SINGAPORE: The Energy Market Authority has designated PowerGas, a wholly owned subsidiary of Singapore Power, to build and operate Singapore's first Liquefied Natural Gas (LNG) terminal.

PowerGas will build the terminal on a 30-hectare site which is currently being reclaimed on Jurong Island.

Construction is expected to begin in 2009, and the terminal should be operational by early 2012.

Minister of State for Trade and Industry, Mr S Iswaran, announced this at the LNG Supplies for Asian Markets 2007 Conference on Tuesday.

He said: "There are clear synergistic benefits for PowerGas to operate the LNG terminal, given its current role as the gas transporter and system operator in Singapore. PowerGas will be able to ensure that the operation of the terminal, which is strategic and critical, is efficiently integrated with the gas pipeline network.

"PowerGas will also be able to manage periodic demand and supply imbalances in the gas network by adjusting gas supply from the LNG terminal."

The terminal will have a capacity of 3 million tonnes a year but this can be increased to 6 million tonnes.

Mr Iswaran also noted that the door is still open for the private sector to take an active role in the development and operations of the terminal.

The Energy Market Authority has launched a two-stage tender process to appoint a buyer to procure LNG.

Due to the small domestic market, only one buyer will be appointed to ensure it has a critical mass of demand to negotiate with LNG suppliers.

The buyer, expected to be appointed in the second quarter of 2008, will also aggregate gas demand from all potential users.

The government decided last year to build an LNG terminal to import LNG, in order to diversify the country's sources of energy and to meet rising demand for energy.

Quek Poh Huat, CEO of Singapore Power and chairman of PowerGas, said PowerGas will work in sync with the LNG terminal in providing gas. "The operation of the terminal will be a natural fit with PowerGas' existing role, as the terminal will be an extension of this network."

PowerGas is the gas transporter and system operator in Singapore which transports natural gas to power generation companies and industrial customers, as well as town gas to commercial and residential customers. – CNA/yb/so