Boston, MA -- (SBWIRE) -- 01/01/2013 -- BMI View: Petrochemicals and refining remain the lifeblood of Singapore, with strong regional demand growth meaning there is potential for capacity expansion - although investment in countries such as China and Vietnam has led to increasingly fierce competition. Growing gas demand means liquefied natural gas (LNG) imports are needed to augment pipeline volumes from Indonesia and Malaysia.

The main trends and developments we highlight in the Singaporean Oil & Gas sector are:

- Singapore's first LNG import terminal, expected to be ready in Q213, will be expanded to ensure it can meet all of the island-state's gas demand, raising the possibility that existing pipeline gas supply contracts with Malaysia and Indonesia may not be renewed. Chee Hong Tat, the chief executive of Singapore's Energy Market Authority (EMA), told an industry conference on March 5 2012 that the government would 'ensure sufficient capacity to import LNG to meet all of [Singapore's] gas demand'. The terminal, which will cost approximately SGD1.7bn (US$1.39bn), will have an initial capacity of 3.5mn tonnes per annum (tpa) - equivalent to 4.8bcm of gas. Construction of the terminal began in March 2010. The government announced in October that it would expand capacity to 9mn tpa with the addition of a SGD500mn fourth gas storage tank, likely to be complete by 2017.
- Singapore imports all of its natural gas, which is mainly used for power generation and petrochemical production, exclusively via pipelines. In 2011, Singapore consumed an estimated 8.8bn cubic metres (bcm) of gas - a rise of almost 500% since 2000. Gas use is rising rapidly, as the government promotes policies aimed at reducing carbon dioxide and sulphur emissions, ensuring energy security, and promoting the country as a regional hub for an integrated gas pipeline network. Our forecast is for gas consumption to reach at least 12.5bcm in 2016, rising further to 17.9bcm by 2021.
- Singapore has been experiencing steady growth in demand for oil, tracking both the local and regional economy. Throughput in Singapore's refining system should rise in line with regional demand. Beyond 2012, annual oil demand growth is likely to average 2.5-3.0% through to 2021. This implies demand rising from an estimated 896,000 barrels per day (b/d) in 2011 to around 1.2mn b/d in 2021 - all met by imports.
- As demand increases in Asia, the government has stated it will promote long-term growth in refining capacity in order to maintain its position as a leading exporter and regional trading hub. Furthermore, naphtha demand (for petrochemicals production) and the resumption of regional oil consumption growth point to a rise in refining capacity over the long term.

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