SINGAPORE – The liquified natural gas (LNG) market remains tight but Singapore’s long-term contracts with reliable suppliers should ensure there are no shortages, noted a leading energy sector executive.
Mr Steve Hill, executive vice-president of Shell Energy, a unit of Shell, said: “Singapore is obviously very dependent on natural gas and LNG within that for its electricity supply and its electricity reliability.”
But its term contracts mean it does not face the uncertainty over supply that affects countries which depend on purchases from the spot market, he added.
“Whatever the situation in the global LNG market is, Singapore should rest assured that it will receive the LNG cargoes because you have contractual commitments that ensure their delivery from reliable suppliers,” Mr Hill told the media on the sidelines of the Gastech 2023 conference at the Singapore Expo on Wednesday.
The four-day event, one of the world’s largest conferences for the LNG, low-carbon solution and climate technology industries, started on Tuesday and is hosting about 4,000 delegates.
About 95 per cent of Singapore’s power generation is fuelled by natural gas, mostly piped from Malaysia and Indonesia, but an increasing amount is now being shipped in liquefied form from as far away as the United States, Qatar and Australia.
Piped and LNG prices went on a roller-coaster ride last year after Russia’s invasion of Ukraine. Record-high prices stoked worries about fuel supply security as European buyers replaced Russian-piped supplies with LNG.
Many countries in Asia, where demand for LNG has grown sharply in recent years, have since signed long-term deals to avoid future shortages.
But Mr Hill said some countries in Asia are still very dependent on the spot market, where prices can rise more sharply in case of supply disruptions.
Singapore, which has been investing in a strong LNG ecosystem, now has the potential to become a leading bunkering hub in Asia as the demand for cleaner marine fuels picks up, he added.
There are 60 LNG traders here, including the world’s top 10 operators.
About US$240 billion (S$327 billion) worth of LNG trade flowed through Singapore last year – equivalent in value to about 50 per cent of the country’s gross domestic product.
Singapore’s LNG terminal, operated by SLNG Corporation, began operations in 2013 with a throughput capacity of 3.5 million tonnes per annum but can now handle up to 9.6 mtpa.
“As ships switch from oil, they will need to bunker cleaner fuels. And because Singapore has the LNG infrastructure, and it’s a shipping and LNG trading hub, it’s a logical location to become an LNG bunkering hub too,” said Mr Hill.
He added that the global LNG market remains tight even as prices have eased from the record highs of 2022.
“The sentiment in the market today is clearly a lot better than this time last year.
“Prices are much lower, there’s more comfort in the market, but we potentially still have quite a fragile set of market conditions,” Mr Hill noted.
