Singapore commits to LNG for meeting future energy needs

Singapore has decided to go ahead with liquefied natural gas (LNG) imports to meet future energy demand and ease its dependence on piped supplies from Indonesia and Malaysia, the trade minister said yesterday.
"We need to diversify our energy sources in order to ensure that we are not over-reliant on a single source for our energy needs," Lim Hng Kiang told an energy forum organised by the Energy Market Authority (EMA).
"As such, the government has decided to import liquefied natural gas to meet future rising demand for energy as our economy expands and our population increases."
A study prepared by Tokyo Gas Engineering Co commissioned by the EMA has recommended building an LNG terminal to receive 3mn tonnes per year by 2012.
The EMA said in a report released yesterday that it sees the politically stable Australia as the preferred supplier. This would help to strengthen the hand of LNG marketers such as Australia’s Woodside Petroleum Ltd and US major Chevron Corp that have found it tougher to sell LNG to China and India due to higher prices.
Other potential suppliers are Qatar and Iran, the EMA said.
The terminal is expected to cost about $500mn, Lim said. Industry sources said the funding could partly come from the city’s power plants that dominates Singapore’s natural gas consumption and the overall project would cost more if investments in LNG tankers were taken into account.
"This is a very big investment. There is some uncertainty over the demand. This is a very lumpy investment. If the market feels core investment is needed from the government, we will seriously look at it," Lim told reporters after his speech.
Singapore, whose economy is forecast to grow 5%-7% this year, has long sought to diversify its gas supplies, all of which come via three pipelines from Indonesia and Malaysia to fuel 80% of the island’s power generation that is growing at more than 4% a year.
Singapore’s anxiety grew sharper two years ago when a technical outage disrupted gas flow to Singapore’s power stations via the Indonesian pipeline, plunging nearly half of the wealthy city-state into darkness.
Singapore is the latest to join the list of LNG importers, whose ranks have swollen with the addition of giant Asian countries seeking cleaner and cheaper fuel.
India began imports in 2004 and China took in its first LNG cargo this summer, while the US is rushing to expand import capacity.
Thailand committed to its first terminal last month after sealing a key Iranian LNG supply deal. – Reuters