Southeast Asia is busy building gas-importing facilities

Southeast Asia is busy building gas-importing facilities

Southeast Asia could soon double its capacity to import liquefied natural
gas, becoming a key player in the global LNG market, as regional energy
supplies fall short of demand.

In Map Ta Phut, a town on the Gulf of Thailand in the country's Rayong
Province, expansion work is nearly finished on an LNG import terminal owned
by PTT, Thailand's state-owned oil company. The contractor for the project,
a consortium of Japan's IHI and South Korea's Posco Engineering, aims to
have the new facilities up and running by next March. New docks for
transport ships have been added, and two massive storage tanks are almost
complete.

When finished, capacity at the import terminal in Map Ta Phut will double to
10 million tons per annum. The fuel will be stored in liquid form at about
-160 C, then converted back into gas and transported to power plants,
industrial parks and other users by pipeline.

DWINDLING RESERVES Thailand relies on natural gas for 60% of its
electricity. Much of that fuel is produced domestically. With gas reserves
declining and demand for power on the rise, the country is trying to meet
more of its energy needs from renewable sources. But even if all goes
according to plan, gas will still provide around 40% of Thailand's
electricity needs, meaning more LNG will have to come from abroad. PTT will
soon sign 15-year supply contracts with affiliates of Royal Dutch Shell and
BP to make use of its expanded import capacity.

Indonesia, a major resource exporter in Southeast Asia, may also start
importing LNG by 2019 if no new oil fields are developed, according to an
official at the Ministry of Energy and Mineral Resources. Domestic oil and
gas output will soon fall short of the country's energy needs, and the
official said Indonesia could become a net importer of LNG by 2030.

State-owned energy producer Pertamina is adding two LNG import terminals to
its network, including one in Central Java Province. These will raise the
company's annual import capacity to more than 14 million tons. The company
also plans to build nine or so additional small terminals. President Joko
Widodo's administration plans to construct power plants with a total
generating capacity of 35,000 megawatts over the period from 2015 to 2019,
which will sharply increase demand for gas.

Vietnam, which relies on coal-fired power plants for about 40% of its
electricity, has also begun switching to gas due to declining coal
production and environmental concerns. PetroVietnam Gas is building the
country's first LNG terminal at the southern port of Thi Vai for $286
million. The terminal, which will be able to handle 1 million tons of LNG a
year, is expected to be completed as early as 2019. The company is planning
a second LNG import terminal, at Son My in the southern province of Binh
Thuan.

There is concern about electricity shortages in Vietnam, whose economy is
growing by around 6% a year. Moreover, pollution from a Taiwanese-owned
factory in the central province of Ha Tinh has sparked complaints from
residents and greater interest in LNG, which is seen as cleaner than other
forms of energy.

Singapore wants to be able to process more LNG than it needs for itself.
Singapore LNG is working to boost capacity at a terminal on Jurong Island by
80% to 11 million tons by 2017. Additional construction could bring that to
15 million tons in the future. The city-state aims to become a regional gas
trading hub, with the Singapore Exchange having introduced LNG futures
contracts in January.

"Our starting position was meeting our needs, but clearly there is a need in
immediate neighbors in Southeast Asia and other Asian countries," said S.
Iswaran, the country's minister for trade and industry, adding that because
"Asia is a net energy consumer and big consumer of LNG, it is essential that
we have mechanisms that allow better price discovery for consumers." Futures
trading is expected to allow for "greater transparency, and therefore better
decision-making for gas buyers, [which] will make a big difference," he
said.

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Link to Original Article:
http://asia.nikkei.com/magazine/20161201-SUPERCLANS/Business/Southeast-Asia-
is-busy-building-gas-importing-facilities

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com