New government entity formed to centralise Singapore's natural gas procurement and supply
The plan to set up the new Singapore GasCo was first introduced in 2023, on the back of a global energy crunch.
A vessel transports liquefied natural gas (LNG) past the coast of Singapore on Jul 3, 2024. (Photo: AFP/Roslan Rahman)
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SINGAPORE: A new government-owned entity, Singapore GasCo, has been established to centralise the procurement and supply of natural gas to meet the country's energy needs.Â
It will be able to "reap economies of scale and negotiate for more favourable gas contracting terms", said the Energy Market Authority (EMA) and GasCo in a joint media release on Wednesday (May 7).
GasCo will also procure natural gas from diverse sources and enter longer-term gas contracts to provide more stable supply and prices, they added.
About 95 per cent of Singapore’s electricity is generated using imported natural gas. This is mostly supplied through pipelines from Malaysia and Indonesia, according to government website SG101.
Six of the existing gas contracts with Indonesia and Malaysia are also due to expire between 2018 and 2029, with no guarantee of renewal, the website states.Â
"As we push ahead with Singapore’s energy transition towards net-zero by 2050, natural gas will continue to play a crucial role in safeguarding our energy security and supporting an orderly transition," said EMA and GasCo on Wednesday.Â
Mr Alan Heng, former group CEO of Pavilion Energy, has been appointed GasCo's chief executive. Mr Heng has also held various senior management positions for 23 years at ExxonMobil and has over 37 years of experience in the energy sector, added the release.
The framework for GasCo was first unveiled in 2023 by Minister for Trade and Industry Gan Kim Yong.
The announcement came on the back of a global energy crunch in 2022, when electricity prices surged on fossil fuel shortages exacerbated by the Russia-Ukraine war, severe disruptions in renewable power and global oil and spot gas price spikes.
In 2021, surging gas prices also caused an energy crisis that severely tested Singapore’s electricity market. Power generation companies were reluctant to buy gas on fears they would be left with expensive inventories should prices moderate subsequently.
Six electricity retailers exited the market within weeks, unable to deal with the extreme volatility.
"The establishment of Singapore GasCo is a major milestone in Singapore’s energy transition journey," EMA and GasCo said.
"Singapore GasCo will play a key role to support a secure, resilient and cost-competitive power system as we navigate the energy transition towards a more sustainable future."
