(EnergyAsia, October 29 2012, Monday) — Singapore will invest S$500 million to add a fourth tank to its liquefied natural gas (LNG) terminal by 2017, boosting the total storage capacity to nine million tonnes, said the country’s Second Trade and Industry Minister S. Iswaran. (US$1=S$1.22).
The terminal is expected to start up in the second quarter of 2013 with two tanks of total capacity of 3.5 million tonnes to be followed by a third tank of 2.5 million tonnes later in the year, he told the Gas Asia Summit last week.
Singapore LNG Corp (SLNG) is already studying plans to build a fifth tank on the Jurong Island terminal which is designed to accommodate six tanks.
Mr Iswaran said the expansion was in response to Singapore’s faster-than-anticipated demand for LNG. Power generation companies and industries have committed to purchasing around 2.7 million tonnes/year or about 90% of the volume contracted for sourcing by BG.
He said the government is studying possible frameworks for future LNG import to allow for competitively-priced and reliable supplies while taking into consideration the needs of consumers and the operational efficiency of the terminal.
Singapore is paying one of the world’s highest natural gas prices having signed long-term contracts with Indonesia and Malaysia at a reported 15% premium to spot high sulphur fuel oil. Singapore power generators and chemical producers are paying between US$16 and US$18 per million BTU for piped gas, more than double the price in Europe and five times the US.
“As the cleanest fossil fuel that can now be procured from diverse supply sources, LNG is set to play an increasingly important role in Singapore’s energy mix. Hence, we must plan ahead to ensure that our infrastructure can cater to our future energy needs,” he said.
Apart from enhancing Singapore’s energy security by allowing further diversification of fuel sources, Mr Isawaran said the additional capacity will boost Singapore’s role as an international LNG trading hub.
He said the increased storage infrastructure could catalyse business opportunities such as LNG trading, break-bulk services and LNG bunkering.
In a separate speech, SLNG CEO Neil McGregor said LNG could account for 30% of Singapore’s gas demand when the terminal begins operating from the second quarter of next year.