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NEW ZEALAND: Leadership highlighted at World Geothermal Congress 2010
Thursday, 13 May 2010

(EnergyAsia, May 13 2010, Thursday) --- New Zealand showcased its geothermal leadership at the World Geothermal Congress (WGC) 2010 held in Bali, Indonesia last month.

The New Zealand Geothermal Association (NZGA) and a large delegation of scientists, engineers, consultants and investors, and major companies demonstrated a full spectrum of professional services and expertise in geothermal development with the support of the New Zealand government. Among the exhibitors were Auckland University, the Institute of Earth Science & Engineering, Maskell Production Ltd, Allied Industrial Engineering, Robt Stone, Parsons Brinckerhoff Power, Institute of Geological, Nuclear Sciences, GNS Science, PT AECOM Indonesia, Sinclair Knight Merz and Tiger Energy.

Alan Koziarski, New Zealand Trade and Enterprise's Regional Director for South and South East Asia, said:

“The significant presence at WGC 2010 globally reinforces New Zealand’s solid track record in this industry and gives us the opportunity to forge deeper partnerships with other leading geothermal markets in Asia Pacific such as Australia, Indonesia and the Philippines. It is also a fitting launch pad for our joint hosting with Australia of the World Geothermal Congress in 2015.”

Blessed with rich geothermal fields, New Zealand is a pioneer in developing large-scale geothermal electricity generation as early as the 1950s. Today, it combines experience with cutting-edge geosciences research and innovation to harness the potential of geothermal to deliver cost-competitive, sustainable energy not just in New Zealand but across the region.

Spence McClintock, President of the New Zealand Geothermal Association, said:

“The geothermal industry is the place to be, with a lot of development over the last few years and much more to come in the near term.  Geothermal energy is now getting the profile it deserves as a reliable, clean and renewable form of energy. It is independent of weather and can deliver energy at some of the most competitive unit rates of any energy option for heat or electricity generation.”

Geothermal energy provides approximately 0.4% of the world global power generation. As of 2008, global installed capacity of geothermal energy for power generation was more than 10GW.

The International Geothermal Association has predicted that global capacity will reach 11 GW by 2010, and dramatically grow in the next few years as the world shifts to cleaner fuel.

In New Zealand, geothermal energy is the second-most used renewable fuel for electricity generation after hydro which provides around 14% of the country’s electricity. Geothermal’s rise will continue as the government has set a national target for renewable sources to generate 90% of the nation’s electricity requirements by 2025.

New Zealand already has one of the fastest growing rates of geothermal development in the world, recently rising from No.8 to No.5 in ranking.

“We have seen a steep upward growth for geothermal power generation domestically, proving the commercial viability of this clean energy resource to fuel our industries and homes,” Mr McClintock said.

Overseas, New Zealand companies are consulting for and supplying to various partners in countries such as Indonesia, Philippines, Australia, Papua New Guinea and a range of countries through the western Pacific and Asia in particular, but with interests spreading through Chile and other parts of South America, as well as east African countries.

In Indonesia, New Zealand built the Kamojang 1 Project, the first geothermal power station in the country.  It funded and provided technical engineering support for the facility which opened in 1982.  Companies like PB, PT AECOM, and SKM remain heavily involved in active geothermal projects including Kamojang, Darajat, Dieng, Gunung Salak, Wayang Windu, Lahendong and Ulumbu.

New Zealand continues to be one of the few countries to offer broad geothermal post-graduate training, as it has done for the last 30 years.  Many of the leading national engineers and scientists in Indonesia or the Philippines have had training in New Zealand, and the relationships formed are valued by all those involved.
 
CHINA: Coal import levels expected to decline in 2010, says consultant
Tuesday, 11 May 2010

(EnergyAsia, May 11 2010, Tuesday) --- China’s coal import level is expected to decline this year as a result of a return to price differentials for thermal coal between Chinese domestic and rising seaborne coal prices, said Wood Mackenzie’s coal consultant Paul Manley.

