New canal a lifeline for energy
Updated: 2013-06-26 01:23
By WEI TIAN and XING ZHIGANG (China Daily)
Analysts warn of risks for massive Nicaragua project worth $40b
The Chinese businessman behind an ambitious plan to build a waterway across Nicaragua to rival the Panama Canal stressed on Tuesday that the new canal will serve as a lifeline for global energy trade when completed in 2020.
Hong Kong-based HKND Group, an infrastructure development company wholly owned by Wang, will be responsible for financing the project before construction begins. But Wang said the project would also introduce global investors, and he has also been in touch with energy companies.
The new canal is expected to generate annual revenue of at least $5.5 billion, according to an initial estimate, because of the increasing Chinese demand for coal and oil in the region and the shift of US energy policy to more exports, Wang said.
Although the Panama Canal has invested $5.3 billion in an expansion project since 2007, Wang said it couldn't meet the growing maritime trade between East and West.
"The Nicaragua canal will be broader, deeper and will allow larger vessels to pass," Wang said, adding that the canal is designed for 400,000-ton-class vessels, compared with the Panama Canal, which only allows vessels with capacities below 150,000 tons.
"The canal will accommodate large LNG carriers and oil tankers from the United States and Venezuela heading toward China," said Lin Boqiang, director of the China Center for Energy Economic Research at Xiamen University.
US shale gas exports to China have little price advantage because of the high cost of getting around Cape Horn — the southernmost tip of South America — but a shortcut will boost the volume, he said.
"The new canal will become a lifeline in global energy trade," Lin said, adding that more imports from the Americas is also in line with China's strategy to diversify its foreign energy dependence on the Middle East.
"The canal will bring significant change to the global maritime trade. There will be vessels tailored for the Nicaragua Canal, and harbors renovated for these vessels," Wang said.