Singapore’s strategic location could position it as Asia Pacific’s LNG hub

The current global demand for liquefied natural gas (LNG) sits at 250 million tons a year but it is expected to rise up to 400 million tons a year within the next decade or two. This creates advantageous opportunities for strategic locations like Singapore. The city-state is already positioning itself to become Asia Pacific’s LNG hub as the demand for the energy source increases.

At a recent roundtable held in Singapore, Saad Rahim, chief economist of Dutch-based commodity trader Trafigura, said that natural gas is a more reliable electricity source as it is not affected by weather patterns like solar or wind energy. It also has significantly less greenhouse gas emissions compared to coal and other fossil fuel plants.

Organized by International Enterprise Singapore, the roundtable heard that Singapore LNG Corporation has been building up its infrastructure to seize opportunities in the Asia Pacific, which accounts for 70% of global gas demand.

Singapore LNG chief executive John Ng said the terminal on Jurong Island, which houses three LNG tanks with a total storage capacity of 540,000 cu m, can be expanded to seven tanks with a total capacity of 800,000 cu m.

He also added that they are studying the possibility of introducing new services like storage and export, LNG trucking, and nitrogen blending of regasified LNG. “We plan to construct a pilot truck-loading facility by the end of this year to start the service by next year. Business opportunities include break bulking and LNG bunkering to meet regional demand,” he said.

Ng also noted that Singapore’s location near the growing demand centers of East Asia and suppliers in the Middle East, Southeast Asia and Australia creates a strategic advantage.

Tokyo Gas Asia, which has offices in Singapore, Malaysia, Indonesia, Vietnam and Thailand, is equally bullish about the prospects for the LNG sector. Managing director Nobuhisa Kobayashi said at the roundtable: “Tokyo Gas is going to cultivate the natural gas market in South-east Asia. There is a lot of potential in this region for LNG.”

According to James Laybourn, regional floating systems manager of Norwegian consultancy DNV GL, the geography of countries like Indonesia and the Philippines, being made up of many islands, offers opportunities for small-scale LNG projects. There can be potential for floating storage regasification units, which can be located on barges, to supply power stations, he said.

“Singapore’s ambitions to be Asia’s regional LNG hub will most likely see it establishing bunkering facilities,” added.

Peh Lam Hoh, founder and managing director of Sing Swee Bee Group, a key provider of storage services, plans to increase its pool of 300 LNG tanks by the end of the year in anticipation of demand.

The firm owns the largest number of such storage tanks in the Asia Pacific, which cost US$120,000 (S$164,000) to US$150,000 each. They are leased to industrial gas producers in the Asia-Pacific and Africa.

“The current depressed oil price will not be lasting. It will be more expensive within the next three to five years and this will make LNG a cheaper alternative for the energy requirements of our clients,”Peh said.

The roundtable was also attended by Total’s head of global LNG trading Patrick Dugas; ExxonMobil vice-president of LNG marketing Stephan Roeper; and moderator Chris Graham, Wood Mackenzie’s head of primary fuels research for the Asia- Pacific.