More industries likely to use LNG in Singapore

Other than power units, refineries and pharma firms may buy gas: BG Group
Ronnie Lim, Business Times 6 Sep 10;

LNG supplies to Singapore starting in early-2013 won't just help fuel power stations, but will also be used by some petrochemical/refinery, electronics and pharmaceutical plants here.

Singapore's LNG buyer BG Group - which will finalise its sales contracts in mid-September for a total 1.5 million tonnes per annum (tpa) of liquefied natural gas with the gencos here - is currently sounding out these potential industrial customers after earlier securing its first non-power customer, a petrochemicals company.

'We are in various stages of negotiations with industrial customers, including electronics and pharmaceutical plants, which need gas for their manufacturing processes or are considering having their own cogeneration plants,' Dan Werner, BG's general manager for Singapore, told BT.

By Sept 15, the six generating companies here are expected to commit to their planned new projects/expansions to qualify for vesting contracts which essentially guarantee them a share of the electricity market.

This was a 'carrot' dangled by the Energy Market Authority to get them to commit to LNG purchases to fuel their new projects, with this in turn helping underpin Singapore's $1.5 billion LNG terminal project.

Among those which recently announced new investments are Island Power which has just signed its Engineering, Procurement & Construction deal for a new $1.2 billion, 800MW station; Sembcorp which announced a 400MW expansion after clinching a utilities supply deal from Jurong Aromatics Corporation; and Keppel Corporation which said it plans to build a 900MW expansion by the end of this year.

Several pharmaceutical plants in Tuas, like Schering-Plough and Pfizer Asia Pacific, are already using natural gas to fuel their cogen plants, while gas is also needed to fuel in-house cogen units supplying electricity and steam to petrochemical/oil refineries here, like at ExxonMobil and Shell.

While some of these refineries already have existing gas supplies, they may need additional LNG in future.

'We have in place long-term piped gas contracts for the energy needs of our manufacturing site on Jurong Island,' an ExxonMobil spokeswoman said. This was in reference to its $3 billion deal with Keppel Gas for Malaysian gas supplies, including for its latest 220MW cogen expansion to supply utilities to its upcoming US$5 billion second petrochemical complex.

Singapore Refining Company, which is currently planning to build a 60-70MW cogen unit at its Merlimau refinery, could also potentially be a LNG customer.

Meanwhile, Mr Werner said that BG is set to make its final investment decision for its 8.5 million tpa Queensland Curtis LNG project - meant to supply Singapore and others - within the next few months.

'The first gas from Queensland Curtis is expected in 2014, and given its proximity to Singapore, it will likely be the source of most of the LNG coming here,' he said.