2013-12-12 15:25:55 - Recently published research from Business Monitor International, "Singapore Oil & Gas Report Q1 2014", is now available at Fast Market Research
Petrochemicals and refining remain the lifeblood of Singapore, with strong regional demand growth meaning there is potential for capacity expansion - although investment in countries such as China and Vietnam has led to increasingly fierce competition. Growing gas demand means liquefied natural gas imports are needed to augment pipeline volumes from Indonesia and Malaysia.
The main trends and developments we highlight in the Singaporean Oil & Gas sector are:
* Singapore's first liquefied natural gas (LNG) import terminal, which began operations on May 7, 2013, will be expanded to ensure it can meet all of the island-state's gas demand, raising the possibility that existing pipeline gas supply contracts with Malaysia and Indonesia may not be renewed. Chee Hong Tat, the chief
executive of Singapore's Energy Market Authority (EMA), told an industry conference on March 5 2012 that the government would 'ensure sufficient capacity to import LNG to meet all of [Singapore's] gas demand'.
* The terminal, which was completed under a budget of SGD1.7bn (US$1.39bn), has an initial capacity of 3.5mn tonnes per annum (tpa) - equivalent to 4.8bn cubic metres (bcm) of gas. The government announced in October 2012 that it would expand capacity to 9mn tpa with the addition of a SGD500mn fourth gas storage tank, likely to be complete by 2017.
* In a May 2013 announcement, the government reaffirmed that the facility's third tank, which will increase capacity to 6mn tpa, will come online before the end of 2013. The facility's fourth storage tank remains on target to be completed within the previously stated 2016-2017 timeframe. Singapore LNG Corporation (SLNG) is hopeful that the city-state's soaring capacity will not only satiate the country's own demand, but will also allow Singapore to become a leading LNG trading hub for the region.
* Interest in the new terminal had nearly outstripped supply as of April 2013, at which point Singaporean power supply firms as well as other industries had committed to at least 2.7mn tpa. BG Group owns the franchise rights to supply the first 3.0mn tpa; a level which, given current demand trends, may be breached within the next few quarters.
* State-owned sovereign wealth fund Temasek Holdings in September announced that its new LNG unit Pavilion Energy will begin to trade LNG in Asia before the end of 2013, seeking to establish partnerships with existing firms in China, South Korea, Japan, and Taiwan. Pavilion was created with initial capital of SGD1bn, but will seek to raise additional capital according to CEO Seah Moon Ming.
* Singapore imports all of its natural gas, which is mainly used for power generation and petrochemical production, exclusively via pipelines. In 2012, Singapore consumed an estimated 8.9bcm of gas - a rise of almost 496.0% since 2000. Gas use is rising rapidly, as the government promotes policies aimed at reducing carbon dioxide and sulphur emissions, ensuring energy security, and promoting the country as a regional hub for an integrated gas pipeline network. Our forecast is for gas consumption to reach at least 10.5bcm in 2017, rising further to 12.4bcm by 2022.
* Singapore has been experiencing steady growth in demand for oil, tracking both the local and regional economy. Throughput in Singapore's refining system should rise in line with regional demand. Beyond 2013, annual oil demand growth is likely to average 2.5-3.0% through to 2022. This implies demand rising from an estimated 1.4mn barrels per day (b/d) in 2013 to around 1.8mn b/d in 2022 - all met by imports
* As demand increases in Asia, the government has stated it will promote long-term growth in refining capacity in order to maintain its position as a leading exporter and regional trading hub. Furthermore, naphtha demand (for petrochemicals production) and the resumption of regional oil consumption growth point to a rise in refining capacity over the long term.
* Singapore's crude oil and products import bill is expected to decline slightly from an estimated US $50.3bn in 2012 to US$50.5bn in 2017, before reaching US$59.6bn by 2022. The cost of gas imports in 2012 was estimated at US$4.9bn and is expected to rise to US$5.9bn by 2022. Combined crude oil and natural gas import costs look set to reach US$55.5bn by 2017 and US$65.6bn by 2022. At the time of writing we assumed an OPEC basket oil price for 2013 of US$103.00 per barrel (bbl), falling to US $101.80/bbl in 2014
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