BG wins Singapore LNG contract

Singapore: BG Group Plc won an exclusive 20-year contract to supply Singapore's planned liquefied natural gas (LNG) terminal yesterday, giving one of the world's most active LNG traders a long-term outlet in Asia.

"BG offers firm supply at competitive prices from its global portfolio from Egypt, Trinidad & Tobago and future Australian supply," Khoo Chin Hean, Chief Executive of the Singapore regulator Energy Market Authority (EMA), told a news conference.

"BG will have an exclusive licence to import LNG and sell regassified LNG in Singapore for a demand of up to three million tonnes per annum (tpa) starting in early 2012," Khoo said.

The contract will be for up to 20 years.

Martin Houston, Managing Director of global LNG for BG said the supplies from Australia would come from the Queensland LNG project, which will come online by 2013.

"Recently we announced an alliance with Queensland Gas Co to develop a liquefaction plant in eastern Australia and once onstream, LNG from that plant would provide a viable economic source of supply to Singapore," Houston said.

Singapore had said last year it expected to import one million tonnes per annum of LNG by 2012, below the terminal's annual capacity of three million tonnes.

Rod Duke, an official with the EMA, said demand in Singapore was only expected to hit the three million tpa mark by 2018.

The terminal can be expanded in stages to six million tpa and ultimately to 10 million tpa in stages.

In 2006, Singapore decided to go ahead with LNG imports to meet future energy demand and ease its dependence on piped gas from Indonesia and Malay-sia.

Singapore also expects to lift capacity and use the additional LNG to trade cargoes of spot LNG in the regions.

Supplies of LNG - gas chilled to liquid form so it shrinks to a 600th of its original volume - are sold on a long-term basis, though the number of cargoes sold on a prompt spot basis is increasing.

Potential

Short-term deals make up around 10 per cent of total traded LNG at the moment and analysts expect that to grow to around 20 to 25 per cent of total LNG trade in future.

Britain's BG Group said earlier this month it would start selling imported LNG in India later this year, and sought to expand its city gas business in the country.

Global demand for LNG, led by the US, China and India, is set to more than double to 400 million tpa by 2015 on the back of economic growth and environmental concerns.