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Singapore plans to build second LNG terminal

02.26.2014  |  HP News Services

Singapore announced plans to build a second liquefied natural gas (LNG) receiving terminal as it pursues a long-term strategy to become Asia’s primary LNG trading hub.

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By CHOU HUI HONG and RAMSEY AL-RIKABI
Bloomberg

Singapore plans to build a second liquefied natural gas (LNG) receiving terminal as it pursues a long-term strategy to become Asia’s LNG trading hub.

The city-state, which generates more than 90% of its electricity using natural gas, is studying locations on the eastern part of the country for a new facility to support industries and power plants, Prime Minister Lee Hsien Loong said Tuesday 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% 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 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 tpy receiving facility on Jurong Island. A third tank has been completed, doubling capacity to six million tons, Lee said today.

‘Very Visionary’

“Just mooting the second terminal is very visionary. This is long-term planning,” said Regan, who expects the new project not to be operational 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.”

A fourth tank will be added at the original site, taking capacity to at least 9 million tpy by 2017, the Prime Minister said. The terminal can accommodate as many as seven tanks with a total capacity of 15 million tpy, he said.

LNG meets about 20% of the country’s natural gas needs, according to Sriram Narayanan, the commercial director at Singapore LNG Corp., which operates the Jurong Island terminal.

“We are preparing for the possibility that our demand for natural gas may one day be met entirely by LNG,” Lee said.

BG Group 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 tpy 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 regulator, the Energy Market Authority.

Asian Demand

Southeast Asia’s gas demand will rise 184 billion cubic meters by 2018, up about 19% from 2014 levels, compared with 11% 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% to 294 billion in the same period.

About 59 million metric tons of LNG, or 25% 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% of global demand.

Companies have lined up to tap Singapore’s market. Germany’s E.ON, Glencore Xstrata and others have hired LNG traders in the city. 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.

Record High

GAIL India Ltd., the country’s biggest gas distributor, will allocate 1 million tons of the fuel from the US for trading at its Singapore unit, Chairman B.C. Tripathi said in an interview Oct. 29.

Temasek Holdings, Singapore’s state-owned investment company, set up Pavilion Energy in April to trade LNG. Pavilion has a contract for 500,000 tpy 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/MMBtu, Energy Intelligence Group said Feb. 17 on its website.



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