With the generating companies already sopping up most of LNG importer BG Group's franchised volumes, Singapore's incremental gas demand in the near term until 2017 is not expected to be large, says the Energy Market Authority.
For the next few years, new liquefied natural gas demand here is likely to be driven more by industries.
Stating this in background notes to its just-launched consultation on LNG procurement post-BG, the regulator said that the global LNG market is also expected to be tight in the same period (until 2017). And this could limit the number of suppliers able to commit supplies to Singapore.
'Beyond 2018, Singapore's gas demand outlook is stronger and this coincides with a possible loosening of the global LNG market,' it said.
Significant additional supplies are expected between 2012 and 2017 from LNG projects in Australia, Papua New Guinea and Angola. Another potential LNG source will be from US shale gas, it added.
EMA's quest for a new LNG procurement framework comes as BG, its initial aggregator, has almost sold out its franchised volumes. As at Q1, the UK group had already sold 2.65 million tonnes per annum of its franchised 3 million tpa, and expects to hit the latter by 2013 - some five years earlier than anticipated.
Under a three-month consultation exercise launched last Friday, EMA has suggested two procurement models post-BG. They are namely: a government-appointed regulated sole importer (RSI), or BG + 1; and BG + 3. The latter is because operationally, the Singapore LNG terminal, even when fully developed, can at best accommodate up to four large LNG importers.
Due to land constraints on Jurong Island, Singapore is expected to have only one LNG terminal over the course of this decade, EMA stressed, adding however, 'over the long term, Singapore may only have a total of two large LNG import terminals'. That is why it is critical to maximise efficiencies at the first terminal.
Under EMA's proposed BG + 1 model - where EMA will grant a licence to a RSI to purchase LNG on behalf of all end-users - BG could still be allowed to sell more volumes (beyond its earlier franchise) by competing with the RSI under a 'challenge mechanism.'
The latter will allow end-users to obtain offers from other potential suppliers, and if these are considered to be better than that offered by the RSI, the potential supplier will be awarded the contract, the regulator explained.
As for BG + 3, EMA said that it will conduct up to three requests for proposals to appoint the three aggregators, who will be judged on factors like price, financial strength and supply credibility. Together the three will account for 12 million tpa of LNG. Here, BG 'could be allowed to sell more volumes by competing with other buyers', the regular said, adding however, that it welcomes industry feedback on this.
LNG imports are meant to help Singapore diversify its gas supplies. Currently Singapore is reliant on about 7 million tpa of piped natural gas (PNG) imports from Malaysia and Indonesia, but declining gas production and increased domestic gas use in the neighbouring countries will likely impact imports going forward.
While EMA had earlier clamped down on additional, new PNG imports here in order to shore up the Singapore LNG project and get gencos to take up BG's LNG volumes, in March last year it temporarily relaxed some of its PNG import restrictions. This was a 'bridging' measure to help gencos which needed more fuel, with the relaxation effective until the first LNG shipments in May next year.
But given BG's almost sell-out LNG position now, EMA, last Friday said it was also conducting a fresh review, and further relaxation, of the PNG import policy.
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