Singapore to Import More LNG

Singapore plans to award up to two new import licenses to supply the city-state’s next tranche of LNG cargo, and intends to lift a moratorium on piped natural gas when BG, the exclusive LNG supplier to the Jurong Island terminal reaches its 3 Million tonnes per annum (Mtpa) franchise or in 2018, whichever is earlier.

S. Iswaran, Minister in the Prime Minister’s Office and Second Minister for Home Affairs and Trade & Industry, made these announcements in his keynote address at the Gas Asia Summit his morning, noting that these were outcomes of a major review of Singapore’s gas import framework.

Iswaran, also told delegates at the Sands Expo and Convention Centre that there had been broad support from the industry for the Energy Market Authority’s Competitive Licensing Framework (CLF), “which will give Singapore the flexibility to procure LNG on a tranche-by-tranche basis to meet incremental market demand.”

EMA’s two-stage request for proposal (RFP) to supply Singapore’s next tranche of LNG imports will be launched in 2014. Up to three parties will be shortlisted for the second stage and the ability of the proposers to “facilitate the development of an LNG hub in Singapore” was cited as one of the considerations. More details on the RFP process will be released within the next two months.

“This major review of Singapore’s gas import framework aims to enhance our ability to meet our goals of energy security and price competitiveness,” Mr. Iswaran said. All these initiatives will “give gas buyers more choice”, he said.

MIswaran added the EMA is currently looking at how capacity at Singapore’s LNG terminal – which opened in May this year – can be allocated to spot import and other ancillary services without affecting the terminal’s throughput services.

This came after the EMA consulted the industry on allowing imports of spot LNG and piped gas, as well as on-selling in the domestic secondary gas market.

Abundant supplies and growing Asian demand was driving gas infrastructure investment in Asia, he said, citing the latest BP Statistical Review of World Energy, which said that LNG exports grew from 150 million cubic metres to 328 million cubic metres between 2002 and 2012.

Iswaran said that along with increased LNG trade volume, more spot cargoes are being traded. Until now, LNG contracts in Asia have predominantly been long-term contracts indexed to oil prices.

“This has meant that Asian gas buyers are highly exposed to movements in oil prices even when the fundamentals of the gas market remain unchanged,” said Mr Iswaran.

He added: “A more liquid and transparent gas market in Asia will offer buyers and sellers more choices to diversify their import and export portfolios. Such diversification will not automatically translate into cheaper gas prices. However, a more competitive market is crucial to ensure long-term sustainable growth in the Asian gas market, to the benefit of sellers and buyers alike.”

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Source: SIEW, October 31, 2013