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  Business Times 7 May 07
S'pore may face natural gas supply shortage
Crunch due to rising demand, limits on more pipeline gas imports
By Ronnie Lim

(SINGAPORE) Singapore could face a natural gas supply crunch in the next couple of years.

Demand will grow, as new petrochemical complexes come up. But supply is limited as producers like Indonesia and Malaysia increasingly prefer to keep their gas for their own use.

Singapore's moratorium limiting further piped gas imports ahead of imports of liquefied natural gas around 2012 is also not helping, industry sources say.

'We are watching the developments carefully,' one official told BT. Another said: 'Certainly we expect a tightening in gas supplies coming up.'

New gas demand is coming from Shell and ExxonMobil, which are building multi-billion dollar petrochemical complexes that include their own co-generation plants to provide for electricity and steam, and Singapore Refining Company which is investing in a multi-million dollar clean fuel plant.

Generating companies (gencos) 're-powering' older plants will also need natural gas to fuel their new, more efficient turbines.

PowerSeraya, which lost its supplies of orimulsion - a bitumen-water fuel mix - when Venezuela halted production late last year, is one such possibility.

Natural gas is now piped in from Malaysia and Indonesia's fields at Natuna and Sumatra by Senoko Power, Gas Supply Pte Ltd (GSPL), SembGas and Keppel Energy.

SembGas pipes in 325-500 million standard cubic feet a day (mscfd) from Natuna, while GSPL brings in 350 mscfd from Sumatra. Senoko pipes in 115 mscfd from Malaysia, while Keppel - which has just started commercial operations at its new 500 megawatt power station - can import 115 msfcd, about double its own needs.

'Most of the current piped gas, except for some spare capacity at GSPL and Keppel, is already committed,' an industry official said, so there is little left to meet additional demand of about 200-300 mscfd from the new co-generation plants at petrochemical complexes.

Pharmaceutical plants like Pfizer and Schering-Plough at Tuas, and others in the pipeline, are also likely to want gas to fuel tri-generation plants, producing electricity, steam and cooling water, which they are installing.

'But the gas demand for such tri-gen units is small,' a source said.

The government's decision to give the nod to a US$500 million liquefied natural gas (LNG) terminal here to import about 3 million tonnes of LNG a year was also based on the preposition that the volume of piped gas is capped to ensure the LNG project is viable.

This moratorium - which, industry sources say, is already in force - means no more pipeline gas imports allowed beyond contracts already signed by the latest players, namely Keppel Energy and Island Power, which plans to build a power station on Jurong Island.

So additional gas supply will be limited until imports of LNG start around 2010.
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