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Keppel signs HOA with Petronas to import LNG into Singapore

Singapore's Keppel Corp has laid the foundation for importing LNG from Malaysia via a deal struck with state-owned Petronas.

Singapore's Keppel Corp has laid the foundation for importing LNG from Malaysia via a deal struck with state-owned Petronas.

Keppel Infrastructure Holdings, the energy and engineering arm of Keppel Corp. said late Tuesday its subsidiary Keppel Gas has signed a Heads of Agreement with Petronas to purchase up to 1 million mt/year of LNG over 10 years. No start date or price details were available.

However, the deal is conditional upon Keppel Gas receiving a license to import LNG into Singapore as well as obtaining other necessary regulatory approvals from the city state's Energy Market Authority.

The UK's BG Group currently holds the exclusive right to supply 3 million mt/year of LNG to the Singaporean domestic market.

The Singapore government launched a competitive request for proposals for the next tranche of LNG imports earlier this year, with submissions due by December 31.

At that time, the EMA would shortlist up to three candidates, and eventually award up to two more LNG import licenses.

But Keppel Gas appears to have lined up the deal with Petronas to improve its chances of obtaining an LNG import license.

"Right now, we are still waiting for more proposals, so we can't comment," an EMA spokeswoman said Wednesday, when asked if an HOA in place with a supplier would improve the chances of being awarded an import license.

Besides being one of Asia's most reputable term LNG suppliers, Petronas is also developing an extensive global portfolio of LNG supply, including in Australia and Canada.

The Singapore government has been encouraging LNG imports, as well as the development of an LNG hub, in order to reduce its reliance on pipeline gas supplies from Malaysia and Indonesia.

Keppel Gas currently has a deal to import up to 120,000 MMBtu/day (around 850,000 mt/year) of pipeline gas from Malaysia.

That contract is set to expire by 2023, with the price linked to fuel oil. A spokesman from Keppel Gas was unable to comment whether the proposed LNG deal with Petronas would also be priced against fuel oil.

Over 90% of Singapore's electricity is currently generated from natural gas.

--Max Gostelow, max.gostelow@platts.com --Edited by Jonathan Fox, jonathan.fox@platts.com

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