Singapore GasCo in talks with LNG suppliers for long-term contracts
A vessel transports liquefied natural gas (LNG) past the coast of Singapore on Jul 3, 2024. (Photo: AFP/Roslan Rahman)
SINGAPORE: Singapore's GasCo is currently in talks with liquefied natural gas (LNG) suppliers for long-term contracts, its CEO Alan Heng told the Asia Gas Markets Conference on Tuesday (Oct 28).
The company, a government-owned entity set up to centralise the procurement and supply of gas to Singapore's power sector, will be operationally ready by Jan 1, 2026.
It will be ready to start procurements by then on a spot basis if required, though GasCo wants to have a series of long-term contracts with good certainty of supply, according to Mr Heng.
"We will, from time to time, take advantage of the spot market, but it will be very calibrated, because we really do not want to see a situation when power prices go up by 50 per cent, 100 per cent in Singapore because (we are) uncontracted," he said.
Mr Heng added that the next step is to get up in the marketplace, run a process to build a portfolio and diversify supply.
"It's really important for us to have a mix of portfolio between long-term contracts, shorter-term ones, bridging medium-term contracts with different price indexations, different geographic reach and different suppliers," he said.
"And if we have sufficient longevity in prices, we will be able to get affordable prices over a sustained period of time," he added.
"It might not be the cheapest at any one point in time, but over a five-year period, it will consistently be cheaper than if you just went out to the spot market."
Meanwhile, supply from the United States will be part of GasCo's procurement portfolio.
"The US will have supply of about 35 to 40 per cent of global LNG ... so invariably, you have to go and secure some US LNG," said Mr Heng.
"From who, (we) haven't figured out yet ... we will definitely have an element of US LNG in our portfolio."
The company is working on contingency planning with the Energy Market Authority in case of potential disruption to power supply, such as in the event of a shutdown of piped gas from neighbouring countries in a large quantity, Mr Heng added.
