Development of Singapore’s second LNG facility to begin amid rising demand for energy

SINGAPORE - Development of a second liquefied natural gas (LNG) facility in Singapore will soon begin, with operator Singapore LNG Corporation (SLNG) inking agreements enabling the project to advance to the execution phase.

The move cements the growing use of LNG, or shipped natural gas as opposed to piped natural gas, in Singapore, amid rising demand for electricity to power new homes and support evolving business needs, and facilitates the Republic’s push to harness cleaner sources of energy.

At an event to launch the project at the Sands Expo and Convention Centre on Oct 23, SLNG announced agreements with Mitsui O.S.K. Lines (MOL), Jurong Port and engineering company Wood to advance development of the facility.

It will charter from MOL a floating storage and regasification unit (FSRU), which is a type of ship that enables the transport and storage of LNG in tanks on board, as well as the conversion of LNG back into gas that is then piped back onshore.

The FSRU, which will function as SLNG’s second LNG terminal, will be constructed by South Korean shipbuilder Hanwha Ocean for an undisclosed amount. It is expected to be operational by the end of the decade.

Together with SLNG’s existing terminal on Jurong Island, the FSRU will increase its combined LNG regasification capacity from 10 million tonnes to 15 million tonnes on a yearly basis, the company said.

It will also offer greater flexibility to SLNG in meeting Singapore’s future gas demand.

The FSRU will be berthed at Jurong Port. Wood will design and build the onshore infrastructure connecting the FSRU to onshore pipelines and the Singapore gas pipeline network. 

SLNG chief executive Leong Wei Hung said the move underscores SLNG’s continual role and responsibility in helping to ensure Singapore’s energy security.

“As Singapore continues to prosper, this investment in additional capacity will help ensure the nation is able to capture opportunities and remain on a path of growth, while pursuing its energy transition goals.”

Plans for a second LNG terminal in Singapore were announced in October 2023 by then Deputy Prime Minister and Finance Minister Lawrence Wong.

The first SLNG terminal began commercial operations in May 2013. As at end-September 2023, the terminal had received about 430 shipments of LNG totalling approximately 26.58 million tonnes.

The developments were announced on the sidelines of the Singapore International Energy Week conference.

Speaking at the conference on Oct 21, Deputy Prime Minister Gan Kim Yong said natural gas will continue to play a crucial role in safeguarding Singapore’s energy security.

“We must therefore ensure we have a stable and secure supply of natural gas.

“In tandem, we must also enhance our infrastructure to support the import of natural gas,” Mr Gan said.

In 2023, natural gas accounted for 94.5 per cent of Singapore’s fuel mix, according to the Energy Market Authority (EMA).

Other energy products such as municipal waste, biomass and solar accounted for 4.3 per cent, while coal and petroleum products accounted for the rest.

The natural gas fuel mix remained stable at 94.1 per cent in the first half of 2024, EMA said.

Mr Gan added that the separate gas entity which Singapore plans to create to centralise the procurement and supply of gas to the power sector will be set up as a fully government-owned company by the end of 2024.

Those plans, first announced in 2023, will enable Singapore to negotiate more favourable gas contracting terms, enter into longer-term gas contracts for more stable prices and supply, and procure gas from diverse sources to reduce concentration risk.

In an interview with The Straits Times, Mr Leong said SLNG is also keen to allocate some of its spare capacity to LNG bunkering once Singapore’s energy security requirements are fulfilled.

He noted that demand for LNG as a source of fuel in commercial shipping has risen substantially as liners move to comply with the International Maritime Organisation’s climate targets for shipping, and as regulations are put in place to ensure liners take steps to decarbonise.

Mr Leong added that SLNG can play a role in building up Singapore’s reputation as an LNG bunkering hub.

“We are exploring options to enable liners and traders to blend fuels through us. We are happy to be the conduit for ships needing bio-LNG and decarbonised LNG.

“In the bunkering world, we are seeing a shift from other fuels to LNG due to technology availability and supply. This is new and welcome change, and an opportunity for us,” he said.