The prospects of liquefied natural gas (LNG) in Singapore

Abstract

This research project presents developments and challenges faced by Singapore as she progresses towards achieving the title of Asia’s premier LNG bunkering hub, on top of her existing titles of world’s top bunkering port and world’s second busiest port. The existence of the nation’s first LNG terminal since 2013 was a stepping stone, with near future plans to expand this terminal and to develop a second terminal. The main players involved extensively in this development are Maritime and Port Authority of Singapore, Energy Market Authority and Singapore LNG Corporation Pte Ltd. As the world’s largest shipping fuel supplier and trader, Singapore takes advantage of this prestige and aims to be LNG bunkering ready by 2020. Prior to 2020, MPA will conduct a subsidized pilot programme for up to six LNG-fuelled vessels, with an objective to fine-tune the operating procedures and safety standards. The LNG market in Asia is not as established as compared to Europe or USA, thus it is inevitably tougher to gather sufficient demand to justify the huge capital cost involved in building infrastructure. Moreover, the implementation of sulphur restrictions in ECAs does not include Singapore hence lesser demand for clean fuels within Asia-Pacific region. There are various reasons identified and gathered through our questionnaires which led to general fear and unwillingness of shipowners to corroborate by getting their fleet ready for the transition to LNG as marine fuel. In addition Singapore is susceptible to regional competition from Malaysia who is picking up fast in their LNG sector. Thus Singapore has to step up its game in order to outdo its rival players albeit having land area constraints. It is worth noting that there are great prospects in the LNG market as the shipping industry is by and large convinced of the well-being of LNG to the environment even though there are comparable alternatives to LNG. As one of the advancers in the maritime sector, the outlook of LNG market in Singapore is positive in spite of some hurdles that will occur during this process because the opportunities far outweigh the hurdles. Singapore can leverage on her strengths to realise the goal of being Asia’s top LNG bunkering hub.