Keppel, Petronas sign US$1.8b gas deal
Keppel, Petronas sign US$1.8b gas deal
Agence France-Presse, Singapore
Singapore's state-linked Keppel Energy signed on Monday an 18- year contract worth S$3 billion (US$1.8 billion) to buy natural gas from Malaysia's Petronas, the firms announced.
The deal was hailed as another step in the fast improving ties between the neighbors, which have endured a tense relationship stemming from Singapore's ejection from the Malaysian federation and subsequent independence in 1965.
Under the terms of the contract, Petronas, which is 100- percent owned by the Malaysian government, will deliver up to 12 billion British thermal units of natural gas a day for about 18 years.
The gas will be delivered via a new five-kilometer (3-mile) pipeline to be constructed by the two companies between Johor in southern Malaysia and Jurong island in Singapore's north.
Delivery of gas is expected to start in the middle of next year, and the S$3 billion figure is based on current gas prices.
The gas will feed Keppel Energy's 500 megawatt plant currently under construction on Jurong Island. It will supply electricity to Singapore's domestic and industrial market.
The deal will also make Keppel Energy, a wholly owned subsidiary of Keppel Corporation, the first company to import natural gas from Malaysia into the city-state's main gas network, the two firms said.
At a signing ceremony in the Malaysian capital of Kuala Lumpur on Monday, Keppel Corporation senior executive director Choo Chiau Beng said the deal was an "important milestone in furthering the economic co-operation" between the two nations.
"It is an example of how both countries, as close neighbors, can come together to conclude deals that are mutually beneficial," he said, according to a transcript of his speech released to the media here.
"This agreement is made possible by the warm relationship enjoyed by the two countries at both the governmental and private sector levels."
Keppel Energy is a wholly owned subsidiary of government- linked Keppel Corporation, one of the biggest conglomerates in Singapore with interests in the marine, property, telecommunications, transport, as well as energy, sectors.
Relations between Singapore and Malaysia, which have been dogged by bilateral issues such as a dispute over a rocky islet, began warming after the famously feisty Mahathir Mohamad retired as Malaysian prime minister in 2003.
The two companies also said the contract would mean the gas supply networks of Singapore, Malaysia and Indonesia would be interconnected, an important step in the planned TransASEAN gas pipeline that will hook up Southeast Asia.
"The interconnection provides further security of supply to Singapore and other connected countries," Choo said.
About two-thirds of Singapore's electricity is generated from piped natural gas. But the resource-starved city-state is looking to lift that percentage as it liberalizes its electricity market.