Singapore takes more steps to become LNG trading hub

(Reuters) Singapore is boosting efforts to establish itself as Asia's LNG trading hub, looking at third party spot imports and a second LNG terminal, while LNG bunkering services will start next year.

The city state, already one of the world's leading oil trading centers, is vying with Tokyo and Shanghai to become Asia's main pricing hub for the emerging LNG market as the fuel moves away from being traded almost exclusively through long-term contracts.

"These developments will increase the vibrancy of the Singapore gas market, and grow its regional footprint," trade and industry minister S. Iswaran said at the opening of the Gas Asia Summit.

Singapore already has an LNG price index, the Singapore Exchange's SLInG, and has developed infrastructure like storage tanks to support trading activities in the region.

LNG throughput capacity at its Jurong Island terminal will rise by 5 MMtpy  to 11 MMtpy early next year, while a fourth storage tank at the site will be completed in 2018, Iswaran said. Singapore was also considering a second LNG terminal, he said, without giving details.

Singapore earlier this week appointed Pavilion Gas and Shell Eastern Petroleum, a unit of Royal Dutch Shell, as importers of LNG into Singapore earlier this week, joining BG Singapore Gas Marketing, also a unit of Shell.

Iswaran said Singapore's Energy Market Authority  would hold industry consultations on allowing third party LNG imports after receiving feedback that spot imports, subject to a market-wide cap, should be approved on a first-come first-served basis.

"This approach increases the sources of supply which encourages gas-on-gas competition, which further leads to more liquidity and flexibility in the market," energy consultancy Wood Mackenzie said in an October 24 note to its clients.

Singapore is also developing a domestic secondary gas trading market that will give greater flexibility to buyers, and will begin bunkering operations - providing LNG as a fuel to ships - in 1Q of next year, Iswaran said.

Demand for LNG as a shipping fuel could soar over the next 10-15 years, if authorities this week agree a global cap on sulphur dioxide emissions, a senior executive of French energy firm Engie said.

Reporting by Mark Tay; Editing by Richard Pullin

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