Singapore Cements its Position as a Major LNG Trading Hub in Asia: AsiaBiz Services
June 3, 2014 - Singapore
Pavilion Energy, which was founded by Singapore’s sovereign wealth fund Temasek Holding in April last year, will develop capabilities in the maritime business to manage, acquire and charter LNG vessels as a result of this joint venture. Currently, the newly-founded company has acquired one existing vessel from BW Group, making it the first-ever Singapore flagged LNG carrier.
BW Pavilion LNG is also building two new LNG carriers at the Hyundai Heavy Industries shipyard in South Korea. These LNG carriers, which are being constructed for approximately US$500 million, aim to offer high quality LNG transportation to regional customers with specific infrastructural solutions.
SINGAPORE TO LEVERAGE POSITION AMID GROWING DEMAND
This joint venture is indicative of Singapore’s commitment to improve its shipping connectivity of global LNG supplies with Asian demand centres. LNG demand centres in the region include countries like China, Japan, India and South Korea, which in total account for 70% of all LNG exports in the world.
Capitalising on the intense demand for LNG, Singapore aspires to develop itself as the prime Asian hub for LNG trading. The city-state, which is already a successful oil trading hub in the continent, is advantaged by its strategic geographical positioning between producers such as Indonesia, Malaysia and Australia, and consumers such as China, India and Thailand. The International Energy Agency mentioned that Singapore, a country that produces over 90% of its electricity from LNG, is the most suitable Asian nation to assume the position of a LNG trading hub in the region. It also stated that Asia has overtaken Europe as the globe’s greatest importer of LNG, accounting for 46% of the international trade.
The demand for LNG is not exclusive to just Asia. There is rising demand for LNG beyond Asia, and Singapore is vying to tap on that growing demand too. Last year, the island nation purchased three gas blocks near Tanzania for US$1.3 billion, and imported its first LNG cargo to kickstart its $1.34 billion, first-ever LNG terminal in Jurong Island.
This terminal consists of three tanks with a total capacity of six million tonnes of LNG per annum (MTPA). Since its inauguration, the terminal has received shipments from far flung nations such as Equatorial Guinea in Africa and Trinidad and Tobago in the Caribbean. Earlier this year in February, Singapore has also announced plans to build a fourth tank by 2017, raising the total capacity to at least 9 million MTPA.
SINGAPORE KEEN TO ATTRACT MORE LNG PLAYERS
According to the Second Minister for Trade and Industry, S.Iswaran, Singapore hopes to attract more LNG companies to incorporate in Singapore and contribute to the growth of the local LNG industry. The country, which is already home to over 20 LNG companies, welcomes the local incorporation of LNG businesses in a variety of areas such as marketing, procurement and trading. Thus, in the last few years various businesses have established LNG trading desks in Singapore to capitalise on its expanding infrastructure, such as GDF Suez, BP and Statoil.
“Singapore is clearly taking advantage of its geography and stature in Asia to become the region’s primary LNG trading hub. This is why it has invested in so much of infrastructure to attract LNG companies to incorporate in Singapore. Not just LNG trading companies are welcomed, but businesses that provide ancillary support like bunkering and vessel cool-down services are also enticed to set up in Singapore”, said Mr. James Nuben, Head of Taxation at AsiaBiz Services.
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Source: Business Wire India