Mr Manley said: “Even though in January and February of 2010 there was a continuation of the trend in 2009 of record levels of thermal coal imports in China, our view is that in 2010 overall Chinese thermal coal import levels will be lower, marking 2009 a unique year.”

“The price differentials that were evident in 2009 and were key to higher Chinese import levels in 2009 have switched again and we have seen rising seaborne prices, which hit port cleared prices of RMB908 per ton in March, potentially moving back to pre-2009 patterns. We expect current seaborne thermal coal prices to continue to rise through 2010 as the world recovers from the global financial crisis. 

Recovery of traditional markets such as Japan, Korea and Taiwan is expected to continue throughout the year which, combined with increasing volumes of seaborne thermal coal demand by Indian coal buyers, are likely to support price increases.” 

He added that while the current were initially matched by China’s domestic thermal coal prices, falling domestic demand and prices have caused a large differential which would result in lower imports compared to last year. Policy changes made in 2009 that limit exports are expected to continue, keeping the exports below historical levels.

Wood Mackenzie, the Scotland-based energy consulting firm, said the opportunistic buying by Chinese thermal coal buyers is one of the key factors that made 2009 unique.

Mr Manley said: “We saw a switch in the price differential between Chinese domestic coal prices and seaborne coal prices. While both historically moved in tandem, with seaborne prices exceeding domestic prices, this switched in September 2008 when seaborne prices had a dramatic dip. 

“The global financial crisis led to a drop in demand by major international players, which saw seaborne prices plunge to a 2009 average port cleared price of RMB692 per tonne, while China’s domestic coal prices averaged port cleared prices of RMB707. China’s domestic coal price remained higher due to the softer impact of the global financial crisis on China and a continuous healthy demand for coal.”

As a result, Chinese coal buyers capitalised on low coal prices in the seaborne market causing the seaborne thermal coal imports to China from Australia, Canada, Indonesia and Russia to rise.

In 2009, imports from Australia and Indonesia increased almost ten times and three times respectively compared to the previous year. The increase was attributed to the strong Chinese demand and opportunistic buying, which helped provide relief to the depressed industry.

“Past trends have shown that Chinese suppliers tend to price high quality seaborne coal out of the market. 

Partnered with lower domestic power demand as temperatures rise in Spring and a spate of industry slowdowns post-Spring Festival, we do not expect import levels to reach that of 2009,” Mr Manley said.
 
MARKETS: Crude prices plunge in week ending May 7 as turbulence rocks financial markets
Monday, 10 May 2010

(EnergyAsia, May 10 2010, Monday) --- By Darrell Delamaide for Oilprice.com.

In a week of market turmoil resulting from Greece’s fiscal crisis, US WTI crude oil benchmark went from an intraday high above US$87 on May 3 (Monday) – its highest point in more than a year and a half – to plunge briefly below $75 four days later.

The Greek economic crisis, exacerbated by a still-unexplained “glitch” in US stock trading on May 6 (Thursday) that saw the Dow Jones Industrial Average plunge 9% in a matter of minutes before recovering, sent financial speculators scrambling for the sidelines, liquidating their long positions.

The West Texas Intermediate contract on MYMEX settled at $75.11 a barrel on Friday, its lowest point since February, compared to $86.15 a week earlier – a decline of nearly 13%.

Friday’s announcement of an unexpected increase in the unemployment rate to 9.9% in April from 9.7% in March cut short any hope of a rebound following the 3.6% drop in oil prices on Thursday amid the gyrations in the stock market.

US government data on Wednesday showing that crude oil inventories had increased by 2.8 million barrels – almost double expectations – lent momentum to the price decline that began on Tuesday as unrest in Greece and uncertainty about its bailout raised fears of the crisis spreading to other Eurozone countries.

The European crisis not only threatened to stifle economic recovery, but also pushed the euro down below $1.30, further depressing the dollar-denominated oil price.

Fears grew in the market that even at $140 billion, the bailout package for Greece would not be sufficient to resolve the country’s fiscal crisis, especially as strikes and riots that have claimed three lives continued to roil the nation’s capital.

