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SIEW 5Qs Interviews

By Singapore LNG Corporation | 18 November 2016

SIEW 2016: 5Qs with John Ng, CEO, Singapore LNG Corporation

About John Ng

Mr John Ng Peng Wah is the Chief Executive Officer of Singapore LNG Corporation Pte Ltd, and a veteran of Singapore’s energy sector with more than 30 years of commercial and engineering experience under his belt.

Prior to joining SLNG, he was the Chief Executive Officer of the YTL PowerSeraya Group, as well as Executive Director of Seraya Energy (a retail subsidiary) and PetroSeraya Pte Ltd (an oil storage and trading subsidiary).

John is a Director of the Central Provident Fund Board, a Member of the National Integration Council and Co-Chair of the Security Tripartite Cluster Committee. In addition, he is the Vice President of the Singapore National Employers Federation, and the Chairman of its Industrial Relations Panel.

John holds a Master of Science in Systems Engineering from the National University of Singapore and a Master of Science in Material Science from Carnegie Mellon University, USA.

1. What are your views on the role of LNG as Asia moves towards a low carbon future?

The fact of the matter is, the modern world cannot survive without electricity. It is a basic necessity for homes, businesses and industries; and there is no economy in the world today that can progress and prosper without affordable and sustainable access to electricity. As such, every country must deal, in their own way, with the energy trilemma of security, sustainability, and affordability.

At present, natural gas, liquefied or otherwise, offers the most practical balance between security, sustainability, and affordability for many countries around the world, especially developing and newly developed economies. In terms of security, estimates indicate that natural gas reserves exist in significant abundance, especially since the “Shale Gas Revolution”. In terms of sustainability, it produces substantially lower carbon emissions than oil or coal. And in terms of affordability, natural gas is potentially cheaper than oil and many other renewable options, depending on market conditions.

With the global push to reduce carbon emissions and renewables not quite ready to replace fossil fuel, natural gas is probably the most balanced and viable option for many countries; and its use is expected to grow.

2. In your view, what would an Asian LNG hub bring to the region and what should be in place for this to be developed?

Singapore’s fortuitous geographical location puts it in a highly advantageous position to develop as an LNG trading hub, but Singapore cannot become an LNG hub on its own. What is needed is an entire ecosystem, including related and inter-connected facilities around the region.

Hence, we look forward to there being more LNG terminals, infrastructure, and activities in and around the region. As more players enter the market with increased infrastructure and increased transactions, the market as a whole matures with greater liquidity. This will create more business opportunities for traders, as well as for terminal operators like SLNG, and eventually lead to greater LNG price discovery.

3. What do you think are the growth opportunities for LNG in Asia?

We are at an interesting turning point in the LNG growth story. Despite the current low LNG prices, LNG demand in the key LNG consuming nations in Asia has remained largely suppressed compared to previous years, due to a mix of reasons that include the restart of nuclear power plants, weak economic conditions, coal remaining the dominant fuel source, and so on. At the same time, a number of new LNG production projects have been coming on-stream since 2015, leading to an overall LNG over-supply in Asia.

The circumstances have led to substantial quantities of new LNG production entering the market to be contracted on “destination-free” terms, which means that such LNG cargoes can be diverted or traded by the buyer into other markets. This flexible supply, coupled with the presently not very robust demand in the traditional markets and the emergence of LNG trading intermediaries, will lead to more secondary market trading in the years going ahead.

In short, there is reason to be optimistic about the growth of the spot/string secondary market in the coming years.

4. How is SLNG tapping into new business areas like small scale LNG?

SLNG is exploring how our Terminal can further support the growth of LNG-related businesses in Singapore and value-add through innovative business models or being the “first mover” in some instances; and one of the new services that we are looking into is LNG Truck Loading.

The Terminal’s design provides for four permanent LNG truck loading bays, and while there are indicative interests from various parties for such a facility, there is no real demand yet. It is the usual “chicken and egg” story, where potential users may be waiting for the infrastructure to be ready and infrastructure developers are waiting for there to be enough users. So instead of just waiting around, we decided to make the first calculated move and proceeded to develop an interim truck loading facility. This facility is scheduled to be completed by the end of this year to begin service early next year.

The truck loading facility can be used to transport LNG overland to locations in Singapore not served by the gas network. This may include locations where the LNG could be transferred onto barges for delivery to ships as bunkering fuel. This is thus one way in which SLNG is working closely with the Maritime and Port Authority of Singapore to facilitate the development of LNG bunkering.

Another area in which we are hoping to help crack the “chicken and egg” issue is in the realm of small scale LNG. Countries like Indonesia and the Philippines are potentially the most attractive places in Asia for a vibrant small scale LNG play, as it offers a solution to reach the many small demand centres in these 2 archipelagic nations.

The two operational jetties at our Terminal can already accommodate LNG carriers from 60,000 to 265,000 cubic metres in capacity, and we are currently exploring modifications to our Secondary Jetty to possibly accommodate LNG vessels as small as 2,000 cubic metres in capacity. If the modifications are feasible, we can help facilitate the development of a range of businesses that involve deliveries of small volumes of LNG, such as break bulking and LNG bunkering.

However, it will take time for the various links in the value chain, such as receiving terminals for the small-scale LNG, to develop; and given the high capital costs involved, the will to pursue such developments, whether commercial or political, is important. All the different players must come together to form the required ecosystem, without which the potential cannot be realised.

5. What are your thoughts on the SIEW 2016 theme “New Energy Realities”?

I think that this is an appropriate and timely theme which reflects the opportunities and challenges we face in the current environment. With the oil and gas glut, the energy landscape has changed quite dramatically and there is waning confidence that things will ever go back to “the way it was”. At the same time, the environmental banner is being raised higher and higher, forcing closer attention to be paid to more environmentally friendly fuel options. Technology progress has also continued to make energy production, systems, and networks smarter, heralding new possibilities.

So it is time to consider and face up to new energy realities.

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