Singapore's efforts to become Asia's hub for liquefied natural gas (LNG) are gaining steam with a raft of new initiatives.
Yesterday, Minister for Trade and Industry (Industry) S. Iswaran outlined more facets of a strategy that he said would increase the "vibrancy of the Singapore gas market and grow its regional footprint".
One is to dramatically widen the supply options. Natural gas was imported here from just Indonesia and Malaysia in the past, but shipments will now come from the United States, Australia, Norway, Russia, Qatar and Brunei.
Mr Iswaran told the Gas Asia Summit at the Marina Bay Sands Convention Centre that the "diversity of supply will further strengthen our energy security".
Earlier this week, Pavilion Gas and Shell were appointed to supply Singapore with the next tranche of LNG needed by power plants and industries here. This new source of supply is being made possible by the development of specially designed ships that can carry natural gas in liquefied form, as opposed to the traditional method via pipes from neighbours close by.
The expanded supply options are important as about 95 per cent of Singapore's electricity is generated using natural gas.
MORE OPTIONS, BETTER SECURITY
The diversity of supply will further strengthen our energy security.
MINISTER FOR TRADE AND INDUSTRY (INDUSTRY) S. ISWARAN, on the impact of widening Singapore's LNG supply options.
Mr Iswaran said Singapore aims to provide greater flexibility and diversity for gas importers and buyers.
The Government is reviewing allowing spot imports of LNG by third-party suppliers, he said. Spot LNG refers to a single cargo of LNG, as opposed to a series of cargoes bought under a contract, which is what is currently being done. Third-party suppliers are those other than Pavilion Gas and Shell, the appointed LNG importers.
The industry has asked for spot imports to be allowed on a first-come-first-served basis until a market-wide limit on the volume of LNG that can be imported is reached. This is an issue keenly watched by industry players.
Ms Geena Chatterji, a research associate at energy consultancy Wood Mackenzie, said Singapore has an opportunity to replicate its success in oil with LNG, adding that the finalisation of plans for third-party spot imports would be a "game changer" for Singapore's position as an LNG hub.
This would "increase the level of competition in Singapore, and allow for price discovery", she said.
Demonstrating open access to the domestic gas market is "crucial to hub development", she added.
Mr Iswaran said yesterday that the issue will be the subject of an Energy Market Authority (EMA) consultation with industry players for a second time this quarter.
While LNG is more frequently traded through long-term contracts, a domestic Secondary Gas Trading Market (SGTM) is being developed to allow gas buyers and sellers to trade on a short-term basis, Mr Iswaran said.
The first phase of implementing this trading market has been completed, and industry groups will start discussions on the finer details early next year, he added.
Infrastructure development is a key part of the hub strategy as well.
Singapore will expand the throughput capacity of the LNG terminal on Jurong Island from six million tonnes a year to 11 million by early next year.
Mr Iswaran added that the Government is studying the potential development of a second terminal.
The Singapore Exchange, which already has LNG price indexes, has announced plans to launch more LNG financial derivatives for buyers and sellers to mitigate risk, he said.