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Singapore Starts LNG Operations

Singapore received its first commercial delivery of liquefied natural gas Tuesday, diversifying its supplies and underscoring the country's role as a regional energy hub at a time when Asia's gas demand and trade is booming.

The gas will be used to make electricity, supplementing pipeline gas from Indonesia and Malaysia, and at a later phase the Singapore delivery terminal will be used for storage and LNG re-exports.

BG Group shipped in the deep-chilled gas on the vessel Methane Kari Elin, berthing it at state-run Singapore LNG Corp. Pte. Ltd.'s new $1.7 billion Singapore dollar (US$1.38 billion) terminal.

This facility will allow Singapore to access competitively priced gas globally, the Ministry of Trade and Industry, Energy Market Authority and Singapore LNG said in a joint statement.

"It will also contribute to the development of Singapore as a regional gas hub, catalyze LNG-related business opportunities and create new job opportunities for Singaporeans," said S. Iswaran, minister in the Prime Minister's Office.

The terminal, with an initial throughput capacity of 3.5 million tons a year, will be expanded to six million tons annually by the end of the year and nine million tons a year at a later stage to cash in on rapidly expanding gas use and trading in Asia.

Recently, the International Energy Agency singled out Singapore, along with Japan and South Korea, as the places in Asia best suited to become gas trading centers.

Demand from the world's top two LNG users, Japan and South Korea, is growing, as is use by energy-deficient China and India—and other Asian countries are also planning to import the fuel.

Gas purchases in Asia traditionally have been made on long-term contracts, often 20 years, with prices indexed against crude oil, but the emergence of new suppliers and the shale gas revolution in North America is undermining and reforming this pricing system and driving the expansion of spot-market gas trading.

As of late last year, at least 14 companies had set up LNG trading or marketing desks in Singapore, including BP, BG Group PLC, Gazprom OAO , OGZPY +1.95% Royal Dutch Shell, Vitol Group and GDF Suez .

Around 80% of Singapore's electricity generation is gas-based, and the bulk of its initial LNG imports are expected to feed growing gas demand from its utilities.

Over the next two years, Singapore expects to add two gigawatts of generation capacity to the 10.88 gigawatts it had in March, with gas demand to hit 15 million tons a year by 2024.

With a land area of just 714 square kilometers and a population of over 5 million, Singapore is heavily dependant on energy imports. 

Fuente: WSJ