SembCorp interested in LNG terminal project
SembCorp interested in LNG terminal project
Dow Jones, Singapore
Singapore's SembCorp Utilities is interested in the ownership
and operation of the country's first liquefied natural gas
receiving terminal, which the government is considering building,
the company's chief executive office has said.
The proposed S$500-S$600 million (US$289-$347 million) LNG
terminal terminal would secure a third source of supply and
create price competition with piped gas Singapore imports from
Indonesia and Malaysia, CEO Tang Kin Fei told Dow Jones Newswires
recently.
Additionally, Singapore has the finance available and the
infrastructure in place to build the terminal, he said.
The government plans to issue a tender for a feasibility study
for the project within the next two months, signaling strong
interest in the project.
SCU, which is a wholly owned utilities arm of diversified
engineering group SembCorp Industries, supplies power, steam and
gas, and is involved in integrated utilities and offshore
engineering.
SCU will be interested in importing LNG for its customers even
if it doesn't own or operate the terminal, Tang said.
"It doesn't matter who owns the terminal, as long as it has
open access for LNG importers," he said.
SCU's sister company SembCorp Engineering and Construction
could build the LNG terminal, Tang said.
"We're interested in owning the LNG terminal, but it is not a
must for us....We're more interested in selling the gas
molecules," he said.
On the demand side, Tang said that SembGas's customers would
want to buy more gas if the price is competitive.
SembGas sells piped natural gas to power generation and
petrochemical companies including Tuas Power, Power Seraya,
SembCorp Cogen, ExxonMobil, Ellba Eastern and some 50 customers
in the Jurong and Tuas industrial areas, western Singapore.
Demand for more gas seems clear. The three main power
generators in Singapore are all gearing up to use more gas at
their dual-fuel combined-cycle power units.
"The LNG project is definitely viable...It will create price
competition for piped natural gas and provide another source of
gas supply for Singapore," Tang said.
Natural gas suppliers are now only interested in pricing the
gas just below the power plant's production cost, he said.
"We could use LNG as bargaining tool against piped gas...We
don't have much of a choice at the moment," Tang said.
Currently, piped gas from Indonesia costs about 115 percent of
equivalent amounts of high sulfur fuel oil, which translates to
about $4.80-$5.00 per billion British thermal units, he said.
Tang pointed out that China's LNG importers are securing LNG
term contract price about $3.00-$3.50 per BBTU.
"We pay about US$400-500 million each year for our Indonesian
gas supply," he said, adding that the gas suppliers to Singapore
now have no incentives to reduce the price of piped gas.
SembGas, a unit in which SCU owns 70 percent share, buys 325
MMcf/d of gas from Indonesian West Natuna field.
The LNG terminal would offer more supply flexibility and cost
saving to SembGas, Tang said.
SembGas could buy the 90 percent minimum of its contracted
West Natuna gas supply, and fulfill its remaining requirement via
LNG imports, he said.
Apart from the West Natuna gas supply, Singapore also receives
150 MMcf/d of gas from Malaysia and, by 2009, up to 350 MMcf/d
from Indonesian Grissik field.
A Singapore LNG terminal could be smaller size than the normal
terminal capacity of 3 million tons/year, Tang said.
A terminal of about 1.5 to 2 million tons/year capacity would
be feasible for Singapore's needs, he said.