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Singapore has taken two major steps towards realising its S$1 billion (US$654 million) maiden liquefied natural gas import project, which it is aiming to have operational by early 2012, writes Amanda Battersby.
Singapore’s Energy Market Authority (EMA) has appointed Singapore Power subsidiary PowerGas to build and operate the LNG plant and PowerGas will be inviting bids for a partner or partners, most likely minority ones, to join it.
“To ensure the success of the LNG terminal, we also welcome industry players with the relevant commercial and technical expertise to partner PowerGas to jointly develop and operate the terminal,” Minister of State for Trade & Industry S Iswaran told the LNGA 2007 conference organised by Conference Connection.
The EMA is also moving forward with plans to appoint an “aggregator” within six months to source LNG for project. The authority this week launched the first of its two-stage request for proposals that will lead to the selection of the aggregator, which could be a single company or consortium. Singaporean and foreign companies are invited to apply by 4 December.
“We will then draw up a shortlist of proposals that are the most compelling from Singapore’s point of view,” he said, adding that he saw no reason why the aggregator could not have a small equity stake in the terminal.
Details of the second stage of the request for proposals are expected to be announced in early January. The aggregator will be given exclusive licence to import LNG into Singapore up to a maximum of 3 million tonnes per annum — or the full phase one capacity — and to sell regasified volumes.
The terminal’s 30-hectare site allows for expansion to 6 million tpa and Iswaran added that proposals from potential terminal partners outlining such an expansion would be welcome. Singapore is looking to initially import 1 million tpa in 2012 and envisages ramping up purchases to 3 million tpa over the next five years.
The aggregator would also assess gas demand and enable the appropriate trading mechanisms for LNG to be arbitraged against pipeline natural gas and vice versa. In May, the government introduced a special 5% tax rate for a decade on income from LNG trading as part of its plans to make the Lion City a trading hub.
At present, Singapore receives pipeline gas from neighbours Malaysia and Indonesia via sales contracts linked to the price of high sulphur fuel oil.
The LNG import terminal will be built on the south-western part of Jurong Island, which is home to refineries and petrochemical plans. Site works are expected to be ready by the end of next year, with construction to start in 2009.
The engineering, procurement and construction contract for the import terminal will be competitively tendered by PowerGas, said Iswaran.
The current estimated cost for the LNG receiving and regasification facility is in the S$1 billion ballpark, he said.