1. Good afternoon to colleagues and global energy leaders from governments, the industry and international organisations taking part in the 7th Asia LNG and Hydrogen Gas Markets Conference. It is my pleasure to join you today.
2. We are meeting at a time when the world is facing a global energy crunch. A confluence of factors – like increased gas consumption from the recovery of economic activities, severe weather, as well as gas production outages - have disrupted supplies and sent global energy prices to new highs. The increased demand is compounded by low inventory levels in major economies for the coming winter season.
3. Today’s tight gas market has created ripple effects on electricity markets, pushing prices up and driving fuel substitution in favour of coal and oil. Governments around the world are taking various measures to secure sufficient fuel supplies.
4. With growing global climate ambitions and action, various countries and investors are pivoting from traditional fuels to cleaner sources of energy. However, various industry reports tell us that the transition is likely to be fraught with challenges, notwithstanding the current energy crunch.
5. It is with this context that I would like to touch on three areas:
i. LNG’s pivotal role in enabling the global energy transition;
ii. The need for continued investments in the global LNG ecosystem; and
iii. A call to collaborate on emerging low-carbon solutions such as hydrogen.
LNG’s pivotal role in enabling the global energy transition
6. The ongoing gas crunch has resulted in significant volatility for the energy markets. In early October this year, Asia LNG spot prices surged by 40% to an all-time record high of $56 per million British thermal units (mmBtu) amid the global supply crunch. Rising power prices have also impacted operations of electricity-intensive industries, and several companies have temporarily cut down production as production costs have continued to rise. Countries have also turned to diesel and coal to meet rising demand even when LNG would have been a much cleaner solution.
7. Various countries are looking to transit away from coal to cleaner energy sources. It is relatively easier for countries with renewable energy potential to make the switch – for example, those that have land for large-scale solar deployment, or hydroelectric or wind energy. However, given the intermittency of renewables like solar and wind, power systems still need to be supported by alternate generation capacity that is ideally low or zero carbon. This is critical for system resiliency and reliability.
8. Natural gas is the cleanest-burning fossil fuel which can complement the intermittency of renewables and ensure reliable electricity supply. The use of combined cycle gas turbine technology for power generation is also well-established. Ongoing improvements in energy efficiency are also being pursued in this area. Therefore, LNG will continue to play a pivotal role in a country’s transition to clean energy. It will remain a key part of most energy systems for decades to come, before low-carbon alternatives such as hydrogen become commercially available. Carbon capture technologies can also potentially make natural gas a viable option, if we are able to capture carbon dioxide generated from the post-combustion of natural gas.
Need for continued investments in LNG infrastructure
9. Therefore, natural gas is a critical element in the global energy transition, and there is a need for continued investments in LNG infrastructure. The LNG market continues to grow in response to strong global and Asian demand. According to the International Energy Agency (IEA) latest gas market report for Q4 2021, LNG trade has been and remains instrumental in adjusting to sharp and unexpected demand swings. Delivering secure supply is key. Governments and market players may see this as an opportunity to encourage collaborations, as well as the need to adopt a prudent and scalable approach for the security of LNG supply.
10. Growing demand for LNG is also partly driven by its use as transport fuel including bunkering. According to the IEA, gas as a transport fuel is expected to grow at an average rate of 2.6% per year, principally driven by Asia with the growing use of LNG for trucks and river transports. As a fuel for transportation, LNG offers much potential and new business opportunities. To make investments in this area more enticing, market players would do well by collaborating and adapting to current trends.
11. Domestically, the completion of Singapore’s LNG Terminal in 2013 has allowed Singapore to import LNG from global markets such as Australia and the United States. The LNG terminal operator, Singapore LNG Corporation (SLNG), has also been serving the region by providing a range of services. Besides vessel gassing-up and cool down, SLNG also offers storage and reload, LNG transhipment, breakbulk and LNG truck loading. Last year, SLNG played a leading role in LNG re-export global markets, accounting for 42% of the world’s total re-exported LNG.
12. To encourage greater competition and provide our gas users with more purchase options, the Energy Market Authority (EMA) appointed two more Term LNG Importers - ExxonMobil LNG Asia Pacific and Sembcorp Fuels in March 2021. Together with Shell Eastern Trading Limited and Pavilion Energy Singapore, the four LNG importers are required to offer competitive prices to gas users in Singapore, as well as maintain a diversified portfolio of LNG sources. This is key to ensuring that Singapore’s LNG supplies continue to be secure, reliable and competitively-priced.
