Singapore plans to secure more liquefied natural gas (LNG) for its electricity needs and develop the country as a trading centre for the fuel.
Minister in the Prime Minister's Office and Second Minister for Trade and Industry S. Iswaran announced on Wednesday that the Government will issue a request for proposals (RFP) for the next tranche of LNG imports next year.
About 90 per cent of Singapore's electricity is generated by natural gas now, with the bulk of it piped in from Malaysia and Indonesia under long-term contracts. Fuel oil and other sources such as waste and renewable energy make up the remaining 10 per cent.
Earlier this year, Singapore's first LNG terminal - on Jurong Island - started operations, allowing it to import the gas in liquefied form, as part of plans to diversify its fuel sources for energy security.
The terminal's capacity will expand to nine million tonnes of LNG per year by 2016, from 3.5 million tonnes now. The LNG supply can help meet Singapore's power needs if the piped gas contracts with its neighbours are not renewed.
The Energy Market Authority (EMA) said last year that Singapore imports almost seven million tonnes of piped gas per year from its two neighbours.
In 2008, the Government awarded a franchise to British natural gas company BG Group to import LNG for use in Singapore. The exclusive franchise is for up to three million tonnes of LNG per year or until 2023, whichever is earlier. If BG supplies the maximum three million tonnes a year, the Government can appoint another LNG supplier.
Mr Iswaran said during his keynote address at the Gas Asia Summit at Marina Bay Sands on Wednesday that the RFP next year is likely to be for a smaller LNG supply of between one million tonnes and 1.5 million tonnes per year. The EMA may award up to two licences and will judge the proposals based on factors such as diversity of fuel sources and their ability to help develop an LNG trading hub here.
"What that means is we can look at procuring incremental quantities progressively and run a competitive process to supply the local market," he said.
He added that the EMA is studying how to allocate space within the LNG terminal for spot imports - which are immediate imports that are not part of a long-term contract - and other ancillary services. "The terminal gives Singapore an opportunity to play a greater role in the region by supporting LNG trade and providing (the) services," he said.
As the BG Group has already sold about 2.7 million tonnes a year under the contract, the EMA intends to lift its temporary ban on new piped gas imports when BG sells the maximum three million tonnes or in 2018, whichever comes first.
Said Mr Iswaran: "We had the moratorium in order to ensure that the LNG market is able to develop.
"As we go forward, we should open up the market to different sources of gas in order to ensure the most competitive sources are able to supply to Singapore."
Get a copy of The Straits Times or go to straitstimes.com for more stories.