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1. LNG Overview
Liquefied Natural Gas (LNG) is natural gas that is stored and transported in liquid form at atmospheric pressure and at a temperature of minus 160oC. Like the natural gas that is delivered by pipeline to customers, it consists mainly of methane (CH4). Liquefying natural gas provides a means of moving it over long distances when pipeline transportation is not feasible.
Natural gas is turned into a liquid using a refrigeration process in a liquefaction plant. The unit where LNG is produced is called a train. Liquefying natural gas reduces its volume by a factor of 610. The reduction in volume makes it practical to transport and store the gas.
Generally, LNG is measured in metric tonnes when it is in liquid form and in cubic feet when it is in its gaseous state. In international trade, LNG is transported in specially built tanks in double hulled ships to a receiving terminal, where is it stored in heavily insulated double-walled tanks.
The LNG is then sent to regasifiers which turn the liquid back into gas for distribution via the pipeline system to customers as part of their natural gas supply. The LNG industry has operated worldwide for over 40 years with very few safety related incidents.
Globally, natural gas production and consumption is growing rapidly to fuel power generation assets and to meet industrial, commercial and domestic needs. The scene is characterised by developed economies with well established markets importing piped gas and LNG, developing economies increasing the demand for natural gas, and few countries with large natural gas resources that are becoming economic and possible to develop due to higher natural gas prices.
Annual growth of world gas consumption has averaged about 2.5% between 1996 and 2006. International trade in natural gas continues to grow faster than consumption as a result of continual expansions in both international pipelines and LNG shipments. In 2006, global consumption of natural gas was about 101 trillion cubic feet, while global trade of natural gas (piped and LNG) was 26 trillion cubic feet (or 26% of the global consumption of natural gas). The global trade of LNG alone in 2006 was 7.5 trillion cubic feet i.e. 153 million tonnes and is expected to increase. Currently 29 liquefaction plants, 65 import terminals and almost 200 LNG ships handle this LNG trade.
Global demand for LNG has grown rapidly in recent years, particularly in the Asia Pacific region. This is because natural gas can be used in the gas-fired combined cycle power plants, which are more efficient than the conventional oil-fired steam plants. Secondly, natural gas serves as an alternative fuel source for energy diversification to reduce the dependence on imported oil. Thirdly, for some countries, natural gas is preferred due to environmental considerations. On the supply side, exporting countries such as Australia, Qatar, Russia, Nigeria and others are expanding their liquefaction plants to meet the increasing demand from existing users and new buyers like China and India.
It can be observed that the LNG industry is evolving from domination by regional trades, definite roles in the value chain and long term contracts to an increase in scale, flexibility and scope for global reach and optimisation. There is diversification and broadening of scope by LNG value chain players from their line of business and a drive for increased contract flexibility (including a mixture of short, medium and long term contracts). Global demand and supply of LNG is growing, and there is a high supply potential to Singapore from the surrounding regions.
In Singapore, electricity will increasingly be generated from gas-fired combined cycle power plants. Today, about 80% of Singapore's electricity is generated from natural gas. Currently, natural gas is imported from Malaysia and Indonesia via pipelines. It is expected that Singapore's demand for gas would exceed supply in the future, and as such LNG import is an option to meet future gas demand.
2. LNG Feasibility Study
In January 2005, Energy Market Authority (EMA), the gas and electricity industry regulator in Singapore engaged Tokyo Gas Engineering Co., Ltd (TGE) to undertake a feasibility study in relation to LNG import into Singapore. TGE was supported in this study by the following parties: -
- Sumitomo Mitsui Banking Corporation (SMBC)
- Lovells Lee & Lee (LLL)
- ICF Consulting (ICF)
- Environmental Resource Management(ERM)
- Rotary Engineering Pte Ltd (Rotary)
The study has been completed. It recommended that Singapore develop an LNG terminal of 3 million tons per annum (mtpa) around 2012. The Singapore Government has in August 2006 announced its plan to import LNG to meet future rising demand for energy.
3. Policy on Gas Import Control
Although LNG is competitive, there is a need to reduce investment risks for the LNG terminal investors by giving clear signals that there will be demand for LNG.
As such, the Government has introduced controls on piped natural gas (PNG) imports to allow the build up of LNG demand, until the capacity of the 3mtpa terminal is reached. The Government will consult the industry and review the PNG import control policy when LNG import reaches 3mtpa or in 2018, whichever is earlier.
Gas import control has taken effect from 21 August 2006. Please refer to the information paper on "Policy on Gas Import Control" of 26 December 2006 for details.
4. LNG Receiving Terminal
Location of Proposed LNG Receiving Terminal
A suitable site of about 30ha on the south western part of Jurong Island has been identified for the proposed LNG receiving terminal. Location of the site is shown in the plan enclosed. TGE has assessed that a 3mtpa LNG receiving terminal can be developed at the proposed site, with provisions for expansion to 6mtpa.
Designation of PowerGas as Terminal Developer
The EMA has designated PowerGas Ltd (PowerGas), a wholly owned subsidiary of Singapore Power Ltd, as the developer to own and operate the first LNG receiving terminal. PowerGas is the operator of Singapore gas pipeline transport system, and there are operational synergies to be gained from having the Terminal Developer and Gas Transporter as the same entity.
PowerGas as the LNG terminal operator in Singapore will be regulated by EMA. EMA will issue a Gas Licence for Operation of LNG Terminal to PowerGas under the Gas Act (Cap. 116A).
5. LNG Procurement
An Aggregator would conduct the initial LNG procurement for Singapore. The role of the Aggregator is to aggregate demand for regasified LNG from all end-users of gas in Singapore, and to procure LNG supply for these end-users. The Aggregator will have an exclusive licence to import LNG and sell regasified LNG in Singapore for a demand of up to three million tonnes per annum (mtpa) starting in early 2012.
On 4 September 2007, EMA called a Request for Proposals (RFP) for interested parties to participate in Stage One of the selection process for the LNG Aggregator. A total of 18 proposals involving 22 companies were received when Stage One RFP closed on 4 December 2007. Subsequently 5 companies were shortlisted based on the criteria set out in the Stage One RFP document.
On 18 April 2008, following the conclusion of the Aggregator selection process, BG Asia Pacific Pte Limited (BG) has been appointed to fulfil the role of the LNG Aggregator. BG was selected for the attractiveness of its total solution for Singapore, including security of supply from BG's diverse LNG supply portfolio at a competitive price and also its capability to grow the Singapore gas market.
EMA and BG have entered into a Memorandum of Agreement (MoA) which is a comprehensive contract detailing BG's responsibilities in the role of the Aggregator.
Some of the companies participating in the Aggregator selection process have requested EMA to keep their participation confidential. EMA will therefore not disclose the names of any of the participating companies.
6. Frequently Asked Questions (FAQ)
A FAQ has been prepared to address commonly asked questions regarding the Aggregator, the Terminal and the LNG Project in general. Interested parties may view the document here
7. Key Contacts
The key contact for this project is:
Ms Low Ying Chun
Engineer (LNG Project)
Telephone - (65) 6835 - 8034
Email - low_ying_chun@ema.gov.sg
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