Singapore plan to import LNG moves full steam ahead

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Ronnie Lim, Business Times 23 Nov 07;
Industry expects about half dozen groups to bid to be sole LNG buyer

SINGAPORE is moving full steam ahead with its plan to import LNG by 2012 to cater to the fast-increasing natural gas demand from power stations and industries here, especially those on Jurong Island.

About half a dozen groups, comprising local and foreign players, are expected to bid to be the sole liquefied natural gas buyer, or 'aggregator', when the first, December 4, deadline of a two-stage Request for Proposal (RFP) closes, industry sources speculate.

At the same time, the Energy Market Authority this week also sent out a request to end-users, such as power stations, to indicate how much LNG they are interested in buying.

This 'Request for End-Users to Express Interest', closing Dec 14, will help the aggregator in contacting identified end-users as well as get a better idea of total demand for re-gasified LNG here, EMA said.

Industry sources said that as far as the bid to be the sole LNG buyer is concerned, local conglomerates like Gas Supply Pte Ltd (GSPL) and SembCorp - which are already buying piped natural gas from Indonesia - will most likely throw their hat in the ring. Keppel Corp, which is buying piped natural gas from Malaysia, is another strong possibility.

They could tie up with foreign players including Korean and Japanese gas importers, like Tokyo Gas, as well as oil giants like Shell, British Petroleum and British Gas, the sources said.

While most declined revealing their hand at the moment, GSPL CEO Tan Chin Tung confirmed that it was definitely submitting a bid to be the aggregator, although he declined to say whether it will do so as part of a consortium.

Singapore's move to import LNG, which can be shipped in from anywhere worldwide, will help it diversify its energy supply sources - given that Indonesia and Malaysia will increasingly need natural gas for their own domestic use.

This is critical given that currently over 80 per cent of electricity demand here is met by piped gas imports from the neighbours.

Currently, Singapore imports about six million tonnes per annum (tpa) of piped natural gas, with the planned LNG terminal expected to initially bring in 0.8-1.2 million tpa in 2012, with this building up to 3 million tpa by 2018.

PowerGas is leading the building of the S$1 billion LNG receiving terminal - construction, as well as detailed engineering, which is expected to start soon for the project to be ready by 2012.

On the appointment of the LNG buyer, the first stage RFP is meant to give the potential aggregator a better understanding of the market before it submits its final plan.

In the second stage RFP - expected to be announced in early January next year - the EMA will appoint the aggregator from shortlisted candidates by April, 2008.

Under the latest indicative time lines from EMA, the LNG aggregator and end-users will then begin negotiations for regasified LNG supply between Q2 and Q4 next year.

They are expected to enter into Memoranda of Understanding by December 2008, followed by final Gas Purchase Agreements by end-2009.

There are plans to launch a website to provide near real-time information when natural disasters occur, he added.

Several industry players have expressed interest in working with the centre by providing technological assistance or data.