13. LNG trading is also an important part of the value chain. Singapore currently has over 50 companies with an LNG trading or business development presence in Singapore. They complement the various suppliers and independent trading companies already in the LNG ecosystem. As we strengthen our infrastructure, I urge like-minded traders and organisations to expand your LNG presence locally and globally. This will enhance and contribute to a vibrant and thriving LNG ecosystem for all.
Transition to low-carbon hydrogen
14. At the same time, we hope Asia will continue exploring new energy technologies in order to meet longer-term energy needs as well as achieve low-emission targets. A promising solution is hydrogen, which has an energy density about three times that of natural gas. Hydrogen has the potential to be produced and transported globally through well-developed supply chains just like oil and LNG. This would potentially let alternative energy-disadvantaged countries access cleaner energy sources from across the world. Global decarbonisation efforts could also receive a push this way.
15. The momentum on hydrogen has been building worldwide. A number of countries like Australia, Japan, New Zealand, South Korea, and the UK, have spelled out their hydrogen strategies and indicated national and corporate interest in developing hydrogen supply chains.
16. This is very encouraging, but there remain key challenges to overcome. For example, technologies that allow for long-range transportation and long-term storage need to be developed in a cost-effective manner. The cost to use hydrogen also needs to be viable. In addition, the production of green hydrogen generated from renewables is still subject to the intermittency of renewables and forces of nature like the weather. Further technology developments need to be explored, so as to minimise such impact.
Singapore’s efforts on hydrogen
17. The global community is working hard to surmount these challenges, and Singapore is keen to contribute. Earlier this year, we concluded a feasibility study on hydrogen supply pathways and downstream applications for Singapore. We will be following up on the findings, and will continue to work with industry and academic partners to pursue partnerships to study, pilot and test-bed hydrogen solutions that have the potential to scale in the long-run.
18. This includes supporting research to develop low-carbon technologies in hydrogen and carbon, capture, utilisation and storage (CCUS). As part of our Low-Carbon Energy Research Funding Initiative (LCER FI), the Government recently awarded 12 projects in the domains of hydrogen and CCUS. This multi-agency initiative seeks to improve the technical and economic feasibility of implementing low-carbon technologies. Four of the awarded projects were related to hydrogen, and researchers will be studying how to safely deploy hydrogen and develop easier ways to transport it through carriers like ammonia.
International collaborations on hydrogen
19. I have spoken about Singapore’s domestic initiatives and how they contribute to the development of hydrogen chains. However, this would need to be complemented by international cooperation as we all work towards building a broader hydrogen economy and ecosystem. A key focus of our international engagement strategy is to learn from and to contribute to global discourse on best practices in the hydrogen economy. Singapore is actively collaborating with international bodies and countries such as Australia, Chile, and New Zealand to amplify, to participate in and to keep abreast with global technological developments on hydrogen technology.
20. We will work together on practical projects to develop hydrogen markets, supply chains and standards. In addition, we look forward to strengthening our networks and partnerships. I am pleased to note that the industry has been active on this front, with multiple consortia exploring the development of low-carbon hydrogen and its associated infrastructure in Singapore. For example, earlier this month, Sembcorp Utilities, Chiyoda Corporation and Mitsubishi Corporation signed an MOU to explore the feasibility and implementation of a commercial supply chain to deliver hydrogen into Singapore.
21. These are but a snapshot of some exciting efforts across our industry. We encourage more companies to get into the action and explore possible supply pathways and downstream uses of hydrogen in Singapore. We look forward to establishing more of such meaningful collaborations to further develop more sustainable solutions such as low-carbon hydrogen to achieve our climate targets.
22. Let me conclude. As part of the global energy transition, we will need to find good alternative sources of low-carbon energy. Hydrogen is a promising option, but time will be needed for research breakthroughs and novel solutions. By current estimates, green hydrogen is unlikely to be commercially viable for storage and transportation before the next decade. Recent events have also shown that for the present and foreseeable future, LNG will remain a critical source of energy for the world.
23. Investments on LNG infrastructure are necessary as LNG will continue to play an important part in the global energy transition. At the same time, we should cast our eyes to the future and make early investments in alternative energy technologies such as low-carbon hydrogen.
24. The longer-term energy mix, both globally and in Singapore, will depend on a number of factors. This includes the development of new technologies to enable the storage and transport of hydrogen, as well as carbon capture, utilisation and storage. It is possible that LNG and hydrogen will co-exist as future partners in the global energy system, especially if carbon capture technology for power generation becomes cost-viable. Singapore is committed to work with our partner countries and industry players, to support Asia’s low-carbon energy transition plans.
25. With this, I wish everyone a fruitful conference. Thank you.