SINGAPORE, Sept 4 (Reuters) - Singapore expects to import 1 million tonnes per year (tpy) of liquefied natural gas (LNG) by 2012, below its planned terminal's annual capacity of 3 million tonnes, a government official said on Tuesday.

The terminal is likely to increase imports to 3 million tpy within the following five years, to meet demand seen rising to that level by 2018, S. Iswaran, Minister of State for Trade and Industry, told an LNG conference.

He said Singapore expected to choose LNG suppliers for its planned import terminal by the second quarter of next year, though he did not give details of potential suppliers. Singapore has said previously it sees stable Australia as the preferred supplier.

The lower-than-expected demand from Singapore may be disappointing for marketers such as Woodside Petroleum Ltd and U.S. major Chevron Corp , though global demand for the clean fuel is expected to grow strongly.

Other potential suppliers are Qatar and Iran.

Singapore decided last year to go ahead with LNG imports to meet future energy demand and ease its dependence on piped gas from Indonesia and Malaysia. Some analysts have said the terminal is more for security of supplies than commercial purposes.

Iswaran said PowerGas Ltd, a gas transporting firm and subsidiary of domestic grid operator Singapore Power, will build and operate the terminal, which is expected to start by early 2012 and cost around S$1 billion ($657 million).

Construction of the terminal will start in 2009 on reclaimed land on the city-state's oil and petrochemical hub Jurong Island, PowerGas said in a statement.

Capacity could be lifted to more than 10 million tpy by the 2020s, if there is enough demand in a growing market for trading cargoes of spot LNG, since there is space for more tanks at the site, said an official at Singapore's Energy Market Authority.