EMA's Chief Executive Chee Hong Tat, seated on right, says the LNG market is likely to tighten. (Photo credit: Energy Market Authority)
March 26, 2012--THE LNG market is likely to tighten in the coming years, as strong demand from Asia's growing economies outstrips short-term supply, said the Chief Executive of Singapore's Energy Market Authority, Mr Chee Hong Tat, earlier this month.
Speaking at the annual LNG Supplies for Asian Markets conference held in Singapore, Mr Chee pointed to China and India's rising LNG demand alongside Japan's increased LNG imports, a by-product of the Fukushima nuclear power plant disaster last March. For the rest of last year, Japan's LNG imports shot up 12 percent by volume as the country ramped up its gas-fired power generation.
However, there was some positive news ahead for LNG buyers from the supply front, noted Mr Chee.
LNG supply is expected to expand after 2016 due to a variety of factors.Australia, for one, has ongoing projects which are set to add about 33 million tonnes per annum (Mtpa) of LNG to the current supply from 2016.
Increasingly, LNG cargoes initially meant for the United States have also been diverted to Asia and Europe--in line with unconventional gas discoveries in the US that have turned it into a major exporter, instead of a net importer, of gas.
In parallel, he added that other regions in the world including China, Australia and Europe could tap on their unconventional gas reserves. Some analysts, he said, had even predicted that China's unconventional gas output could hit 1.3Mtpa in 2015, and 21.9Mtpa in 2020.
He cited another interesting development--floating LNG production, where offshore gas fields could be accessed at a lower cost and a smaller environmental footprint. Some industry players like Shell have already invested in this development. Mentioning Shell's Prelude Floating LNG (FLNG) project in Australia, Mr Chee added: "The success of FLNG could bring even more LNG supply projects online, and open up more supplies and choices for LNG buyers."
EMA's CE then turned to Singapore's own LNG terminal project, which will be part of Singapore's diversification strategy to ensure energy security for the city-state. Built at a cost of about S$1.7 billion, the terminal is more than 80 percent complete and is scheduled to commence operations in the second quarter of next year.
BG Singapore Gas Marketing, the current LNG aggregator, has already sold close to 90 percent of its 3Mtpa franchise to buyers and EMA is actively studying alternative ways of procuring LNG for Singapore.
Mr Chee said a three-month-long public consultation exercise on possible LNG import frameworks would be launched later in March on EMA's corporate Web site. He invited audiences at the event to offer their feedback.