Singapore Import Licenses Indicate Shift In LNG Pricing

Singapore Import Licenses Indicate Shift In LNG Pricing

Looking to grow its role in the Asia-Pacific region as an energy hub,
Singapore has awarded LNG import licenses to Shell and Pavilion Gas. Both
companies will supply Singapore with up to 1 million tonnes of LNG annually
for three years, beating out other submitted tenders. Shell and Pavilion's
offers allow for shorter-term contracts and, more importantly, alternate
pricing indexes such as Henry Hub prices or the newly established Singapore
Exchange SLiNG contract, which has proven to be the most attractive aspect
to Singapore LNG executives.

Since the inauguration of Singapore's LNG import terminal in 2013, the
country has attempted to position itself as a viable regional LNG, aiming to
make Asian buyers of the fuel less susceptible to seemingly unrelated
commodity price fluctuations. Historically, a majority of LNG contracts have
been linked to oil prices. This has caused instability that was not
necessarily relevant to natural gas markets worldwide.

Singapore relies on natural gas to fuel virtually all of its electricity
generation. While much of that demand is satisfied via pipelines from
Indonesia and Malaysia, those pipeline contracts are due to expire in the
next five years, which could lead to an increased reliance on LNG imports.
To that end, Singapore LNG is currently undergoing a phase 3 expansion of
the existing Jurong Island facility, which will add a fourth LNG storage
tank and additional regasification facilities that will nearly double the
terminal's send-out capacity from 6 mtpa to 11 mtpa.

LNG imports in the "Rest of Asia" category-that is, not including China,
India, Japan, Korea, Taiwan and Indonesia-are expected to more than double
in the coming 10 years.

Similarly, natural gas used in electricity generation is also expected to
nearly double in the same time period as these mostly emerging economies of
Southeast Asia turn to the cheap fuel to meet its burgeoning demand.

Given this trend and the growing sentiment among buyers throughout Asia to
institute price points independent of crude oil prices, the recent deals
with Shell and Pavilion Gas should be encouraging for Singapore and other
net gas importers in Asia, particularly those that rely mostly on LNG as
opposed to pipeline gas.

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Ref:
http://www.downstreambusiness.com/singapore-import-licenses-indicate-shift-l
ng-pricing-591781?mkt_tok=eyJpIjoiWVRoa016WTBZVEUzTnpFNCIsInQiOiJWN3hnQlNLNj
FTSGNZa2pOcEFGZDl1c3ZqdjRjNHJESFVJK28wTzFcL2h4WmxsV2VoTXA1SXFpbVQrckJ1clQwem
RQbGNtZE5mdmJ6cTY1SXdjd2grQlwvbTVBb2p2b2F0dkFYdHBWdDNEdnBNPSJ9

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com