Singapore awards LNG import licenses to meet future demand

spore-LNGSINGAPORE: Pavilion Gas and Shell Eastern Petroleum have been appointed as importers of liquefied natural gas (LNG) into Singapore, the trade minister said on Monday, as the city-state gears up to take more LNG.

Singapore, which relies almost exclusively on gas for electricity generation, currently takes the bulk of its gas via pipelines from Malaysia and Indonesia but is expected to boost LNG shipments in coming years.

The two firms beat Sembcorp Industries and BG Singapore Gas Marketing for the contracts to supply Singapore with 1 million tonnes per annum (mtpa) of LNG, offering buyers shorter term contracts and alternate price indices.

The exclusive franchises will last for three years or when the firms reach imports of 1 mtpa, depending on which comes first.

Singapore plans to allow other firms to import and sell non-term contracted LNG cargoes on a case-by-case basis, trade minister S. Iswaran said at the opening of Singapore’s International Energy Week (SIEW).

The city-state was also considering new imports of piped natural gas, he said.

Pavilion Gas, a unit of privately held Singapore-based Pavilion Energy Pte Ltd, and Shell Eastern Petroleum, a unit of Royal Dutch Shell, join BG Singapore Gas Marketing as approved LNG importers.

BG Singapore was the first company permitted to import LNG into Singapore in April 2008. The contract allows the firm to supply all end-users in Singapore with up to 3 mtpa of LNG or until 2023, whichever is earlier.

Singapore’s natural gas imports reached 10.36 million tonnes of oil equivalent (toe) in 2015, according to EMA data, with 7.78 million toe delivered via pipeline from Malaysia and Indonesia, and 2.58 million toe LNG imports.

Natural gas accounted for 95.3 percent of the city-state’s fuel mix for electricity generation last year, rising to 95.5 percent in the first three months of this year, EMA data shows.

The new import licences are unlikely to lead to an immediate spike in LNG demand as the bulk of the country’s natural gas requirements are still supplied via pipeline, a local trader said.

The Southeast Asian country’s demand for the super-cooled fuel is only expected to peak when its natural gas pipeline contracts with Malaysia and Indonesia expire around 2023.

Separately, Iswaran said Singapore has joined the International Energy Agency (IEA) as an association country, part of the IEA’s plan to expand its reach to emerging economies.

Singapore is the fourth country to join the IEA under the association country initiative after China, Indonesia and Thailand last November.