Singapore Bids for Role as LNG Hub With Second Terminal

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