Singapore’s new liquefied natural gas (LNG) terminal will be able to handle sufficient imports of the fuel to cover all of the country’s power needs, even if piped gas supply contracts with Malaysia and Indonesia are not renewed, a top energy regulator said on Monday.
Singapore depends on natural gas for around 80 percent of its power generation needs, with the bulk sourced from Indonesia and Malaysia under long-term contracts.
“Supply will come under pressure because of growing domestic gas demand in Malaysia and Indonesia. What we will do is ensure sufficient capacity to import LNG to meet all of our gas demand,” Chee Hong Tat, chief executive of Singapore’s Energy Market Authority, told an industry conference.
Singapore officials have previously said the new terminal was designed to supplement piped gas. Chee declined to say when the piped gas contracts end.
Indonesia and Malaysia were the second and third largest LNG exporters last year, but the two, facing dwindling output from ageing fields and rising demand from power plants, are looking at imports to meet demand in some areas.
Singapore currently buys almost 7 million tonnes per year (tpy) of piped gas from its two neighbours, Chee said.
The LNG terminal, which comes into operation in the first quarter of next year with two storage tanks, will be able to handle 6 million tpy of gas imports by early 2014 when a third tank is added. The facility can accommodate up to 7 tanks with a total capacity of 15 million tpy.
Chee also said that the government is considering building a second LNG import facility in the longer term, but did not elaborate.
Singapore plans to use the new terminal on Jurong Island to facilitate gas trading and bunkering if spare capacity remains after meeting the country’s energy needs.
“How much LNG we need to meet domestic demand will determine how much we can support ancillary services like storage, trading and bunkering,” said Chee.
Britain’s BG Group has filled orders for almost 90 percent of its exclusive 3 million tpy franchise to import LNG through the terminal, less than three years into its 20-year deal.
The government is studying its options for procuring additional volumes of the super-cooled gas after BG fulfills its 3 million tpy franchise and will seek feedback from the industry later this month, Chee said.