The knock-on effects of a credit crisis at other highly indebted euro zone countries, such as Spain and Portugal, and the threat to European banks that hold a lot of European sovereign debt also spooked equity, bond and commodities markets.

The German parliament on Friday approved the Greek bailout, but Chancellor Angela Merkel faces a tough political test in a regional election on Sunday in North Rhine-Westphalia, Germany’s most populous state. German backing is seen as crucial to any effort to keep the crisis from spreading and to keep the euro intact.
 
SINGAPORE: Physical oil trade reached record 4.22 million b/d for 2009 on decade of high growth
Wednesday, 05 May 2010

(EnergyAsia, May 5 2010, Wednesday) --- Singapore’s trade in physical crude and major oil products reached a record high of 4.22 million b/d last year, breaching the four-million-b/d level for the first time. All the growth came from the products trade which expanded more than 11.9% year-on-year to 3.336 million b/d and helped offset the 12.24% drop in crude’s 890,464 b/d volume.

In value terms, Singapore’s physical oil trade experienced a sharp 23.2% drop to nearly S$143.2 billion, compared with 2008’s record S$186.8 billion. The decline was due largely to weaker oil prices last year after the record-setting levels of 2008. US crude futures kept mostly at the US$70-80 range through most of 2009, compared with the US$100-to- $147 level for most of 2008.

Last year’s strong performance has enabled Singapore to strengthen its position in the global oil trade, and is expected to continue into the decade ahead given the growing demand for energy in Asia and the Middle East.

Much of the growth the past decade took place from 2003 when US President George W. Bush ordered the military invasion of Saddam Hussein’s Iraq. Panicked buying and stockpiling around the world helped drive up the prices and volume of oil traded.

The total volume of crude and products traded through Singapore grew at an average 4.5% per year to reach a record of more than 4.22 million b/d in 2009 from 2.6 million b/d in 1998, according to data derived from state agency International Enterprise Singapore (IES).

Oil products provided all the growth, more than doubling from 1.55 million b/d to over 3.33 million b/d for an annual average growth rate of 7.2%. The crude trade was little changed over the 11-year period, reflecting the lack of growth in Singapore’s refining capacity and the rise of direct trade between crude oil producing countries and consumers. With Asia’s economies continuing to grow, Singapore’s role in the oil products trade is expected to expand.

2008 was a year of superlatives when the price of US WTI crude surged past US$100 a barrel for the first time, and reached a record US$147 a barrel in July. With crude oil holding above US$100 a barrel for most of the year, the value of Singapore’s crude and oil products trade reached a record S$187 billion in 2008. In 1998, when crude oil hit a low of US$10 a barrel, the value of Singapore’s oil trade fell to just under S$24 billion.

Several major trends have enabled Singapore to expand its role in the regional oil trade over the last two decades. This includes rising energy consumption in Asia and the Middle East, the growth in the two regions’ oil refining capacities, increased fuel stockbuilding and strategic stockpiling around the world, rising fears of supply disruptions caused by military conflicts and geopolitical tensions, and the rise of the 24/7 paper oil markets and derivatives.

EnergyAsia will be publishing a special report analysing Singapore’s physical oil trade since the Asian Financial Crisis of 1998. 

Please contact: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it or tel 65-6438 0933.
 

 
 
MARKETS: Economic data, oil spill push crude prices higher at end of week for April 30
Monday, 03 May 2010

(EnergyAsia, May 3 2010, Monday) --- Article by Darrell Delamaide for Oilprice.com.

Stubbornly high crude oil inventories continued to stymie bulls through the middle of the week of April 26, but the market seized on positive economic data to push prices higher toward the end of the week.

The oil spill from a collapsed rig off the Gulf of Mexico may also have played a role in firming prices. Analysts said that the spill could have a short-term impact on supply if it interfered with oil deliveries to Gulf coast refineries, and a longer-term impact if it led to new restrictions on offshore drilling.

