal by 10 kilometres as part of the country’s efforts to constantly improve the international waterway.

On 1 March, the SCA increased transit dues for liquefied petroleum gas, chemical tankers, and other liquid bulk tankers transiting the Suez Canal in both directions by 10 percent. The SCA also introduced a seven percent increase for vehicle carriers, liquefied natural gas carriers, general cargo vessels, multi-purpose vessels, heavy-lift vessels, roll-on/roll-off vessels, in addition to special floating units. A five percent increase was also applied to petroleum product tankers, crude oil tankers, and dry bulk vessels.

Following the Russian invasion of Ukraine, SCA head Osama Rabie said that the Suez Canal is an international strait that is neutral to political events and wars as per the Constantinople Agreement.

The Convention of Constantinople is a treaty that was signed by several countries, including Russia, concerning the free navigation in the Suez Canal on 29 October 1888.

The first article of the treaty stipulates that the “Suez Maritime Canal shall always be free and of commerce or of war, without distinction of flag. Consequently, the High Contracting Parties agree not in any way to interfere with the free use of the Canal, in time of war as in time of peace."