This consultation exercise is to seek views from the industry on the options for Singapore’s future liquefied natural gas (LNG) import framework, beyond the 3 million tonnes per annum (Mtpa) franchise with BG Asia Pacific Pte Limited (now named BGSingapore Gas Marketing Pte Ltd) (BG). The objectives of the new framework are to enhance Singapore’s energy security and improve price competitiveness for our natural gas supplies.

Today, more than 80% of Singapore’s electricity is fuelled by piped natural gas (PNG).Major industries in the petrochemicals, electronics and biomedical sectors have also become increasingly dependent on natural gas for their production needs. In August 2006, the Government announced its plan to import LNG to meet futurerising demand for energy and introduced controls on PNG imports to allow the build up ofLNG demand until the capacity of 3 Mtpa is reached or in 2018, whichever is earlier.

The Government decided to conduct the initial LNG procurement for Singapore through an Aggregator. The role of the Aggregator was to consolidate demand for regasified LNG from end users of gas in Singapore and to procure LNG supply for theseend users. The Aggregator would have an exclusive licence to import LNG and sell regasified LNG in Singapore for a demand of up to 3 Mtpa or 2023, whichever is earlier. On 18 April 2008, the Energy Market Authority (EMA) appointed BG as the LNG Aggregator through a competitive Request-for-Proposal (RFP) process. As of end February 2012, BG has contracted a total of 2.65 Mtpa of LNG in Singapore. BG expects to reach its franchise of 3 Mtpa of LNG sales in either 2012 or 2013.

Singapore will begin importing LNG when the country’s first LNG regasification terminal commences commercial operations in 2Q 2013. Singapore’s total demand for gascould eventually increase to about 15 Mtpa by 2024. The LNG terminal on Jurong Island is able to accommodate 7 storage tanks when fully expanded and would be able to meet this demand. Industry experience and analysis suggest that the LNG Terminal can accommodate up to 4 large LNG importers without affecting its ability to effectively deliver 15 Mtpa of capacity throughput. If there are more than 4 importers, there could be operational constraints and inefficiencies which will lower the terminal’s throughput capacity. Based on this consideration, EMA is of the view that it may not be feasible for Singapore toaccommodate a model based on complete open access with many entities importing small quantities of LNG to meet their own needs.

Based on studies of other countries’ experiences and preliminary discussions with industry players, two possible frameworks have been identified in this consultation paperwhich the EMA would like to seek further feedback and comments. These are theRegulated Sole Importer model (or “BG+1”) and the Multiple Aggregators model (or“BG+3”). Please refer to the consultation paper for more details.