Distinguished guests, ladies and gentlemen:
Good morning. To all of you, welcome to the 5th World LNG Series: Asia Pacific Summit. To our guests from overseas, welcome — or welcome back — to Singapore.
LNG's Global Potential
I am delighted to see such a good turnout at this summit. We are here today because we all believe in the great future potential of LNG. In Singapore, we see the prospect all the more clearly. This is because we are situated right in the heart of Asia. This is the fastest-growing region in the world, and naturally it will have fast-growing energy needs. And LNG will be a big, big part of that picture for many years to come.
We are well-placed here in the Asia-Pacific to invest into this area of need. Countries around the world are re-looking at their energy mix, for different reasons. In terms of environmental sustainability, LNG is the cleanest-burning of all fossil fuels, and offers many benefits that will improve our quality of life. This is a good example of the balance between economic and environmental concerns, which will be especially vital for fast-growing urbanisation, like in most of Asia today.
The increasing use of natural gas will help to mitigate climate change. Burning natural gas produces only half the amount of carbon dioxide compared to burning coal. In the US, the increasing use of natural gas has resulted in carbon dioxide emissions falling by almost half a billion tonnes in the last five years. That's a remarkable 7.7% reduction — which is more than any other country.
The good news is that key gas developments are also happening at our doorstep in Asia. China and India will more than double their share of global energy demand by 2025. Their total share will rise from 16% to 37% of all energy consumed, driven mainly by growth in power generation to drive economic development. China has become the world's largest total energy consumer in less than 10 years, and its share of gas consumption can only grow further. Australia is working its way to challenge Qatar as the foremost global LNG exporter.
Globally, both gas production and consumption are expected to continue to expand. Limited domestic gas supply and infrastructure in the region will likely support more LNG trade. The Asia-Pacific region accounted for almost 70% of global LNG trade in 2012. Aside from traditional importers such as Japan and Korea; China, India and the Southeast Asian countries are among the key emerging importers in the region. It is forecasted that Southeast Asia's LNG demand could reach some 50 million metric tons per year by 2025. This will make up about 15% of Asia's total LNG demand by then, and is a big jump from Southeast Asia's current LNG volume of just 20 million metric tonnes a year.
Emergence of Singapore as an LNG Hub
As a global trading hub, Singapore's trade is three times our GDP. We are also well-known as an established oil trading centre. Over the years, more companies have been attracted to establish their trading operations here. This can be credited to Singapore's neutrality and proximity to the regional Asia-Pacific markets, and a strong ecosystem of trade services in areas such as arbitration, finance, logistics, manpower and risk management. I would also like to highlight Singapore's strong energy financing that makes Singapore particularly appealing to global investors and energy companies.
These factors have supported the development of the LNG sector in Singapore, as companies seek to position themselves strategically to capture the growing LNG opportunities in Asia. The LNG marketplace and ecosystem in Singapore have become more dynamic over the past five years. The Singapore LNG terminal is now in operation with further storage capacity to come on-stream over the next four years.
Today, the sector comprises a sizeable community of LNG suppliers, traders, buyers and service firms.
International Enterprise (IE) Singapore, the government agency responsible for promoting Singapore's overall trade, continues to receive keen interest from both existing and new players to set up LNG desks in Singapore to participate even more actively in this market. The LNG sector here is expected to become more vibrant in the coming years.
Today, I can say with confidence that Singapore will develop itself into a major LNG trading hub soon in the region. I believe we have what it takes to attract growing LNG volume into Asia and will be in a position to set LNG prices in the region — similar to a "Henry Hub" or "Aeco Hub" of Asia. Singapore can be the Asian LNG price hub. Pavilion Energy will be a key player in this effort.
What Pavilion Energy brings to the LNG Sector
To this end, Pavilion Energy was set up to build LNG capabilities, that apart from supporting Singapore's long-term energy security, will position us well as a preferred regional LNG player.
We are an independent portfolio company of Temasek Holdings, set up with an initial start-up capital of US$1 billion. More capital will be injected as our investment plan unfolds. Our strategic imperatives are clear. We will "Secure LNG Supply" from diversified global sources and at the same time, "Create & Aggregate Gas Demand" in Singapore and the region.
