The Energy Market Authority (EMA) has appointed McKinsey & Co to study the best ways for Singapore – which wants to become a regional LNG trading hub – to procure its future liquefied natural gas supplies, once aggregator BG Group’s franchise as the sole LNG buyer here ends next year.
An EMA spokesman told BT yesterday that McKinsey & Co Singapore was recently picked as the consultant to help it set up an LNG procurement framework here post-BG Group’s franchise.
This follows a tender which EMA called in August for this, following the stronger-than-expected take-up of liquefied natural gas here from generating companies which are embarking on new plants.
S Iswaran, Minister in the Prime Minister’s Office, disclosed at EMA’s 10th anniversary dinner last month that the BG Group was in fact expected to hit its franchised sales volume of 3 million tonnes per annum (tpa) by next year – or some 11 years sooner than expected.
BG’s agreement with EMA is that it will be the sole LNG buyer for Singapore until 2023, or when it achieves 3 million tpa, whichever comes sooner.
Mr Iswaran, who is also Second Minister for Home Affairs and Trade & Industry, said at the dinner that following the appointment of the consultant, the industry will also be surveyed for its views in the first quarter of 2012.
McKinsey’s study on a future LNG procurement framework will be pivotal to Singapore’s ambitions to become a regional LNG trading hub.
While the first LNG shipments are expected here only in mid- 2013, international LNG producers and trading houses including Russia’s Gazprom, ConocoPhillips, France’s GDF, Norway’s Statoil and most recently India’s GAIL have already set up trading bases here in anticipation of this.
This has also led Singapore LNG (SLNG), which is building the $1.7 billion terminal – currently just about 60 per cent complete – to embark on storage expansion plans. SLNG is building a third tank at the Jurong Island terminal which will boost storage capacity there to 6 million tpa from the earlier 3.5 million tpa.
And there is significant room for further expansion, as the masterplan provides for up to seven storage tanks, SLNG’s chief executive officer Neil McGregor earlier told BT.
Bloomberg last week quoted Mr McGregor saying that Singapore is expected to decide by next year on LNG procurement going forward, including ‘whether it repeats the current (BG) agreement, have another franchise, or something else’.
‘We are in discussions with all major gas suppliers in the region,’ he added.
BG Group itself is understood to be keen to extend its current LNG aggregatorship, and BG Singapore’s general manager Anthony Barker reportedly said as much when he disclosed that the group is in talks with SLNG and EMA to provide additional spot LNG supplies, in addition to its current long-term contracts.
The company is also in discussions to lease extra storage space at the SLNG terminal.
