Singapore government to steer Jurong terminal to 2013 start date
Singapore’s government will take over the ownership and development of the country’s first LNG-receiving terminal to ensure the completion and operation of the 3 million tonnes per annum (mtpa) facility by 2013, senior minister for trade and industry S Iswaran said on Tuesday.
Singapore LNG, a newly set-up company under the ministry’s Energy Market Authority (EMA), will take over the project from the existing consortium of Singapore Power subsidiary PowerGas (70%) and energy group GDF SUEZ (30%).
“Financial markets are less hospitable and financing is more difficult and costly. It has therefore become significantly more challenging for PowerGas to proceed with this project on a commercial basis as originally intended,” the senior government official told delegates at the Next Generation LNG conference in Singapore.
The minister also highlighted the uncertain LNG demand and potentially low terminal utilisation rate as challenges for the terminal in the backdrop of the global economic recession and decreased energy consumption.
The project, which will cost Singapore dollars 1bn–1.5bn ($690m-1.35bn), was originally stated for completion in 2012.
The LNG-receiving terminal is part of Singapore’s long-term strategy to diversify the country’s energy sources and increase its energy security to ensure reliable energy supplies for household and industrial usage, he told reporters at the sidelines of the conference.
The country’s government hopes to develop the terminal “at the earliest opportunity” in order to cater to an anticipated surge in gas demand and position itself to tap on future regional trading opportunities when the economy picks up in the coming years, Iswaran added.
UK-based BG Group won a 20-year aggregator role to supply up to 3mtpa to the terminal in April 2008, after a competitive tender held by the EMA.
Singapore currently buys its gas by pipeline from Malaysia and Indonesia at rates close to heating value parity with fuel oil, regional trading sources said. These contracts are due for renewal in 2014 and 2017.
By contrast, BG is due to supply the terminal at a Brent-indexed “slope” of 14.65–14.85 plus an unknown fixed component, ICIS Heren understands.
“In one sense, this development simply reflects the control of the project simply moving from a quasi-government body [PowerGas] to the government – as well as GDF SUEZ losing their role,” a source with knowledge of the region told ICIS Heren.
“The government’s involvement is probably an acceptance of the fact that it would have had to have given guarantees anyway for the financing. PowerGas is unlikely to have secured financing on those terms on its own balance sheet,” the source added.
The facility, to be constructed on reclaimed land at Jurong Island, has the potential ability to expand its capacity to 6mtpa.
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