Regional LNG: Singapore to commence FS for LNG receiving terminal

Tiny island state Singapore is moving one step further to realize the development of LNG receiving terminal by commissioning feasibility study, Strait Times reported Monday.

The Ministry of Trade and Industry (MTI) via The Energy Market Authority said the tender for the study will be out 'in the next one to two months'.

This is the first tentative step forward since the idea was first raised two years ago. If the green light is given, industry sources estimate the project to cost about US$500 million and take up to five years to complete.

?This will be a project to position ourselves to meet Singapore's long-term energy needs. Because of developments in the LNG market globally, there may be opportunities to tap LNG to meet future growth in energy demand and create new economic activities from managing the LNG business,? the report quoted MTI spokesperson.

Industry sources expect the Japanese to bid aggressively for the study. Corporations such as Nissho Iwai and Itochu have done similar consultancy work in other countries.

Oil companies and consultants said an LNG terminal will secure the supply of what is forecast to be Singapore's chief fuel in the coming decades. It can also position Singapore as an energy trading centre, an objective discussed at length by the Economic Review Committee in 2002.

The feasibility study will, among others, identify at least two sites for a terminal and forecast Singapore's gas demand up to 2030.

Its terms and conditions also state that the design should be flexible enough to meet future demand and responsive enough to address 'catastrophic failure in the supply of piped natural gas'.

However it turns out, industry players do not believe the terminal will eclipse the current piped supplies of natural gas from Indonesia and Malaysia. They can co-exist, said experts.

Besides, the recent gas supply disruption, which caused a blackout in the western part of Singapore, showed a need for backup supply, they added.

Said a Singapore Petroleum Company spokesman: 'Gas delivery via pipelines and LNG are not mutually exclusive.'

But the new venture has caught the eye of the oil giants.

ExxonMobil, for instance, has LNG joint ventures with a combined gross capacity of 22 million tonnes per year - nearly 20 per cent of the global industry capacity - making it a leading LNG supplier.

BP, which is involved in the building of China's first LNG terminal in Guangdong, is keeping an open mind about doing the same here.

Its president in Singapore, Wu Shen Kong, said: ?BP is prepared to look at it pending the outcome of the study.?

But critics of the project said Singapore's gas is not competitively priced. And liquefaction will further add to its cost.

The long lead-time and heavy investment outlay also make it risky. Said an energy consultant: ?An LNG infrastructure is insurance against supply hiccups. But if there is no hiccup, it becomes a very expensive white elephant.?(*)