Singapore plans to build a second
receiving terminal for liquefied natural gas as it pursues a
long-term strategy to become Asia’s LNG trading hub.
The city-state, which generates more than 90 percent of its
electricity using natural gas, is studying locations in the
eastern part of the country for a new facility to support
industries and power plants, Prime Minister Lee Hsien Loong said
yesterday at the official opening of Singapore’s first terminal.
Singapore is trying to take advantage of its geography and
stature as Asia’s oil-trading center to also become a leader in
LNG. Asia has overtaken Europe as the world’s biggest gas
importer, accounting for 46 percent of global trade, according
to the International Energy Agency, which cites Singapore as
best-placed to be the hub for liquefied natural gas.
“It is signaling a confidence that the government feels it
can play a role in the regional LNG market,” said Tony Regan, a
Singapore-based energy consultant at Tri-Zen International Inc.
“Just talking about it is to capture the attention of the
traders and say, look, Singapore’s serious.”
The Southeast Asian nation’s first terminal alone has
capacity to handle about three times as much gas as Singapore
consumes. The city imported its first LNG cargo in March 2013 to
inaugurate its 3 million metric-ton-a-year receiving facility on
Jurong Island. A third tank has been completed, doubling
capacity to 6 million tons, Lee said yesterday.
A fourth tank will be added at the original site, taking
capacity to at least 9 million tons a year by 2017, the prime
minister said. The terminal can accommodate as many as seven
tanks with a total capacity of 15 million tons a year, he said.
‘Very Visionary’
The second LNG facility will probably have a similar
maximum capacity as the first terminal and could be built as a
floating facility offshore, Chee Hong Tat, chief executive
officer of Singapore’s Energy Market Authority, said today at a
conference in the city-state. The prime minister’s announcement
had no details on the timing or size of the proposed project.
“Just mooting the second terminal is very visionary. This
is long-term planning,” said Regan, who expects the new project
won’t be operating until 2025 or 2030. “It’s going to make sure
it has enough capacity to play in the regional market, not just
the domestic market.”
The second terminal may be used for reloading and ship
bunkering rather than just for imports, said Leigh Bolton,
managing director of Holmwood Consulting Ltd., who has 20 years
of experience in natural gas and LNG.
Gas Needs
“Do they need another terminal only for Singapore trading?
I would say probably not because they are already expanding
their existing terminal’s capacity,” Bolton said by phone from
Surbiton, England.
LNG meets about 20 percent of the country’s natural gas
needs, according to Sriram Narayanan, the commercial director at
Singapore LNG Corp., which operates the Jurong Island terminal.
The rest is supplied by four pipelines from Malaysia and
Indonesia, according to the Energy Market Authority.
“We are preparing for the possibility that our demand for
natural gas may one day be met entirely by LNG,” Lee said.
BG Group Plc (BG/) won the contract in 2008 to supply 3 million
tons of LNG to Singapore annually over 10 years starting last
year. The company had committed 2.6 million tons a year by
August 2013, it said on its website. A second license to supply
the Asian city-state with 1 million tons through 2018 will be
awarded by the Energy Market Authority.
LNG Trading
Southeast Asia’s gas demand will rise 184 billion cubic
meters by 2018, up about 19 percent from 2014 levels, compared
with 11 percent growth in global consumption, the Paris-based
IEA estimated in its medium-term gas report in June last year.
By contrast, China’s needs will increase by 56 percent to 294
billion in the same period.
About 59 million tons of LNG, or 25 percent of the 236
million tons sold globally, were traded as short-term or spot
cargoes in 2012, unchanged from the year before, according to an
annual report by International Group of Liquefied Natural Gas
Importers. Asia accounted for 71 percent of global demand.
Companies have lined up to tap Singapore’s market.
Germany’s EON SE, Glencore Xstrata Plc and others have hired LNG
traders in the city. Qatar Liquefied Gas Co., the world’s
largest producer known as QatarGas, is looking to expand in the
region, Abdulla Al-Hussaini, the company’s marketing director,
said in an October interview.
GAIL India Ltd. will allocate 1 million tons of the fuel
from the U.S. for trading at its Singapore unit, Chairman B.C.
Tripathi said in an interview Oct. 29.
Temasek Holdings Pte, Singapore’s state-owned investment
company, set up Pavilion Energy Pte in April to trade LNG.
Pavilion has a contract for 500,000 tons a year for 10 years
starting in 2018 from an unidentified European supplier.
Spot LNG for Northeast Asia is trading near a record high.
Prices for cargoes to be delivered over the next four to eight
weeks were $19.60 per million British thermal units, Energy
Intelligence Group said Feb. 17 on its website.
To contact the reporters on this story:
Chou Hui Hong in Singapore at
chong43@bloomberg.net;
Ramsey Al-Rikabi in Singapore at
ralrikabi@bloomberg.net
To contact the editor responsible for this story:
Pratish Narayanan at
pnarayanan9@bloomberg.net
Singapore Bids for Role as LNG Hub With Second Terminal
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