The gains on Thursday and Friday enabled oil futures to offset the decline in the first part of the week and finish higher on the week, with the West Texas Intermediate benchmark June contract settling at $86.15 a barrel on Friday, compared with $85.12 a week ago. The contract traded below $82 at one point during the week.

The news Friday that consumer spending powered US GDP growth to a 3.2% annual rate in the first quarter spurred oil prices to further gains after Thursday’s report of a continuing decline in jobless claims also boosted the outlook for oil demand. Analysts also cited the Federal Reserve’s upbeat assessment of the economic situation following the Federal Open Market Committee meeting on Wednesday.

But the weekly inventory report from the Energy Information Administration showed crude stocks up nearly 2 million barrels, with inventories at the New York Mercantile Exchange depot in Cushing, Oklahoma up by 450,000 barrels, and this weighed on the Nymex contract.

The high inventories at Cushing have enabled the European benchmark contract, the ICE Brent crude, which normally trades at a discount to the WTI contract, to overtake the Nymex contract, with the gap this week at times widening to more than $3 a barrel in favor of Brent oil. Brent crude settled at $87.11 on Friday.

The situation has also kept oil futures in contango – later-dated contracts are priced higher than the nearest month because traders expect prices to improve when inventories decline. The July contract on Nymex closed at $88.36 a barrel on Friday.

Oil prices rose on Friday even as stocks plummeted, with the Dow Jones Industrial Index accelerating its decline in late trading to finish down 158 points to 11,008 as financials were hit by news of a criminal probe of Goldman Sachs.

Meanwhile, JP Morgan has raised its 2010 price forecasts for both Brent and West Texas Intermediate crude, citing strong oil demand from emerging markets. The investment bank now expects Brent crude to average $88.60 a barrel, compared with $84 previously, and WTI to reach $88, also from $84.
 
INDONESIA: Latham & Watkins advised on two power project financings totalling US$1.81 billion
Thursday, 29 April 2010
(EnergyAsia, April 29 2010, Thursday) --- Law firm Latham & Watkins said it recently advised on two landmark power projects under development in Indonesia– the US$1.215 billion Paiton 3 project in East Java and the US$595 million Cirebon project in West Java.

Latham & Watkins  said it represented Japan Bank for International Cooperation (JBIC) and the syndicate of commercial bank lenders comprising BNP Paribas, The Bank of Tokyo-Mitsubishi UFJ Ltd, The Hongkong and Shanghai Banking Corporation Limited, Crédit Agricole Corporate and Investment Bank, ING Bank NV, Mizuho Corporate Bank Ltd, Sumitomo Mitsui Banking Corporation and The Sumitomo Trust & Banking Co Ltd for financing of the Paiton 3 power project.

The financing package includes 17-year non-recourse loans totalling approximately US$729 million provided by JBIC under the JBIC Overseas Loan Programme, and a US$486 million loan from the commercial banks.

PT Paiton Energy, a joint venture between International Power Plc, Mitsui & Co, the Tokyo Electric Power Company Inc (TEPCO) and PT Batu Hitam Perkasa (PT BHP), is the project developer and borrower.

The Paiton 3 project comprises a single 815-MW coal-fired unit located within the existing Paiton power generating complex and is expected to be fully operational by the end of 2012.

The Latham & Watkins team included attorneys from the firm’s Hong Kong, Singapore, Shanghai and Tokyo offices, and was led by partners Joseph Bevash, Stephen McWilliams, Clarinda Tjia-Dharmadi, Michael Yoshii and Rowland Cheng, with associates Billy Betts, Kyle Hollingsworth, Jae Lemin, Michael Tardif, Andrew Compton and Kate Papailiou.‪

Joseph Bevash, leader of the firm’s project finance practice in Asia, said: “We are delighted to have represented our clients on these market-leading projects. Our involvement with Paiton dates back to the project's inception in the 1990's and we are proud to have participated in the Paiton 3 expansion.”

Separately, Latham & Watkins said it represented Korea Midland Power Co Ltd. (KOMIPO), as sponsor and O&M provider, in connection with the US$595 million financing of the Cirebon project in West Java.

