The small city-state of Singapore is on the verge to become Asia’s new trading hub for liquefied natural gas, and this will be crucial for Qatar’s LNG trade in the immediate future. As part of the expansion of its brand new LNG terminal, Singapore now aims to increase liquefied natural gas imports and plans to award import licences to as many as two suppliers and almost triple the amount of gas it can receive over the next three years.
Currently, the $1.7bn terminal has two big storage facilities. A third tank at the terminal is slated for completion by the end of 2013, increasing the terminal’s capacity to 6mn tonnes a year. The government also plans for a fourth tank and associated regasification facilities by 2016, which will raise capacity to 9mn tonnes a year. This will naturally lead to a good response from potential LNG players, first of all Qatar. There is also the possibility of co-investments in LNG terminals and infrastructure in Singapore and beyond, as there is a lack of interconnected natural gas pipeline infrastructure all over Southeast Asia.
Unsurprisingly, Qatargas CEO Khalid bin Khalifa al-Thani praised the new opportunities in the region when he held the keynote speech at the Singapore International Energy Week held from October 28 to November 1 in the city-state. He mentioned that in 2012, Asia imported an additional 15.6mn tonnes of LNG over the 2011 figure, which represents a year-on-year increase of 10%. As a consequence of its nuclear reactors shutdown, Japan alone represented over 50% of the Asian LNG consumption growth with imports reaching 87.5mn tonnes in 2012. Southeast Asian LNG demand is expected to be well over 40mn tonnes per annum by 2025 and will account for 13% of the total demand in Asia-Pacific. Several factors are driving this increasing LNG demand, including the region’s continued strong economic growth, the need for diversified gas supplies and the need to offset declining legacy and remote gas supply sources.
The region has already overtaken Europe as the world’s biggest gas importer, now accounting for 46% of global trade, according to the International Energy Agency, which identifies Singapore as being best-placed to become the centre for trading LNG, with Qatar as its natural partner.
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Our columnist Dr Arno Maierbrugger is Editor-in-Chief of www.investvine.com, a news portal owned by Inside Investor focusing on Southeast Asian economic topics as well as trade and investment relations between Asean and the GCC. The views expressed are his own.