Singapore’s ambitions as an LNG bunkering hub

We are in a period of eco-friendly awareness on a global scale, traditional energy sources are in a decline due to new regulatory controls. The progression towards the future fuel, liquid natural gas (LNG), has been discussed considerably throughout the past few years. But with the upcoming environmental regulations in 2015, the time has come for action. The question is: who will embrace the new scenario and provide both the best source and facilities?

Singapore is the frontrunner here. The Lion Republic’s stability has always revolved around clear economic and societal principles, and its ability to identify the imperatives of governance to ensure successful guidance. These imperatives include the need for proactive leadership, to optimise available resources, adapt relentlessly and remain relevant in an ever-changing world. In short, to continually examine and evolve its pivotal role in the world.

An example of Singapore living up to the standards it set itself comes directly from its responsibility to meet the energy needs of its own populace. Just 10 years ago, a disruption of natural gas import flow caused serious interruption to electricity supply which resulted in the loss of 30% of power systems. There was an outcry at all levels, from parliamentary to grassroots.

With high accountable standards of governance at stake, the Singapore government engaged decisively and proactively. Its main focus: reliability of supply.

A year later, Singapore announced plans to dispense with supply problems and construct the nation’s very first LNG receiving terminal. With such aspirations, Singapore could apprehend both its own growing demand and broaden its horizons via supplementary natural gas sources.

An independent company was first contracted to develop the LNG terminal. But due to the global financial crisis, financing became a problem. So the government announced that, to avoid subsequent delays, it would take over full responsibility and ownership. As a result, the Singapore LNG Corporation was established to build, own and operate the LNG terminal.

In February, 2014, after around nine months of successful operation, Prime Minister Lee Hsien Loong officially opened Singapore’s first LNG terminal. Ambition and adherence to sound economic principles allowed Singapore to import global LNG supply, thus safeguarding its ability to meet current and future energy demands.

We all know Singapore has a great legacy as an oil trading hub and a very sound understanding of that market. Moving forward, it has now also recognised the strong potential to benefit from Asia’s rising gas demand. This was shown when the Fukushima Nuclear disaster struck Japan and the majority of domestic nuclear plants were shut down. It led to a substantial increase in the need for LNG as an alternate fuel source. As expected, many of the foremost energy trading firms have settled in Singapore, to take advantage of the secure and transparent regional business platform it presents, and these include many associated supporting banking establishments and specialised service groups.

What does the future hold for Singapore and LNG? Well, with the growing potential for LNG as a marine fuel, Singapore has become the leading Asian nation to develop an LNG bunkering hub. The bunkering industry is placing more and more focus on LNG as a cleaner and more commercially feasible alternative fuel. As well as being a key oil trading hub, Singapore now holds top position as a global bunkering port. With its own LNG supply capacity in place, it is looking to take full advantage of the need for LNG bunkering.

So what of the competition? With any new venture and ambition, Singapore faces challenges to become the world’s foremost LNG trading hub. The challenges come from areas such as shale gas developments in the United States and subsequent export facilities. This will of course impact global LNG trading routes. Time will tell what effect it will have for Singapore.

A naturally occurring downside of success, as Singapore has seen with its involvement in LNG, is the increase in competition from other established Asian regions, most of which are similarly looking to establish comparable LNG trading hubs. South Korea and Japan have already recognised the required infrastructure, such as the storage tanks and related facilities essential to trade LNG.

In Malaysia, aspirations are also visible. The government aims to complete its own LNG import terminal to be used for storage, loading and regasification of LNG, and is also designed for both import and export markets. In addition, Malaysia is set to unveil the world’s first regasification unit on an island jetty located in Melaka.

But despite facing increased competition from other regional markets, its history of stability allows Singapore to continue branding itself as the pre-eminent LNG trading hub. Its objective, to keep attracting significant levels of public and private investment in this rapidly moving sector, will rest on its core economic and societal principles. These are exemplified by the fact that expansion plans are already in the pipeline, with emphasis on the potential to provide to numerous LNG terminal consumers (such as LNG trading, bunkering, LNG carrier post-dock/new-build delivery cool-down operations, etc). Singapore’s vision and planning should allow quick and effective development. The tangential benefits are also obvious: new business creation, new jobs, and increased overall national self-appreciation.

With a very strong safety record in the LNG sector, Singapore places great significance on ensuring high reliability and, as importantly, highly trained and able professionals working in the sector. The provision of such a capable, high-calibre workforce is one area in which Singapore has few, if any, competitors. The expertise resource is increasing as companies commit to specific consultant expansion in Singapore.  In 2014, Singapore took the lead in establishing themselves as a major LNG hub, as a response London Offshore Consultants looked to the LNG Industry to recruit experience to develop an LNG department to provide the future experience required by Singapore.

Singapore has made its mark in the LNG industry, a strong and ambitious mark, one that is impossible to deny or ignore. The time for commitment from companies within the shipping industry, following the lead set by Singapore and others, to commit to LNG is very much upon us.

Written by Philip Ryan, London Offshore Consultants (LOC), Singapore for LNG World News