Ronnie Lim, Business Times 16 Jan 08;
EMA to pick in Q2 sole LNG buyer from 5 shortlisted groups
HIGH LNG prices or escalating building costs notwithstanding, construction of Singapore's $1 billion LNG terminal should start this year-end or early next year to enable the Republic to start importing liquefied natural gas by the targeted late-2011/early-2012 date, S Iswaran, Minister of State for Trade and Industry, said.
The project proceeds as planned, he stressed, as Singapore needs to move ahead decisively with LNG, which is an important plank of its strategic policy to diversify energy sources. Currently, the Republic depends on piped natural gas from Malaysia and Indonesia, and also imported oil for its energy needs.
Mr Iswaran said this following an announcement by the Energy Market Authority that it had shortlisted five groups to vie to be the sole LNG buyer or aggregator from a total of 18 proposals involving 22 companies. EMA, however, did not disclose their identities, following requests for confidentiality from some.
Speaking to journalists after the inauguration of the Singapore Immunology Network yesterday, Mr Iswaran said that 'the market response was very promising'.
He added: 'We had 18 very strong proposals from diverse organisations, both geographically and in terms of business type. It shows Singapore is a market they are very interested in and that we offer a compelling value proposition.'
Following this first stage of the two-stage Request for Proposal (RFP) process, EMA will now move on to select the LNG aggregator in the second quarter. One of the main considerations in the choice will be that 'Singapore gets reliable, steady supplies of LNG at competitive prices,' he said.
Mr Iswaran said that the thinking behind the two-stage RFP was because of the diversity of LNG players - including producers, traders and end-users. 'We wanted to allow the diverse ideas to emerge . . . with the idea here to find (business) models suitable for the Singapore market,' he explained.
Pressed on whether there are LNG producers or Singapore corporations among the shortlisted five, he would only say that 'some have their own sources of gas, some are involved in trading. But I'd rather not comment on nationalities.'
Asked if the project economics would be affected by high LNG prices caused by demand for LNG exceeding supply come 2012, as many predict, Mr Iswaran said that 'Singapore is a long-term player in LNG. We have decided that it's part of our strategic policy for diversifying energy, and LNG is an important plank of that strategy'.
'We are not in the business of trying to time the market . . . how it (the LNG market) will evolve we don't know. So it is important we have to stay committed to our long-term strategy, and we manage the volatility as it comes.
'But as of now we have no reason to change our plans. These are billion-dollar commitments and once we make the decision, we move ahead decisively,' he stressed.
On work on the LNG terminal proper, Mr Iswaran disclosed that PowerGas, the wholly owned subsidiary of Singapore Power, has made 'significant progress and should be able to make some decisions shortly'.
'PowerGas has been working on, first, to identify the core capabilities they need to build up, which they worked on quite quickly, and they are also now looking at partnerships so that they can enhance expertise within the consortia in order to develop the LNG terminal.
'After selecting partners, and completing the complex design process, my own sense is that to meet the target of early 2012 or late 2011, they will need to start actual work by the end of this year or early next year.'