We are looking into global investments, with the aim of building a diversified asset portfolio that enhances our efficiency and competitiveness. We are also looking to grow regional demand for LNG. We will seek to add value across the full LNG value chain and invest in LNG assets and related LNG businesses. We will help open up new markets and work towards competitive pricing in Asia. Pavilion Gas, a subsidiary of Pavilion Energy, is aiming to begin regional trading of LNG within the next 3 months.
Another immediate important task for us is to build deep and robust capabilities anchored in Singapore — especially in our people, our sector knowledge and our financial capabilities. We have very experienced LNG veterans and business leaders on the board of Pavilion Energy and Pavilion Gas. Tan Sri Mohd Hassan Marican is Chairman of Pavilion Energy and Mr Liew Mun Leong is Chairman of Pavilion Gas. Our plan is to acquire assets across the full LNG value chain by building strong relationships with key partners, investing and co-investing in gas acreage, liquefaction plants and assets, shipping and re-gasification. We will work to drive synergy and added value by integrating assets and operations, and developing cost-competitiveness.
At Pavilion Energy, we understand the importance of building business substance as a start-up company. We have therefore acquired some equity holdings in Chesapeake Energy Corporation, the second largest gas producer in the USA. Similarly, we own small equity holdings in Kunlun Energy Company Limited, a well-established exploration and production player in China. Pavilion Energy is also looking at feed-gas and LNG supply opportunities in Americas, Australia and Africa.
Our approach is to spread our supply portfolio by:
To help meet demand, Pavilion Gas will manage gas operations, LNG distribution and trading regionally. We value long-term international partnerships that will build new markets, enhance shipping and logistics, and regasification facilities. We will support innovative processes and technology that enhance production, storage, delivery and trading.
We see collaboration as critical to long term value creation. With our global outlook and Asian roots, Pavilion Energy would like to pursue partnership opportunities, and create new prospects across the region.
On that note, I would like to emphasise regional cooperation, in the context of addressing regional and global challenges. During the Fukushima Daiichi nuclear crisis, we saw clearly how key South Korean and Taiwanese LNG players pitched in to supply LNG to Japan. That was a trying period for Japan, and difficult for the region and the rest of the world to watch on. This is a useful reminder of the importance and necessity of working together, and supporting each other to build a reliable and robust LNG ecosystem for Asia.
Pavilion Energy is keen to co-invest into the LNG terminals and infrastructure within the region and provide its LNG supply to these countries in the near future. We are interested in forging strong trading partnership with regional LNG players in South Korea, Japan, China and Taiwan for spot trading. We look forward to developing rewarding partnership and co-investment opportunities, hopefully with many of you present today, to drive growth of LNG across the region.
Conclusion: A "Golden Age" for LNG?
I am certain that LNG will continue to play a key role in Asia's energy future. Our industries and governments will increasingly embrace energy sources that better serve our communities. Changes in the energy mix across the globe, including the Asia-Pacific, will present many new opportunities. I look forward to hearing from our summit speakers, and from all of you, your take on this and other important issues for us at this time in the industry.
Pavilion Energy would like to play a positive role to shape a more flexible and competitive Asian market. We will facilitate supply, and work to both meet and grow demand in Asia, to the benefit of buyers, investors and end-users. We know that success hinges on enhancing our operating capabilities across the full LNG value chain. But most of all, it will depend on establishing and sustaining long-term partnerships with friends such as yourselves. I look forward to getting to know as many of you as possible at this summit. For those of you visiting from overseas who wish to know Singapore better, I hope you will allow us to extend to you our Singaporean hospitality.
Recently, I made an official visit with the Chairman of Pavilion Gas, Mr Liew Mun Leong to the state of Sabah in Malaysia. We were moved by the sincerity of the people we met, the meticulous and detailed planning that was put into our visit, and the excellent hospitality that we received. There were many highlights of the visit, but the one I remember most was when our host, Hon. Datuk Raymond Tan, Minister of Industrial Development, Sabah, took special effort to drive us around for the day. There were many officers he could have easily assigned for this task, but he had decided to do it personally. He wanted to spend more time with us and to make us feel more welcome. I learnt a lesson in humility that day. I was reminded that good leaders are those who are most comfortable with people and with themselves, and are down-to-earth. And in everything that we do, especially in business, what matters most are our human relationships.
As you network, learn and forge new partnerships, I wish all of you a most fruitful summit, and many more successful ventures for the future.
Thank you very much.