Minister Iswaran, distinguished guests, ladies & gentlemen:
Good morning. Let me thank the organisers of Gas Asia Summit for inviting me to speak. And thank you, Minister Iswaran, for the insightful commentary on the evolving energy landscape. Indeed, the role of natural gas is becoming more critical in the face of the decreasing supply of other energy sources for power generation. LNG is at the heart of this development. These are certainly exciting times for us.
The Expanding Role of LNG
The Asia-Pacific region is the fastest-growing gas market in the world. In 2012, it accounted for nearly 70% of global LNG trade. Aside from the 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 50 million metric tonnes per year by 2025. This will make up 15% of Asia's total LNG demand by then, and is a big jump from the region's LNG volume of 20 million metric tonnes a year today.
At present, Singapore relies heavily on imported PNG (or Piped Natural Gas). This is a concern given an impending supply reduction due to natural resource depletion and competing domestic energy requirements in source countries. Demand for natural gas in Singapore is also expected to increase after the year 2017. Significant efforts have been made to address these concerns – notably, the commencement of operations of Singapore's first LNG terminal in May this year, with additional storage capacity coming on-stream over the next four years. Singapore's LNG terminal is also the first open-access multi-user LNG terminal in Asia.
Singapore's Energy Security: A Robust Infrastructure Required
Singapore energy strategies are aimed at ensuring a strong and vibrant energy system. To enhance Singapore's energy security, we believe a second LNG terminal is required. There is a need to invest into and develop a comprehensive, island-wide critical energy infrastructure. This will address both the increasing demand for natural gas, as well as the existing risks of concentrating Singapore's gas supply of LNG and PNG on Jurong Island. It will also prepare and position Singapore to become a major LNG trading hub of the region.
Pavilion Energy would like to participate and invest in this critical initiative. We are ready to contribute to the building of a robust LNG System and Framework that will support Singapore’s energy security. This will involve making deliberate and strategic investments across the entire global LNG value chain.
Pavilion Energy's Support & Role
Pavilion Energy recognises that a secure energy future for Singapore cannot rest solely on the shoulders of the Government. Businesses and corporations have played, and must continue to play a key role. In my keynote address at an LNG conference last month, I shared that Pavilion Energy was set up to build LNG capabilities that will support Singapore's long-term energy security, and position us as the preferred regional LNG player.
We understand the importance in building 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 boards of Pavilion Energy and 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 with the aim of building a diversified asset portfolio that enhances our efficiency and competitiveness. Pavilion Energy will continue to engage and acquire working interest in upstream gas and liquefaction projects. We are also in talks with various parties on partnerships and investments in other parts of the LNG value chain, e.g. in mid-stream shipping and down-stream transportation/ trucking.
Diversity in gas supply is absolutely key to energy security. At Pavilion Energy, we are making headway in our three-pronged approach to spread our supply portfolio through geographical diversity, pricing index diversity and tenure diversity. I am pleased to mention that Pavilion Energy has reached its first long-term supply agreement with a major European Oil and Gas multinational for delivery into Singapore and the region. This strategic partnership is backed by a worldwide portfolio supply, which is critical in the face of an uncertain energy landscape.
An Asian LNG Hub
The future role of gas in the region will depend on the outcome of Asia's participation in current global supply developments, as well as the amount of supply liquidity into Asia. Pavilion Energy is looking to facilitate Asia's efforts to secure supply to both meet and grow regional demand for LNG. We will help open up new markets and work towards competitive pricing in Asia. We believe Asia will continue to pay the "Asian premium" until and unless it develops an Asian LNG hub.
Singapore is an established international oil trading centre. Over the years, more companies have been attracted to establish their operations in Singapore due to Singapore's political neutrality and proximity to the regional Asia-Pacific markets, and a mature ecosystem of trade services in areas such as finance, logistics, manpower and risk management. Today, many global LNG players have trading teams and desks in Singapore for the same reasons.
Having our own LNG trading capabilities will enhance Singapore's overall supply security, especially in the area of spot procurement during sudden supply challenges. Furthermore, at the heart of regional cooperation is the optimisation of gas supply and demand amongst the Asian economies through regional trade activities.
As part of our plan to begin regional trading of LNG, we have put in place an experienced trading team, complete with the requisite mid-office and back-office functions. I am pleased to say that Pavilion Gas, a subsidiary of Pavilion Energy that manages gas operations, LNG distribution and regional trading, is now fully operational and have commenced our LNG trading activities. We expect to complete our first cargo delivery into Asia by this February.
We are also looking into global investments – with the aim of building a diversified asset portfolio. With our global outlook and Asian roots, Pavilion Energy will pursue both regional and international partnership opportunities, and create new prospects across the region. We look forward to developing rewarding partnerships and co-investment opportunities, hopefully with many of you present today, to drive the growth of LNG across our region.
A Meaningful Journey
The role of natural gas in Singapore and Asia will continue to dominate discussions in the month and years to come. Our industries and governments will increasingly embrace cleaner energy sources that better serve our communities. The changes in the energy mix and the growing energy needs will present many new opportunities. Pavilion Energy would like to play a positive role to shape a more flexible and competitive market.
There is a Chinese saying, 士不可不弘毅, 任重而道远: We must have the spirit of determination in what we do and make things happen. We know that success hinges on enhancing our operating capabilities across the full gas value chain. But most of all, it will depend on establishing and sustaining long-term partnerships with friends such as yourselves.
Ghandi once said: "The future depends on what we do in the present", this is also the story of Pavilion Energy, as told in the Preface to the Poems Collected from the Orchid Pavilion at 绍兴 by the sage of Calligraphy 王羲之 in Year 353 '后之视今，亦犹今之视昔', we do things not just for today but for a better tomorrow, and for our future generation.
It leaves me now to wish us all a rewarding summit, fruitful networking, new partnership opportunities, and many more successful ventures to come.