Regional LNG: Experts divided on demand, timing for Singapore LNG terminal

Industry players are divided on the level of demand and the timing of returns on investment for Singapore's planned liquefied natural gas terminal, Channel News Asia reported Tuesday.

Some say there could be better returns if the project starts later than 2012; others think the target date is appropriate, because it will help Singapore in its quest to become a global trading hub.

The comments follow the government's green light to build a 3-million-tonne facility to receive and store liquefied natural gas.

Moving to LNG is a step in the right direction, especially if Singapore is looking to diversify its fuel sources.

But some experts feel it will be difficult to build sufficient demand for the 3 million tonnes of LNG that the new terminal can handle in 2012.

That is because most of the demand will be filled by existing long-term piped gas contracts.

The government is projecting domestic electricity demand to grow by up to 4.5 percent a year.

Said Ong Eng Tong, energy consultant at Etson Energy, "If it's compounded, I doubt that the demand of electricity will grow to that, because the main consumers of electricity are the industries. We're more concentrated on high-tech, bioscience and all that, which doesn't need much energy. We're also trying to concentrate Singapore as a financial centre, which we're doing successfully, and that doesn't need much electricity or energy."

Some consultants are suggesting that Singapore can afford to wait for newer and more efficient technologies that may come on stream after 2012.

But a feasibility study by Tokyo Gas Engineering showed that setting up a receiving terminal by 2012 will help Singapore get better pricing for importing LNG.

And industry players say Singapore can capitalise on its position as a mid-point between major energy consumers - like China, Japan and Korea - and suppliers including Australia, Indonesia and the Middle East.

Said Neil McGregor, managing director at Power Seraya, "Singapore is equidistant, so it should be able to get price advantages by being in the middle and be able to utilise natural gas for its own energy production here, namely electricity."

Beyond generating power, industry players say Singapore could well look at trading LNG in the future.(*)