Singapore to build first LNG terminal to diversify energy sources

Singapore will build its first liquefied natural gas (LNG) terminal to diversify the city-state's energy sources following the completion of a feasibility study. The LNG terminal will have an annual capacity of three million tonnes (3.3 million tons) and is expected to be operational in 2012, Minister for Trade and Industry Lim Hng Kiang said. "We need to diversify our energy sources in order to ensure that we are not over-reliant on a single source for our energy needs," he said.

Singapore announced two years ago it was considering an LNG terminal to meet its long-term power needs. Singapore has virtually no natural resources and relies on neighbours, Malaysia and Indonesia, for its gas needs with the fuel transported via pipelines.

business-times.asia1.com.sg :

Singapore has decided to go ahead with liquefied natural gas (LNG) imports to meet future energy demand and ease its dependence on piped supplies from Indonesia and Malaysia. A study prepared by Tokyo Gas Engineering Co commissioned by the EMA has recommended that Singapore build a LNG terminal to receive 3 million tonnes per year by 2012 to meet power demand that is growing at more than 4% cent a year.

Singapore has long sought to diversify its gas supplies, all of which come via three pipelines from Indonesia and Malaysia to fuel 80% of the island's power generation.

- The astute reader might note that complementing PNG (piped natural gas) with LNG (liquefied natural gas) is not that much of a diversification. The path of least resistance? Most probably - since you don't need to replace the existing power generation plants. Diversification? Only somewhat. Safety will obviously be an issue. We will still have to contend with resource depletion - we can run away from local depletion in Malaysia and Indonesia but we can't run away from global depletion. The gamble is that the global depletion arrives slightly later than the local depletion.

LNG is the same fossil fuel, just more expensive, due to the need to : 1. freeze it before shipping 2. ship it over great distances, and 3. un-freeze it before use. Being in the billion-dollar range, the LNG terminal wouldn't come cheap either.

Talking about costs, LNG is going to be freely traded just like crude oil is today. Why do you think Qatar is setting up an energy trading exchange? The natural gas will, quite naturally, go to the highest bidders. What is quite certain is, at the end point (the meter outside your house), it is not going to get any cheaper. There is nothing cheap about LNG. It is an interim measure while society considers other solutions.

The other alternatives for base-load power - nuclear, coal, geothermal, ocean tidal and thermal - are just as fraught with all kinds of environmental, political and technical risks. You all know the score for wind and solar - these are good sources but intermittent and therefore not suitable for base-load.

The Singapore government deserves credit for pushing ahead with the LNG initiative, though it is hardly an original idea - many consuming countries are also setting up LNG terminals. The governments of the world had better look elsewhere too in the meantime - while there is still time.

Oil demand to remain high

business-times.asia1.com.sg :

Chinese and Indian demand for crude oil and other commodities may continue apace, bolstering high prices even as the countries take steps to ease economic expansion, Merrill Lynch said in a report. China's economy surged 11.3% in the second quarter and the country will need 4.8 % more crude next year. India's economy expanded 8.4% over the last fiscal year and is 'soaking up any spare LNG cargoes in the Asian region'.

Rising incomes have led to a jump in China's demand for oil products. Vehicle ownership jumped to 3.9 per 100 urban households in the first quarter, compared to 2.2 at the end of 2004. India's growth has led to an average annual increase in coal demand of 4.7% over the last five years, while oil demand has increased 1.8% each year over the same period. 'These major shifts in energy demand levels suggest that hydrocarbon prices will likely remain well-supported next year,' Merrill said.

(2006-08-08 13:16:56 SGT) [Energy] Permalink

Abu Dhabi plans tax-free zone for energy industry

business-times.asia1.com.sg :

The emirate of Abu Dhabi in the UAE has announced a US$1.09 billion Oil & Gas City - a tax-free zone for the energy industry - which will be ready by the end of next year. Features to be offered include the issuing of work visa in 24 hours, providing utilities under a single window and free repatriation of capital, according to Norman Johnston, CEO of the Higher Corporation for Specialised Economic Zones (ZonesCorp).

In March, neighbouring Qatar announced a regional hub for the energy sector - the US$2.6 billion Energy City Qatar (ECQ) and the International Mercantile Exchange (Imex), the 'first dedicated energy trading platform'. The Energy City Qatar is part of the major new city development, Lusail, which in addition to major business and entertainment districts, will be home to up to 200,000 residents.

In the UAE, Dubai has already announced the launch of Dubai Mercantile Exchange (DME), for which construction on the two-storey 500 sq m trading floor and office space started earlier this month in the Dubai International Financial Centre premises.