SINGAPORE, Dec. 2 (UPI) -- Singapore is on course to become Asia's premier liquefied natural gas trading hub, says a key executive.
"In our minds it's already happened, reality just takes a little longer," Singapore LNG Corp. Chief Executive Officer Neil McGregor said Sunday in an interview on Platts Energy Week.
SLNG is operator of the city state's first LNG terminal which received its first commercial cargo, in May, from BG Group, sourced from Equatorial Guinea in Africa. The LNG is re-gasified before delivery to customers.
Initially, the facility had an initial throughput capacity of 3.5 million tons per year. That capacity has now been expanded to 6 million tons, with a target of 9 million tons by 2016, McGregor said during the television program.
"We are scaling up the terminal," he said. "We have a master plan that goes up to 20 million tons for this terminal. And the government's also noted a second terminal for Singapore in the future."
McGregor cited the city state's proximity to the world's number one and two LNG importers, Japan and South Korea respectively, as an advantage along with increased demand, particularly in North Asia.
The National Australia Bank in a report last month said "the synchronized move towards natural gas as the preferred fuel away from coal and nuclear energy" in Asia would keep both prices and demand elevated in coming months.
Japan has increased its reliance on LNG as all 50 of the country's working reactors remain offline, pending safety checks after the March 2011 Fukushima nuclear power plant disaster triggered by a massive earthquake and tsunami.
The International Energy Agency, in its "Developing a Natural Gas Trading Hub in Asia" report released in February said Singapore has the best initial prospects to become a gas trading hub as the government has "a distinctly hands-off approach to the markets."
"Over 60 percent of the world's LNG goes into Asia and most goes past Singapore," McGregor said, adding that about five years ago there were just a few LNG traders in Singapore.
"Now we have over 20 different trading houses that have set up their businesses in anticipation of Singapore actually becoming a liquid and physical hub for LNG," he said.
Although Singapore is Asia's largest oil-supply port, about 80 percent of its electricity is generated from natural gas as fuel. It has been relying on imports from Malaysia and Indonesia via pipelines.
Singapore now has installed power capacity of 10.5 gigawatts and plans to add another 3 gigawatts by 2017.