The project’s lenders are Japan Bank for International Cooperation (JBIC), the Export-Import Bank of Korea (Korea Eximbank) and a group of commercial bank lenders comprising Bank of Tokyo-Mitsubishi UFJ Ltd, Mizuho Corporate Bank, Ltd, Sumitomo Mitsui Banking Corporation and ING Bank NV.

The 660MW Cirebon project is being developed by a consortium comprising Marubeni Corporation, KOMIPO, Tripatra Engineering and Samtan Co.

The Latham & Watkins team included attorneys from the firm’s Hong Kong and Singapore offices, and was led by partners Joseph Bevash and Clarinda Tjia-Dharmadi, with associates Timothy Hia, Monisha Kamdar and Vishal Devraj.‪

Singapore-based partner Clarinda Tjia-Dharmadi said: “The Cirebon power project is another milestone energy project for Indonesia that was both exciting and complex, and we are delighted to have played a role in the successful financing.”
 
MARKETS: US housing data spurred late gains in oil prices for week ended April 23
Monday, 26 April 2010

(EnergyAsia, April 26 2010, Monday) --- This article was written by Darrell Delamaide for Oilprice.com.

After languishing most of the week, crude oil prices galloped to the finish line on April 23 Friday, tacking on 1.7% and recouping most of the previous week’s losses as positive new-housing sale data spurred most markets forward.

The decision by the Greek government on Friday to activate a bailout plan from the European Union and the International Monetary Fund eased pressure on the euro, contributing to oil price gains as the dollar slipped against the joint European currency.

The benchmark West Texas Intermediate contract gained $1.42 Friday to end the week at $85.12 a barrel, compared with the benchmark’s finish of $83.24 in the previous week.

An unexpectedly strong gain of 27% in US new housing sales in March – the strongest monthly gain in nearly five years – galvanised a market looking for any sign of a pickup in US demand for oil. Stock markets also advanced on the news, led by energy stocks.

The week started with oil prices taking a hit in the wake of Iceland’s volcano grounding most northern European flights and then bounced back on Tuesday as authorities began to ease flight restrictions. Some analysts also cited lingering concern about U.S. fraud charges against Goldman Sachs for Monday’s decline, after the announcement of the civil suit last Friday pushed most markets down.

The weekly US inventory report on Wednesday was bearish for oil prices, showing high stockpiles of crude in the Midwest, where influx of new Canadian oil and a temporary slump in demand due to refinery maintenance led to a build-up in stocks.

For much of the week, the exchange rate between the euro and the dollar tended to drive oil prices amid mixed economic data. The euro trended lower through Thursday with the uncertainty about Greece maintaining pressure on it. The formal announcement on Friday that Greece would in fact seek the funds removed some of that uncertainty.

The IMF said in its World Economic Outlook that relatively strong economic growth would keep upward pressure on most commodities prices. However, the multilateral lending agency cautioned that in the case of oil, OPEC could increase its production if it wanted to keep oil prices in the $70 to $80 trading range.
 
MARKETS: US SEC charge against Goldman has ‘volcanic’ impact on energy, commodity trades
Monday, 19 April 2010
(EnergyAsia, April 19 2010, Monday) --- Commentary by Darrell Delamaide for Oilprice.com.

Oil prices plunged on Friday (April 16)  after the US Securities and Exchange Commission (SEC) charged Goldman Sachs with fraud in its marketing of certain subprime mortgage securities, amid a general sell-off in financial and commodity markets.

The allegations against one of the biggest market makers in virtually every markets dampened speculation heading into the weekend. Much like the volcanic eruption in Iceland spewed a cloud of dust over northern Europe that grounded all air travel, the SEC charge cast a pall over financial markets.

The May contract for West Texas Intermediate, which expires this week, settled down $2.27 or 2.7% at $83.24 after briefly dipping below $83 in the wake of the SEC announcement. The benchmark contract settled at $84.92 a week earlier.

