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Singapore aims to become a regional LNG trading hub

Natural Gas

Singapore’s government has promoted the use of natural gas over the past several years. Singapore’s natural gas consumption increased from 230 billion cubic feet (Bcf) in 2005 to 400 Bcf in 2015, according to BP Statistical Review of World Energy. Over the same period, the share of natural gas in Singapore’s electricity generation fuel mix increased significantly from 74% to 95% as many gas-fired generators have replaced the use of oil-fired generators.

The government intends to rely exclusively on liquefied natural gas (LNG) imports by 2024, following the expiration of several gas pipeline import contracts. Until Singapore commenced its first LNG regasification terminal in 2013, Malaysia and Indonesia supplied all of Singapore’s natural gas demand via pipelines. Singapore’s sole LNG receiving terminal at Jurong Island currently has a capacity of 292 Bcf, and is expected to expand to at least 535 Bcf by 2018. The terminal has the potential for a capacity of 730 Bcf with the use as many as seven tanks. LNG imports are expected to diversify Singapore’s import sources.

Singapore aims to become a regional LNG trading hub and has created an index to perform spot pricing for LNG. Singapore’s only LNG regasification terminal has facilities with the ability to transfer LNG from ocean liners to smaller vessels, which can access more regional terminals. The terminal also has storage and reloading capabilities, so LNG can be unloaded, temporarily stored, and eventually delivered to its final destination. However, Singapore’s small infrastructure compared to that of other Asian importing LNG countries could challenge its becoming a major LNG trading hub.

Singapore is also looking to supply LNG bunker fuel to vessels by early 2017. The Maritime and Port Authority (MPA) of Singapore is funding the construction of six LNG-fuelled vessels. Also, the MPA is attempting to create national and international standards and procedures for LNG.

MPA in December last year injected another S$12 million to boost Liquefied Natural Gas (LNG) bunkering in the Port of Singapore.

Half of this S$12 million has been set aside to co-fund the building of new LNG bunker vessels (LBVs) to facilitate the development of ship-to-ship LNG bunkering in the Port of Singapore. The remaining half will be used to top up MPA’s existing co-funding programme to support the building of LNG-fuelled vessels. Launched in 2015, the initial funding for this programme has been fully utilised to support Keppel SMIT Towage Pte Ltd, Maju Maritime Pte Ltd, Harley Marine Asia Pte Ltd, Sinanju Tankers Pte Ltd, and most recently, PSA Marine (Pte) Ltd.

About 95 per cent of Singapore’s electricity is generated using natural gas. Global expenditure on LNG is projected to exceed US$280 million by 2021 while global offshore wind market is expected to surge past US$130 billion by 2023. Leading yard groups KOM and SembMarine have already ventured into the LNG segment, with KOM having delivered the world’s first converted floating liquefaction vessel, the Hilli Episeyo, last year.

Mr Andrew Tan, Chief Executive of MPA, said, “With the implementation of the International Maritime Organization’s (IMO) 0.5 per cent global sulphur cap on 1 January 2020, LNG is a viable and tested solution for shipowners. As the world’s largest bunkering hub, MPA will support future demand by promoting the development of ship-to-ship LNG bunkering in the Port of Singapore. This will provide the industry greater confidence in the availability of LNG supply across key shipping routes.”

Applications for the new fund for the building of LBVs are now open and MPA is inviting interested companies to tap on it to co-fund up to S$3 million per LBV. To apply, companies must be incorporated in Singapore, and the funded vessels must be registered with the Singapore Registry of Ships and licensed for bunkering activity in the Port of Singapore for a period of at least five years. Applicants must also submit their business plan for the proposed LBV, including working with MPA’s existing LNG bunker supply licensees, where applicable. Applications will close on 31 March 2018.

Read the full publication in our Petromin Marine & Offshore May-June-2018-issue

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