Singapore LNG Corp (SLNG) is making inquiries about buying LNG cargoes from the spot market, a rare move for the operator of the city state's liquefied natural gas (LNG) terminal, industry sources said on Wednesday.
The inquiries come on the back of surging prices globally of power generation fuels, such as LNG and coal, amid power shortages from China to India to Europe.
The rocketing prices have also led to one of Singapore's largest independent electricity retailers exiting the market.
According to company sources, at least three other electricity retailers here have stopped accepting new clients as well.
SLNG contributes to Singapore's energy security and its terminal supplies up to 30 per cent of the city state's natural gas demand for power generation, its website says.
The company is looking for LNG in the spot market privately, said four sources, with one of them adding that it is seeking up to two cargoes for delivery into Singapore next month.
SLNG told The Straits Times yesterday it is exploring options to increase inventory of LNG at its terminal amid tight global LNG supply.
"Given the current global LNG supply tightness, SLNG is exploring options to increase LNG inventory at our terminal," said a spokesman.
It is unusual for Singapore to seek spot LNG cargoes as the country is typically adequately supplied with LNG through long-term deals and gas imports from Indonesia via a pipeline.
One of the sources said the request from SLNG came after Singapore's electricity prices jumped.
Singapore's monthly base load electricity futures have surged by more than double since the start of the month, while the quarterly base load electricity energy futures are trading at their highest since the contract was launched in 2015.
In Singapore, electricity tariffs are calculated using fuel costs and non-fuel costs.
iSwitch Energy, one of Singapore's largest independent electricity retailer, said on its website that it will be ceasing electricity retail operations on Nov. 11, due to"current electricity market conditions".
Diamond Electric, Best Electricity Supply and Ohm Energy have stopped accepting new customers with Diamond Electric in the process of handing over existing term contracts to another utility provider, company sources told Reuters.
"Not only are retailers unable to sell to retail customers at a level that is economic because the set quarterly tariff implies a price that is well below where futures are trading, they are also getting hit on the front-end because spot prices have gone ballistic," said James Whistler, global head of energy at Simpson Spence Young.
"Add the failure of the once well-designed market-making scheme and things become untenable for many."
Open Electricity Market website shows only 8 out of the 12 existing retailers offering plans for consumers.
• Additional reporting by Clement Yong