Singapore LNG Stakes Claim for Second Terminal

Singapore LNG Corp. is touting its

experience running Southeast Asia’s biggest liquefied natural

gas receiving terminal as a sign it can manage a second facility

planned for the city-state.

John Ng, the company’s chief executive, says he’s up for

the challenge when the government starts looking for an

operator. While Singapore hasn’t said when the second terminal

will start, industry consultants including FGE forecast it will

be after 2020.

“We are always ready,” Ng said in an interview at his

office on March 20. “Do we have the capability to build, design

and operate the terminal? The answer is yes.”

As Asia overtakes Europe as the world’s biggest natural-gas

importer, Singapore wants to tap burgeoning demand for cargoes

and cement its place as the region’s LNG trading hub. The

country, which uses gas for more than 90 percent of its

electricity, is studying locations on the east of the island for

a second terminal to support industries and fuel power stations,

Prime Minister Lee Hsien Loong said last month.

“The SLNG team will probably be the operator because they

will be more experienced and the government will be comfortable

replicating the same model,” said Tony Regan, a Singapore-based

energy consultant at Tri-Zen International Inc. He expects the

terminal to start operations after 2020.

Asia accounts for 46 percent of global gas trade, according

to the International Energy Agency, which identifies Singapore

as best-placed to be a center for LNG trading. The region

consumed 75 percent of the world’s LNG last year, data from the

International Group of Liquefied Natural Gas Importers show.

Japan Demand

Singapore’s second terminal will have a capacity similar to

the first, according to the Energy Market Authority, the

regulator that oversees the country’s energy industry. The

existing facility has three tanks that can handle 6 million

metric tons a year. A fourth will be added by 2017, increasing

capacity to 9 million tons.

The site can accommodate as many as seven tanks that could

process 15 million tons annually, Lee said at the official

opening last month. Japan, the world’s biggest importer,

consumed about 87.5 million tons in 2013.

Sharon Tan, a spokeswoman for the EMA, said the regulator

doesn’t have information yet about the process it will use to

identify and select an operator.

Singapore has the only LNG terminal in Asia that can reload

cargoes from storage, allowing traders to store gas during low-consumption periods before selling them during peak demand

seasons in winter and summer. SLNG may make the third tank

available for traders to carry out short-term transactions, Ng

said.

Singapore Traders

Germany’s E.ON SE and Glencore Xstrata Plc are among

companies that have hired LNG traders in the city as the market

grows. Qatar Liquefied Gas Co., the world’s largest producer, is

looking to expand in the region, Abdulla Al-Hussaini, the

company’s marketing director, said in an October interview.

More terminals in the region will help boost trade volumes

and establish more competitive and responsive LNG prices,

according to Ng. About 27 percent of LNG supplies, or 65 million

tons, are traded on a short-term and spot basis, according to

the International Group of Liquefied Natural Gas Importers. The

rest is bought and sold in long-term supply contracts with

prices typically linked to the cost of crude oil.

LNG to be shipped over the next four to eight weeks to

North Asia dropped to $15.80 per million British thermal units

in the week ended March 24, down 20 percent from a record $19.70

on Feb. 3, according to New York-based Energy Intelligence.

Floating Terminal

The Energy Market Authority is studying whether to build

the plant offshore on a floating facility, its CEO Chee Hong Tat

said Feb. 26. SLNG, owned by the Singapore government, was

formed in June 2009 by the EMA to operate the S$1.7 billion

($1.3 billion) first terminal on Jurong Island, which began

commercial operations in May last year.

“I’m quite confident we have the capability to do the

second terminal as a floating one,” said Ng, who became chief

executive on Jan. 1, taking over from Neil McGregor. “The

challenges are no less or no more than a land-based one.”

A floating storage and regasification unit, or FSRU, may be

a better choice for Singapore’s eastern terminal as technology

improves, according to Regan. FSRUs typically consist of LNG

vessels anchored offshore to receive and store shipments before

the supercooled gas is sent into an onshore pipeline system.

“FSRUs are cheap, quick to build and start, you can put in

a second unit five years later to increase capacity and it gives

Singapore, which is a small country, a lot more options where to

place the second terminal,” said Regan.

To contact the reporter on this story:

Chou Hui Hong in Singapore at

chong43@bloomberg.net

To contact the editors responsible for this story:

Pratish Narayanan at

pnarayanan9@bloomberg.net

Alexander Kwiatkowski

Singapore LNG Stakes Claim for Second Terminal