Study says Singapore's LNG demand may start in 2012

Japan-based engineering firm Tokyo Gas Engineering Co Ltd (TGE) projected that liquefied natural gas (LNG) demand in Singapore could commence from 2012 with the phasing in of new generating capacity and a switching to LNG from piped natural gas (PNG) by certain generation companies (gencos) in the country.

In a Consultation Paper released by Singapore?s Energy Market Authority (EMA), TGE said based on a low case scenario, LNG demand in the country is expected to reach 1.43 million tons per annum (mtpa) in 2015.

?In addition, post 2023, when the current PNG contracts expire, there could be some switching of supply from PNG to LNG by gencos currently contracted with West Natuna or Sumatra gas, particularly if PNG reserves are not adequate to continue supplies,? TGE said.

According to the paper, the West Natuna gas-fields will start depleting by 2016 while the Sumatra reserves may be insufficient post 2030.

?Indonesia?s long-run economic development will impose limitations on the volume of natural gas exported, potentially resulting in diversion of supply from its Sumatra gas fields to meet its own domestic requirements,? TGE said.

EMA has appointed TGE to undertake a feasibility study on the import of LNG as an option to further diversify sources of natural gas, which is currently piped in from sources in Indonesia and Malaysia.

Currently, over 70 percent of the electricity in Singapore is generated using natural gas. PNG currently supplied to Singapore is 90 percent indexed to crude oil prices.

TGE said LNG is estimated to be competitive relative to PNG in Singapore at oil prices above US$30/barrel.

TGE recommends an LNG terminal with capacity of 6 mtpa with an operational stockpile of 7 days ? this will cover 3 days of natural gas consumption to simultaneously cater to a disruption in PNG supply in addition to the normal LNG demand.

?Taking into consideration the demand for LNG from gencos, back-tip supply of LNG and PNG disruption scenarios, a LNG terminal with an initial capacity of 3 mtpa is proposed,? TGE said. (robert)

Editor's note: EMA?s Consultation Paper can be downloaded at http://www.ema.gov.sg/doc/consultation_paper6.pdf