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Singapore awards LNG import licences to meet future demand



* Pavilion Gas, Shell win Singapore LNG import licences

* Importers offer shorter term contracts, alternate indices

* Immediate rise in LNG demand unlikely – traders (Updates story with Shell’s comments, details)

screen-shot-2016-10-20-at-23-00-27By Mark Tay: SINGAPORE, Oct 24

Pavilion Gas and Shell Eastern Petroleum have been appointed as importers of liquefied natural gas (LNG) into Singapore, the trade minister said on Monday, as the city-state gears up to take more LNG.

Singapore, which relies almost exclusively on gas for electricity generation, currently takes the bulk of its gas via pipelines from Malaysia and Indonesia but is expected to boost LNG shipments in coming years.

The two firms beat Sembcorp Industries for the contracts to supply Singapore with 1 million tonnes per annum (mtpa) of LNG, offering buyers shorter term contracts and alternate indices like pricing against U.S. Henry Hub prices and Singapore Exchange’s SLiNG contract.

The exclusive franchises will last for three years, or once the firms reach imports of 1 mtpa, depending on which comes first.

Singapore plans to allow other firms to import and sell non-term contracted LNG cargoes on a case-by-case basis, and it is also considering new imports of piped natural gas, trade minister S. Iswaran said at Singapore’s International Energy Week (SIEW).

Singapore’s gas imports reached 10.36 million tonnes of oil equivalent (toe) in 2015, according to EMA data, with 7.78 million toe delivered via pipeline from Malaysia and Indonesia, and 2.58 million toe LNG imports.

Pavilion Gas, a unit of privately held Singapore-based Pavilion Energy Pte Ltd, and Shell Eastern Petroleum, a unit of Royal Dutch Shell, join BG Singapore Gas Marketing as approved LNG importers. BG Singapore is now a part of Shell after the two firms merged this year.

“This appointment adds to Shell’s existing import position which commenced in May 2013 and connected Singapore to the global LNG market,” said Shell’s integrated gas and new energies director, Maarten Wetselaar.

BG Singapore was the first company to import LNG into Singapore in April 2008. The contract allows the firm to supply all end-users in Singapore with up to 3 mtpa of LNG or until 2023, whichever is earlier.

Natural gas accounted for 95.3 percent of the city-state’s fuel mix for electricity generation last year, rising to 95.5 percent in the first three months of this year, EMA data shows.

Because most imports come via pipeline, the new LNG import licences are unlikely to lead to a jump in LNG demand in the short-term, but its LNG import demand is expected to rise once pipeline contracts with Malaysia and Indonesia expire in the early 2020s.

Separately, Iswaran said Singapore has joined the International Energy Agency (IEA) as an association country, part of the IEA’s plan to expand its reach to emerging economies.

Singapore is the fourth country to join the IEA under the association country initiative after China, Indonesia and Thailand last November.

(Reporting by Mark Tay; Editing by Richard Pullin)


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