Prices of natural gas provided under long-term contracts have risen by up to 50%: Gan Kim Yong
SINGAPORE: Prices of piped natural gas (PNG) and liquefied natural gas (LNG) provided under long-term contracts have risen over the past year, Minister for Trade and Industry Gan Kim Yong said on Wednesday (Oct 5).
PNG prices were up 20 per cent year-on-year in August, while LNG prices were up 50 per cent compared to the same month last year, Mr Gan said in a written answer to a parliamentary question.
Member of Parliament Louis Chua (WP-Sengkang) had asked Mr Gan about the proportions of PNG and LNG used by Singapore to generate its electricity, and about the year-to-date price changes for these commodities.
"Domestically, around 95 per cent of our electricity is generated using natural gas. For 2021, around two-thirds of our natural gas is imported as term piped natural gas, while the remaining one-third is imported as term liquefied natural gas," Mr Gan said.
"Our electricity generation companies also use spot LNG to supplement their long-term contracts."
Between January and August this year, prices of PNG and LNG provided through term contracts rose by around 21 per cent and 38 per cent respectively, Mr Gan added.
During the same time frame, spot LNG prices surged by 113 per cent.
On a year-on-year basis, spot LNG prices were up 224 per cent in August compared to the same month in 2021.
"As Singapore imports most of our energy supply for electricity production, the increase in global energy prices over the past year will flow through into our prices," Mr Gan said.
Speaking to CNA last month, analysts said that Singapore's demand for both PNG and LNG is generally fulfilled through long-term contracts.
Electricity prices in Singapore should therefore be somewhat protected from volatility, as spot LNG prices - or the market rate for the near-term delivery of the commodity - are significantly higher than the prices of LNG supplied under long-term contracts.
Global energy markets have been impacted by Russia’s invasion of Ukraine, and as winter approaches with Russian gas supplies restricted for "unfriendly" countries, a scramble is under way in Europe to secure more LNG.
Concluding his answer, Mr Gan acknowledged concerns about the energy crunch.
"Countries around the world are struggling with rising energy prices, especially as winter approaches. I know that many Singaporeans are also concerned about whether something similar might happen to us," he said.
"Our approach has always been to right-price electricity and provide targeted assistance, such as GST Voucher - U-Save rebates to consumers, especially to the vulnerable and low-income ones.
"The Energy Market Authority is also prepared to introduce more emergency measures to forestall extreme volatility in electricity prices if necessary."
Last week, it was announced that electricity tariffs in Singapore would dip during the October to December period after six consecutive quarters of increase.