LNG hubs set to enhance gas supply reliability in markets

by Myrna Velasco December 14, 2015

http://www.mb.com.ph/lng-hubs-set-to-enhance-gas-supply-reliability-in-markets/

Rome, Italy – Convergence and integration of markets will define the new industry era for gas as proposals for the creation of liquefied natural gas (LNG) hubs had become an intensifying call of the times to ensure supply reliability.

One of the earlier proposed LNG hubs is for the Southeast Asian market, with Indonesia lending its voice to it and has now been advancing discussions with neighboring countries.

A parallel proposition has been raised for the setting up of LNG hub for the Northeast Asian countries, with studies and research propounded to include those on relaxation of destination and take-or-pay clauses as well as diversification of supply sources to include pipeline gas.

The other proposals have been to set up LNG trading hub in Singapore; and another one in Japan.

Asia is seen as a core market for the global gas industry that many LNG producers – especially from the North American jurisdiction – have been setting their eyes on this part of the continent.

For Southeast Asia, Indonesia is among the markets with forecast substantial demand growth that needs to be supplied via domestic production and international LNG procurement. This country will be investing massively – about US$32.4 billion in the next five years – for its planned LNG receiving terminals and pipeline networks.

“Indonesia’s dependence on LNG oil import is expected to grow significantly…with approximately 4.0 billion cubic feet per day (bcfd) deficit expected by 2030,” Didik Sasongko Widi, vice president of PT Pertamina has noted.

He qualified that Pertamina “is transforming from largest LNG exporter to become portfolio player.” LNG supply aggregation is one of the strategies being thought out by Indonesia to meet the growing but geographically dispersed needs of its various regional markets.

“Pertamina is taking the lead in developing infrastructures covering all the major regions in Indonesia to fulfill gas demand,” he said. Bulk of Indonesia’s future LNG demand will be to underpin the growing needs of its power industry plus a shift of its diesel-dominated transport sector into gas.

For LNG infrastructure developments though, the resounding prescription is not on onshore LNG terminals but more on floating storage and regassification units (FSRUs), which was also observed to have been the key feature of infrastructure developments in the industry this year.

According to Sveinung J.S. Stohle, president and chief executive officer of Norwegian firm Höegh LNG, FSRUs are ideal in “meeting baseload demand for electricity production in confined markets,” and these can be built in half-the-schedule if based on conventional project lead times; and also half the cost.