SINGAPORE – As natural-gas producing companies globally tough it out amid a surge in supply, slowing demand and falling prices, home-grown Pavilion Energy is identifying new growth opportunities to cement its position in the liquefied natural gas (LNG) market in the Republic, and the region.
Pavilion Energy, Temasek Holdings’ LNG unit, is planning to develop supply chain solutions to feed the growing demand for energy from small-scale projects within the region, and is in talks with several partners in Indonesia and the Philippines.
Small-scale LNG, whether transported via land or sea — or a combination of both — is a cost-effective solution for making natural gas available to energy users currently not connected to pipeline networks, Mr Seah Moon Ming, group chief executive of Pavilion Energy, said at the 7th World LNG Asia Pacific Summit here yesterday.
It also increases flexibility in terminal operations, allowing for greater penetration of LNG into previously unreachable markets.
“Markets are opening up to small-scale LNG solutions, and some governments have expressed their support for this initiative. Next steps include having governments align interests with the industry and put in place the much-needed regulations and policies that can help promote and support small-scale LNG as a supply solution,” said Mr Seah.
During the last five years, 65 per cent of all contracts were signed for volumes below 1 million tonnes a year.
In Southeast Asia, where there are numerous small and remote islands, many of which are inhabited and need power, “it makes sense to use small 10,000 cubic metre vessels, carrying about 0.05 to 0.5 million tonne per annum of LNG, to perform multi-location deliveries”, said Mr Seah.
Pavilion Energy is also working on initiatives including the sale of LNG by transporting it in trucks to industrial users in Singapore.
“We are keen to see the pioneering of the sale of LNG using LNG trucks in Singapore to access non-piped gas demand soon … We see this (plan) as an important step towards building a reliable and robust LNG ecosystem in Singapore, and hopefully for Asia,” said Mr Seah.
Further, with plans for LNG bunkering services in Singapore, Pavilion Energy is aiming to become a refuelling station for Southeast Asia.
Despite the area being a busy maritime region, there is currently no LNG-fuelled ship in Southeast Asia, Mr Seah pointed out, adding that about 50 per cent of global LNG supplies pass through the proximity of Singapore.
Founded in 2013, Pavilion Energy has acquired stakes in gas fields in Tanzania, secured LNG supply from the US and bagged various other LNG supply contracts.
The company is focused on paving the Republic’s way to become Asia’s trading and pricing hub.
Despite current conditions of oversupply and slowing demand, Pavilion is confident global LNG demand will rise “as countries and governments come to realise the importance of balancing economic and environmental objectives,” Mr Seah said.
Asia presently accounts for 76 per cent of global LNG demand, led by China and India, which are witnessing rising rates of urbanisation and increasing peak power demand.
LNG demand in Southeast Asia is also expected to rise as traditional exporters Malaysia and Indonesia experience increasing domestic demand, possibly becoming net importers themselves one day, Mr Seah said.