In a deal that reverberated with repercussions, the tiny city of Singapore has made bare its energy independence drive. Two of the stellar names in the world of energy production, Pavilion Energy and Total Marine Fuels Solution (TMFS), have inked a deal to develop the city’s LNG bunkering expertise. Whichever way one looks at it, there is now no stopping Singapore’s astutely, calibrated moves to be Asia’s premier bunkering hub.
Pavilion Energy, a subsidiary of Singapore’s state-owned company Temasek, and Total Marine Fuels Global Solutions have together signed a 10-year deal to help develop LNG bunkering in Singapore.
The agreement is binding, and follows an earlier non-binding deal signed in June 2018.
Key to the agreement is the shared long-term use of a newly-built 12,000 cubic meters GTT Mark III LNG bunker vessel. The vessel by Paris-based LNG containment specialist GTT is fitted with the Mark III Flex membrane containment system and offers a tank capacity of 12,000 cubic metres.
There is little doubt that Singapore wants to be the premier LNG bunkering hub in Asia. Population surges, growing electricity demand in Asia, coupled with memories of a 2003 incident that seared the nation’s collective conscience when a power trip originating in Indonesia from piped-in gas that caused a massive blackout across the country, have fuelled an insatiable desire aimed at dependence. It just could not be business as usual for Singapore since then, especially when the incident reverberated with deep security implications.
Since then, life has come full-circle for Singapore; LNG was not just the marine fuel of choice, it soon morphed into having all the properties of being hoisted onto the altar of the nation’s futuristic energy security.
Singapore has been acutely aware of where its future actually lies, in so far as energy security goes. With many Asian nations ramping up LNG orders and many more building pipelines such as Myanmar and Vietnam, there is no second-guessing where the city-state wants to be.
In 2017, Singaporean Trade and Industry and National Development Minister Koh Poh Koon offered the clearest explanation yet for the harnessing of LNG. He said, “The advantages offered by natural gas, such as its environmental advantages and relative abundance compared to other fossil fuels, are expected to help it make up for 30% of the global energy mix by 2035.”
It was perhaps with that in view that Singapore is making a historic move – historic through a complete paradigm shift in that it now totally wants to disavow the environmentally-toxic bunker trade, a business it has monopolised for decades that it has never ceased to keep its cash register from ringing or stopped its officials from wearing deserved smiles.
But as changing dynamics tell, the global push for clean air emissions is making everybody wake up and take notice, especially when climate change has been widely blamed for the senseless and maddening run of bushfires in Australia.
The International Maritime Organisation (IMO) on its part is insistent and is taking a no-nonsense attitude towards nations that flout rules banning the use of a more than 0.5% use of sulfur content in marine fuels.
Amid the roll of new dynamics, Singapore knows that it has to either sink or swim with the tide – and that new urgency now means that it can no longer bank on the old, emission-causing, toxic bunker fuel and instead cast its eyes over to where the future now lies, and that is LNG.
Unquestionably, Singapore as ever always guns for top billing in the LNG trade. It also has the qualities to become a regional hub; in a May 2018 survey, more than 80 leaders from across the Asia-Pacific energy sector revealed that Singapore was seen as the preferred location for an Asian LNG trading hub.
Hence, now with the slow re-drawing of the once old, energy contours, LNG says Dr. Khorshed Alam, formerly vice-president and regional manager of DNV GL, is ‘[unquestionably] in demand’.
Demand, according to Dr. Alam, will pick up by 2030 – which is just 10 years away – and Singapore has wasted little time sourcing and calling out some of the best-established LNG players in the industry to spearhead the next wave of its bunkering drive.
For years Pavilion Energy, a subsidiary of state-owned company Temasek, has been the toast of the energy world with its open declarations to be Singapore’s global player of LNG. Its sterling qualities have never been in question. It’s group CEO Frédéric H. Barnaud, in announcing the deal with TMFS, said, “Pavilion Energy is fully committed to leading the maritime industry’s energy transition with LNG as a marine fuel – beginning in Singapore, our home base.”
If the CEO’s words are taken as a much anticipated climax in the revolving swirl of events and developments, there is every bit of optimism behind them.
As matters stand, Singapore has already expressed plans to build a new terminal and add another 260,000 cubic metre-full LNG containment tank, of the membrane-type. The terminal and the new tank will facilitate the growth of Singapore as an LNG trading hub and the growth of the LNG business in Singapore, said Singapore LNG (SLNG).
Presently, all of the four storage tanks are currently being utilised and plans are in store for more such tanks, according to a statement by former SLNG CEO Neil McGregor.
‘It underscores our commitment’
Speaking of this new announcement, TMFGS Managing Director Jerôme Leprince-Ringuet gave a ringing endorsement, “With these agreements…It underscores our commitment to offer our customers the best available, and technologically proven solution to significantly reduce the environmental footprint of maritime transport.”
Interestingly, though Singapore is ringed by LNG exporting nations, none have yet taken to LNG bunkering either because they seem content with exporting the commodity, or due to a reluctance for massive capital investments in tanks and terminals. There is no mistaking, however, where Singapore is adroitly placing its bets.
Even if the city-state may lack the edge enjoyed by other nations in their huge consumption of the chilled fuel, the deal inked by Pavilion and TMFGS makes heads turn and signifies the direction that Singapore’s bunkering aspirations are headed.