[SINGAPORE] Singapore has established a new government-owned entity to centralise natural gas procurement, and appointed Alan Heng, who previously led gas trader Pavilion Energy, as its chief executive.
The formation of the entity, called Singapore GasCo, is a “major milestone” in the Republic’s transition towards green energy, the Energy Market Authority (EMA) said on Wednesday (May 7).
Singapore GasCo will “reap economies of scale and negotiate for more favourable gas contracting terms” by centralising the procurement and supply of natural gas to power generation companies (gencos), noted EMA.
The entity will also procure natural gas from diverse sources and enter into longer-term gas contracts to “provide more stable supply and prices”.
Heng led Pavilion Energy up to March this year, before the company was fully acquired by oil-and-gas giant Shell. An energy industry veteran of 37 years, he also spent more than two decades at ExxonMobil in senior management positions that involved planning, operations and marketing.
The creation of Singapore GasCo was mooted back in October 2023, after the country saw large swings in wholesale electricity prices in the prior two years. The market was rocked by strong post-pandemic energy demand, an unplanned gas curtailment from Indonesia, and Russia’s invasion of Ukraine, which led to a global energy crisis.
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The volatility hit Singapore’s electricity retailers, especially those that did not sufficiently hedge their exposure. Five players exited the market in late-2021 – a development seen as a setback for the liberalisation of the power sector.
Thus far, gencos have individually decided on the volume and tenure of gas to procure on a commercial basis.
But this arrangement does not ensure that there will always be enough gas to meet Singapore’s needs, “especially during a crisis, when market conditions are volatile”, the EMA said in 2023. This is because gencos are often reluctant to enter long-term gas contracts.
Natural gas accounts for around 95 per cent of Singapore’s electricity generation and “will continue to play a crucial role in safeguarding our energy security and supporting an orderly transition”, the EMA pointed out on Wednesday. “Singapore GasCo will play a key role to support a secure, resilient and cost-competitive power system as we navigate the energy transition.”
