Singapore playing leading role in LNG Industry Minister

SINGAPORE - The development of liquefied a natural gas trading market in Singapore is gathering pace on the back of LNG infrastructure construction. The aim is not only to improve energy security for the resource-poor city-state, but also to develop a viable LNG trading market. This is one of the key issues the country's Minister for Trade and Industry S Iswaran spoke about in a recent interview with Nikkei Asian Review in the run-up to Singapore International Energy Week.

Q: Singapore is aiming to be the region's LNG hub. How successful has the journey been so far, and what is the plan going forward? ;

A: We want to play a useful role [for the region]. Our starting position [of LNG market development] was meeting our needs, but clearly there is a need in immediate neighbors in Southeast Asia and other Asian countries. So far all the indicators are gathering momentum. We have 30-odd companies in gas trading -- all the major players are here. If LNG bunkering [a service that Singapore is planning to build up] takes off, it will add another level of momentum. For Asia as a net energy consumer and big consumer of LNG, it is essential that we have mechanisms that allow better price discovery for consumers. The difference between Asian gas prices and European or American gas prices is well known. Anything that allows for greater transparency and therefore better decision-making for gas buyers will make a big difference.

Gas is 95% of the electricity generation source in Singapore. To diversify the energy source, for energy security, we are moving from piped gas to LNG. We only started LNG terminal in 2013 but we have been investing in it and, by the end of this year, we should have a throughput capacity of 11 million tons per annum. We are building a fourth LNG tank, to be ready by the end of 2018. In our current site, we have the potential to build up to seven tanks. Prime Minister [Lee Hsien Loong] indicated that we will build the second LNG terminal. We design our [LNG] infrastructure in a way that allows for gas to be brought in, have it break-bulk and be redistributed [for re-export]. It is important because in Southeast Asia today, smaller energy projects are becoming important. In archipelagic geography, the needs may be a lot smaller in certain locations [than currently handled].

Q: On the sustainability aspect, Singapore has ratified the Paris Agreement on green gas emissions mitigation. What does this mean for Singapore's energy policy? ;

A: We've committed to reduce our energy intensity emissions per GDP dollar by 36% from 2005 levels by 2030. We also indicated that we want to stabilize our greenhouse gas emissions and peak around 2030 as well. We are embarking on a series of measures. Singapore is constrained. When we think about energy policy, it is within a context of small economy with limited options in terms of alternative energy, and without any of its own indigenous energy sources. We have to focus on energy security and market competitiveness as well. [As a part of diversification to ensure energy security, we are moving to] alternatives, and solar are probably the most viable sources for us. Today we have a solar power capability of 100 megawatt peak (MWp) installed. We are hoping to increase it to 300 or 350 MWp by the end of this decade, which is about 5% of our peak load consumption. It also helps our sustainability.

Q: How do you plan to achieve the solar power generation target? ;

A: We do not have any subsidy for solar consumption. This is to keep the price signals to consumers clean, because solar has its own associated costs. On the supply side, we support research and development to improve the efficiency, and also to remove any regulatory barriers. [On the demand side,] we aggregate the demand starting with the public sector, because once there is a scale, it makes a project more viable. The rooftops of [state-owned] industrial properties are a very good [place] for solar power generation, and the same for [public] housing projects and schools. The Economic Development Board aggregates it and invites proposals. More of is happening in the private sector too. Apple's Singapore business, with local solar company Sunseap, [has its power generated] entirely by solar. All of these were done without any subsidy. The market can work. These will continue [to achieve the target].

Q: Will Singapore offer business opportunities with liberalization in the energy sector? ;

A: We make sure that the energy market remains competitive. We have progressively liberalized it so that more and more consumers can deal directly with the electricity retailers [starting from the large-volume power accounts such as industry users]. We have been bringing the threshold down, and now 30,000 to 35,000 accounts are eligible, accounting for 80-85% of [electricity] consumption. We plan to [bring] our electricity market full retail contestability, so every household can choose who to buy it from and on what contract, by the end of the second half of 2018. That creates a competitive market. That's partly about energy security but also about economic competitiveness by having a market structure that is competitive and allows consumers to have choice and flexibility and allows multiple suppliers to come into the market.

Q: One of the biggest problems in the global energy market is the volatility of oil prices. How does the industry deal with it?

A: Singapore is a price taker and we have to adjust to it. The lower oil price in general, for many sectors where energy is an input and a cost, is beneficial. In Singapore, the oil and gas sector or offshore and marine sector, which has developed a great deal of capability especially in deep-water oil projects, is adversely affected by lower oil prices. That's the sector that now has to adjust to a new reality. It is an important signal for them to prepare themselves for the different energy environment in the future, because with the Paris Agreement, the emphasis is going to shift more towards less carbon intensive sources of energy.

By : Nikkei Asian Review