Goldman Sachs had no immediate comment. Prices had been drifting lower in equities and other markets prior to the announcement, but fell sharply afterwards, led by a plunge of more than 10% in Goldman shares.

Some analysts speculated that prices could rebound today (April 19) once the dust has settled, but market participants remained uncertain about the long-term impact of the SEC charge on Goldman’s business and on that of other major banks.

In the past, Goldman has rejected charges of misleading investors when it sold securities that it subsequently shorted in its own trading, asserting that that is the role of a market maker. Goldman is one of the biggest participants in the energy futures markets.

Oil prices started the week of April 12 soft, but firmed up after Wednesday’s inventory report from the US Energy Information Administration, which showed a small decline in crude inventories after 10 successive weeks of increases.

An unexpected decline in April consumer sentiment reported on Friday, however, led to new doubts about the strength of the economic recovery and depressed prices. The market had been expecting a reading of 75 after 73.6 in the previous month, but instead the index came in at 69.5.

The inventory report on Wednesday pushed oil prices up 2.1%, to $85.84. But the monthly outlook from OPEC released the same day actually revised its forecast for 2010 demand for OPEC oil downward by 135,000 b/d from the previous month, to 28.8 million b/d. The group’s expectation for the overall growth in oil consumption also trails that of other analysts.
 
MARKETS: High inventories kept crude oil prices from advancing on week ended April 9
Monday, 12 April 2010

(EnergyAsia, April 12 2010, Monday) --- By Darrell Delamaide for Oilprice.com.

Crude oil prices ended last week virtually unchanged from the previous week as optimism about demand warred with trepidation about historically high inventories in both crude oil and gasoline.

The benchmark West Texas Intermediate contract settled at $84.92 a barrel on Friday, April 9, only 5 cents ahead of the previous week’s Thursday close after surging above $87 a barrel early in the week and then declining for three straight sessions.

Bears noted that oil seemed unable to stay above $87 a barrel level, while bulls said that oil had tested the $84 level going down and found resistance.

The contango for oil increased during the week, suggesting continued downward pressure on short-term prices. Contango is when further-dated contracts have higher prices than near contracts. Contango widened to about 60 cents from 40 cents as near-term prices fell at the end of the week.

Analysts also noted that the gasoline crack spread – the difference between a barrel of crude and a barrel of gasoline – declined over the week, indicating soft US demand for gasoline.

US crude oil inventories rose for the 11th straight week and gasoline inventories remained high for the season. Refineries increased capacity utilisation to nearly 85%, giving rise to concerns that US gasoline stocks would remain high if seasonal demand failed to materialise.

Crude oil has gained more than 70% over the past year, outstripping the fundamentals, on speculation that economic recovery would result in an increase in demand.

Energy prices are approaching a crossroads, analysts said. Either demand will in fact start reducing US inventories and prices will head toward $100 a barrel, or inventories will remain at above-average levels and prices could head back in the direction of $75 a barrel.

Continued uncertainty about Greece’s fiscal crisis also dampened oil prices. Fitch downgraded Greek debt to BBB-, the lowest investment-grade rating, increasing the country’s borrowing costs even as it frantically tries to raise money in international capital markets. A Greek default and its knock-on effects in Europe could severely impact economic recovery and reduce demand for oil.
 
SINGAPORE: Ministerial speech delivered at March 31 groundbreaking ceremony for LNG terminal
Tuesday, 06 April 2010
(EnergyAsia, April 6 2010, Tuesday) --- This is an edited speech delivered by S. Iswaran, Senior Minister of State for Trade and Industry and Education on Jurong Island on March 31.

This event marks an important milestone in the evolution of Singapore’s energy policy and landscape. In 2006, we announced that Singapore would build a terminal to import LNG to diversify our energy sources and meet our future energy needs. Since then, considerable progress has been made on several fronts, notwithstanding challenging market conditions in the intervening period.

This will be the first open-access multi-user terminal in Asia...capable of importing and re-exporting LNG from multiple suppliers. When fully operational, it will not only help meet Singapore’s growing energy needs, but also catalyse the development of a robust gas market to underpin our industrial growth.
 
