edited version of Energy Market Authority chief Khoo Chin Hean’s speech
given at last Friday’s announcement that UK’s BG Group has been
appointed Singapore’s sole importer of liquefied natural gas (LNG) and
aggregator of demand.
BG Group’s role is to aggregate demand for regasified LNG from all
end-users of gas in Singapore, and to procure LNG supply for these
end-users. BG will have an exclusive licence to import LNG and sell
regasified LNG in Singapore for a demand of up to three million tonnes
per annum (Mtpa) starting early 2012.
“Approximately 80% of Singapore’s electricity is fuelled by
natural gas. Demand for natural gas will rise as our economy grows. In
addition, industrial projects, like those in the petrochemical sector,
will continue to contribute to this gas demand growth.
“The government decided to import LNG to provide security of supply.
LNG will enable us to diversify our supply sources. We plan to have the
LNG import terminal ready in the early 2012.
“Given today’s tight LNG market, the individual demands of end users
would be too small to attract interest from LNG suppliers. Creating an
LNG aggregator to aggregate LNG demand has made Singapore a more
attractive market for LNG suppliers.
“In September last year, the EMA kicked off a two-stage Request For
Proposal (RFP) process to select an LNG aggregator that would aggregate
regasified LNG demand in Singapore. The response from the LNG industry
was very encouraging. 18 very strong and credible proposals from 22
reputable companies were received, some had their own sources of LNG
and some were strong in trading.
“Five companies were short-listed by the EMA for the second stage of
the RFP process, and BG has emerged as the winner. It was not an easy
task to select the successful aggregator as all short-listed companies
put forward very good submissions.
“When assessing the various submissions, we did so based on four
primary criteria: the capability of the company to perform its role as
an aggregator; the reliability and suitability of their LNG supply
sources; the proposed pricing and terms, and the added value that would
arise from the company’s LNG trading proposals. We were looking for a
total solution.
“BG is a respected international gas company that has the required
experience and capability to meet our LNG supply requirements and
project timeline. BG previously part of the British Gas Corporation,
was the pioneer of the international LNG importation industry. It was
the first company in the world to import LNG by ship on a commercial
basis in 1964.
“Since then, BG has grown its LNG business tremendously. Today, BG
manages a portfolio of over 13 million tonnes of LNG, has under its
control a core fleet of 25 LNG vessels and has supplied LNG to 14
countries around the world. Soon, Singapore will be an important
addition to this list.
“BG has also committed to devote significant time and resources to
develop Singapore’s gas market and promote LNG and gas trading.
“Most importantly, BG has committed to offer three million tonnes per
annum (mtpa) of firm LNG supply to Singapore at a competitive price
sourced from its global LNG portfolio, which includes reliable and
secure projects in Egypt and Trinidad & Tobago and its future
supply from Australia.
“I would especially like to express my sincere thanks to all the
companies that participated in the aggregator selection process. They
have all worked very hard. Singapore values their efforts. We will
endeavour to maintain the good relationships that we have established
with them.
“Through the selection of BG as our aggregator, Singapore has
established itself as a serious and committed long-term player in the
global LNG arena. We are confident that BG will be able to meet our
expectations and fulfill our gas needs for the years to come.
“Reaching this important milestone is very important. However, there is
still a great deal of work to do as you can imagine and I expect that
all the stakeholders in Singapore’s energy industry will have a very
busy schedule over the coming months ahead as, together, we press ahead
to bring LNG into Singapore by the first half of 2012.”
EMA was established in the 2001 to forge a secure, long-term energy
industry that thrives on healthy competition. New market structures
have been created to promote competition in the electricity and piped
gas industries.
In January 2003, the National Electricity Market of Singapore began
operation. In May 2007, the Gas (Amendment) Bill was passed, opening
access to the gas sector. EMA will also continue to achieve cost
competitive outcomes for consumers by ensuring a level playing field
within the energy industry.