SINGAPORE - Keppel Infrastructure Holdings, a division of Singapore-listed Keppel Corporation, has inked an agreement with the Singapore Economic Development Board (EDB) to develop, own and operate a gasification facility on Jurong Island.

The agreement marks an important step in preparation for the final investment decision, which will be taken at a later date, said Keppel in a statement on Tuesday.

The facility, now in its project development phase, will use proven and reliable best-in-class technologies to produce hydrogen, carbon monoxide, syngas and other industrial gases from a variety of potential feedstock, including coal and refinery by-products.

It will be well-positioned to meet anticipated future demands of Singapore's refining and chemicals industries, added Keppel.

This comes as the International Maritime Organisation has said it will require all ships to comply with the lowered global sulphur cap of 0.5 per cent, from the current 3.5 per cent, by January 1, 2020. "As the refining industry in Singapore adopts the production of low sulphur compliant fuel, there will be higher demand for hydrogen from existing and new customers," said Keppel.

Mr Damian Chan, executive director for energy & chemicals at the EDB, said: "After extensive evaluation, we found that gasification would be able to meet industry's demand for competitive hydrogen and carbon monoxide, while the use of best-in-class mitigation technologies would minimise its environmental impact."

The announcement will not have any material impact on the net tangible assets and earnings per share of Keppel Corporation for the financial year ending December 31, 2017.