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S'pore gas retailers cleared to go islandwide

But on-the-ground constraints may temporarily hinder gas flows to customers


THE door is now open for natural gas retailers here - such as SembGas, Keppel Gas, Senoko Gas Supply and Temasek's GSPL and Pavilion Gas - to sell gas islandwide, instead of being restricted previously only to sales in the Jurong Island, Jurong and Tuas (JIT) industrial areas.

But while the greenlight for this was flashed by the Energy Market Authority (EMA) recently, on-the-ground constraints such as interconnectivity of current gas pipelines may temporarily hinder such islandwide gas flows to customers.

EMA's decision to liberalise the natural gas retail market here from April 1 this year follows its earlier industry consultation on opening up the gas market outside the JIT areas to level the playing field. It was a market solely supplied by CityGas, the monopoly town gas retailer here, until now.

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Disclosing that 10 out of 12 respondents to the consultation had supported the liberalisation move, the regulator said in its decision paper that "with the opening up of the market . . . gas retailers can also market their natural gas services to new commercial and industrial consumers outside the JIT areas who are yet to be connected to the natural gas distribution network".

Temasek-owned companies, Gas Supply Pte Ltd (GSPL), which imports piped natural gas from Indonesia, and Pavilion Gas, the newly formed LNG player, noted that the EMA move will "engender competition in the Singapore gas market to create more supply options for customers".

GSPL said that EMA should ensure that all enablers for this are in place - such as the availability of pipeline capacities to make gas supply feasible for consumers outside the JIT areas.

Similarly, Keppel Gas highlighted that "existing infrastructure constraints, arising from the two transmission networks and their corresponding distribution networks being physically disconnected, limit gas buyers to only retailers serving that particular transmission network".

SembGas said that "there could be overwhelming requests for new connections to tap-off from the natural gas distribution network which the retailers will have to work closely with PowerGas for the timely delivery of gas to the customers".

Their responses were noted by EMA which conceded that "there are currently technical constraints in the natural gas networks which could restrict the flow of natural gas from one network to another". "EMA is working with the gas transporter, PowerGas Ltd, to mitigate these constraints."

New gas pipelines may need to be laid for this purpose, and this could possibly take up to next year, industry sources say. They added that outside the JIT area - where most of the gencos and big petrochemical/refinery plants are - the next biggest gas consumers here are the big wafer fab plants which are sited in the north.

ConocoPhillips, which supplies Indonesian gas to Singapore gas importers, said that the market liberalisation "will improve the liquidity of the gas market in Singapore", while Singapore Oxygen Air Liquide said that the ensuing competition will benefit consumers like itself.