Energy Security and Fuel Diversification

To meet Singapore’s long term needs, we need a diversified energy portfolio. The move towards combined cycle gas turbines has made our electricity generation cleaner, more efficient and responsive. But, we need to look beyond piped natural gas to broaden our energy sources. In that context, the growing global LNG market presents a compelling opportunity. LNG is expected to contribute about 17% of global gas supply in 2020, a significant increase from a mere 7% in 2003. The LNG project is, therefore, a key plank in our national energy strategy.

To diversify our energy portfolio, the government is also prepared to consider energy sources such as clean coal and electricity imports in the medium term.  We expect these to be undertaken on a market basis with appropriate safeguards to maintain the reliability of supply and to meet environmental considerations. We are also funding R & D in renewables such as solar, and embarking on a feasibility study of nuclear energy, as possible options to meet our long term needs.
 
The Importance of the Stakeholders

Our immediate priority is LNG, and the success of this project rests on close co-ordination and collaboration among various stakeholders.

First, we are happy to have Samsung C&T as the EPC contractor for the terminal. Samsung, with its involvement in several major infrastructure developments in Singapore, is a name familiar to all of us. Given Samsung’s wealth of experience and familiarity with Singapore, we are confident of the successful and timely completion of the LNG terminal.

Second, our LNG supplier and gas demand aggregator, BG Group, is a leading player in the global LNG industry. BG is committed to supplying LNG to Singapore from its global portfolio, initially from Trinidad and Egypt, and later from its coal-seam gas fields in Queensland, Australia, when that liquefaction project begins production in 2014. BG has also worked closely with the Singapore LNG Corporation to finalise a comprehensive Terminal Use Agreement that sets out the technical and commercial framework for the use of the terminal by BG, as well as future customers of the terminal.

Third, our power generation companies have confirmed the uptake of regasified LNG for their power plant projects. Six companies, Senoko Energy, PowerSeraya, Tuas Power Generation, SembCorp Cogen, Keppel Merlimau Cogen and Island Power Company, have entered into long-term gas purchase contracts with BG for an initial tranche of around 1.5 million tonnes per annum (Mtpa). This represents about one-quarter of the volume presently imported by pipeline. These multi-billion dollar contracts provide options for further increases in gas volumes, should the companies invest in additional generation capacity and require more gas. This is a significant commitment by the generation companies, and it ensures a sizeable base-load of LNG throughput from the start of terminal operations.

Finally, running parallel to the terminal’s development is the construction of new gas pipelines by PowerGas, a subsidiary of Singapore Power. In all, some 65 km of pipelines will connect the terminal to the existing network for the conveyance of re-gasified LNG to end-users. The first of these new pipelines and enhancements will be up by 2013. 
 
Future possibilities

We also expect the LNG terminal and its supporting pipeline infrastructure to catalyse new business opportunities. One possibility is to develop Singapore as a centre for LNG trading in Asia. Singapore’s central geographical position, between LNG demand in North-east Asia and LNG supply from the Middle East and Australia, offers a key competitive advantage.

SLNG Corp has already commenced discussions on these possibilities with several industry players, who have expressed a keen interest to use the terminal capacity for storage and re-loading of LNG.
 
SLNG Corp is also looking at leveraging on the LNG terminal operations to offer integrated and innovative solutions to industries in Jurong Island. LNG can be used to cool air and separate it into its components of oxygen and nitrogen which companies can, in turn, utilise for their industrial processes. The LNG terminal could potentially offer not only low-cost, but also low-carbon integrated solutions for industries located on the island.
 
Conclusion

These are interesting and exciting times for the power generation and LNG industry in Singapore. Against the backdrop of a global economic recovery led by Asia, the outlook for the Asia Pacific LNG market is promising. Today’s groundbreaking leaves Singapore well poised to seize the ensuing opportunities.

I congratulate the management and staff of SLNG Corp and all their business partners on this important event. We all look forward to the day when the first LNG vessel docks in Singapore.
 
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