Mr S Iswaran at the Groundbreaking Ceremony for Singapore’s First LNG Terminal, 31 Mar 2010

SPEECH BY MR S ISWARAN, SENIOR MINISTER OF STATE FOR TRADE & INDUSTRY AND EDUCATION, AT THE GROUNDBREAKING CEREMONY FOR SINGAPORE’S FIRST LNG TERMINAL, AT JURONG ISLAND ON WEDNESDAY, 31 MARCH 2010, 1515 HRS

Your Excellency Oh Joon, Ambassador of the Republic of Korea

Mr Jung Yeon-Joo, President and CEO, Samsung C&T Corporation

Mr Neil McGregor, Executive Director, Singapore LNG Corporation

Distinguished guests,

Ladies and Gentlemen,

Introduction

I am very pleased to join you today for the groundbreaking ceremony for Singapore’s first LNG terminal facility.

This event marks an important milestone in the evolution of Singapore’s energy policy and landscape.It was a journey that began in 2006, when we announced that Singapore would build a terminal to import LNG to diversify our energy sources and meet our future energy needs.Since then, considerable progress has been made on several fronts, notwithstanding challenging market conditions in the intervening period.In June last year, given the bleak economic outlook and commercial uncertainty, the Government decided to take over the ownership and development of the LNG terminal.We did not want to delay the development of this critical addition to our energy infrastructure.

This LNG terminal facility will be the first open-access multi-user terminal in Asia.It will be capable of importing and re-exporting LNG from multiple suppliers.When fully operational, it will not only help meet Singapore’s growing energy needs, but also catalyse the development of a robust gas market to underpin our industrial growth.

Energy Security and Fuel Diversification

To effectively meet Singapore’s long term needs, we need a diversified energy portfolio - this was a key recommendation the Economic Strategies Committee.The move towards combined cycle gas turbines has made our electricity generation cleaner, more efficient and responsive.But, we need to look beyond piped natural gas to broaden our energy sources.In that context, the growing global LNG market presents a compelling opportunity.LNG is expected to contribute about 17 per cent of global gas supply in 2020, a significant increase from a mere 7 per cent in 2003.The LNG project is, therefore, a key plank in our national energy strategy.

To further diversify our energy portfolio, the Government is also prepared to consider other energy sources such as clean coal and electricity imports in the medium term. We expect these to be undertaken on a market basis with appropriate safeguards to maintain the reliability of supply and to meet environmental considerations.In a similar vein, we are also funding R & D in renewables such as solar, and embarking on a feasibility study of nuclear energy, as possible options to meet our long term needs.

The Importance of the Stakeholders

But, our immediate priority is LNG, and the success of this project rests on close co-ordination and collaboration among various stakeholders.I am, therefore, particularly pleased that many established industry players, local and global, have come on board.

First, we are happy to have Samsung C&T as the EPC contractor for the terminal.Samsung, with its involvement in several major infrastructure developments in Singapore, is a name that is familiar to all of us.Given Samsung’s wealth of experience and familiarity with Singapore, we are confident of the successful and timely completion of the LNG terminal.

Second, our LNG supplier and gas demand aggregator, BG Group, is a leading player in the global LNG industry.BG is committed to supplying LNG to Singapore from its global portfolio, initially from Trinidad and Egypt, and later from its coal-seam gas fields in Queensland, Australia, when that liquefaction project begins production in 2014.BG has also worked closely with the Singapore LNG Corporation to finalise a comprehensive Terminal Use Agreement that sets out the technical and commercial framework for the use of the terminal by BG, as well as future customers of the terminal.

projects.Today, I am pleased to announce that six companies, namely Senoko Energy, PowerSeraya, Tuas Power Generation, SembCorp Cogen, Keppel Merlimau Cogen and Island Power Company, have entered into long-term gas purchase contracts with BG for an initial tranche of around 1.5 million tonnes per annum (Mtpa).This represents about one-quarter of the volume presently imported by pipeline.These multi-billion dollar contracts provide options for further increases in gas volumes, should the companies invest in additional generation capacity and require more gas.This is a significant commitment by the generation companies, and it ensures a sizeable base-load of LNG throughput from the start of terminal operations.

Finally, running parallel to the terminal’s development is the construction of new gas pipelines by PowerGas, a subsidiary of Singapore Power.In all, some 65 kilometers of pipelines will connect the terminal to the existing network for the conveyance of re-gasified LNG to end-users.The first of these new pipelines and enhancements will be up by 2013.

Future Possibilities

We also expect the LNG terminal and its supporting pipeline infrastructure to catalyse new business opportunities.One possibility is to develop Singapore as a centre for LNG trading in Asia.Singapore’s central geographical position, between LNG demand in North-east Asia and LNG supply from the Middle East and Australia, offers a key competitive advantage. SLNG Corp has already commenced discussions on these possibilities with several industry players, who have expressed a keen interest to use the terminal capacity for storage and re-loading of LNG.

SLNG Corp is also looking at leveraging on the LNG terminal operations to offer integrated and innovative solutions to industries in JurongIsland.For example, LNG, can be used to cool air and separate it into its components of oxygen and nitrogen which companies can, in turn, utilise for their industrial processes.The LNG terminal could potentially offer not only low-cost, but also low-carbon integrated solutions for industries located on the island.

Conclusion

These are interesting and exciting times for the power generation and LNG industry in Singapore. Against the backdrop of a global economic recovery led by Asia, the outlook for the Asia Pacific LNG market is promising.Today’s groundbreaking leaves Singapore well poised to seize the ensuing opportunities.

I congratulate the management and staff of SLNG Corp and all their business partners on this important event.We all look forward to the day when the first LNG vessel docks in Singapore.