Large LNG Potential In Regional Shipping And Power Generation
“Substantial market opportunities will evolve throughout the small scale LNG value-chain in South East Asia in the next decade”, comments managing director Bjørn Tore Markussen of DNV‘s Clean Technology Centre in Singapore on the outcome of a joint industry project. “The companies who seize the opportunities early in these evolving markets will be well positioned for interesting growth if entry risks are managed properly.”
Investments in infrastructure for small scale LNG power production might be justified when the total demand for electric power exceeds 500 MW within a 120,000 sq. km island region with no pipeline connection, according to a joint industry project on the future small scale LNG value-chain in South East Asia. It also identifies noteworthy potential for LNG as fuel for ships in regional trade, and predicts a future market for LNG bunkering in Singapore.
Consortium
The Joint Industry Project (JIP) mobilised a consortium of 16 participants from all parts of the LNG value chain. Among the members are Gazprom, Rolls-Royce, Wärtsilä, Hanjin Shipping, I.M. Skaugen, Keppel, The Linde Group, Trans LNG, DNV, BW group, BBG, the Maritime and Port Authority of Singapore, the two Singapore universities, NUS and NTU. The JIP is also supported by Innovation Norway and The Norwegian Embassy in Singapore. The study examined two areas of future use of LNG in South East Asia. These were LNG for small scale power production in offgrid island regions and LNG as fuel for ship propulsion.
Small Scale Carriers
The study identified multiple island regions in South East Asia outside any pipeline grid where total demand for electrical power exceeds 500 MW. Based on a number of underlying parameters and assumptions, various financially feasible scenarios were modelled. For example, Eastern Indonesia might have a demand for up to 70 small scale 50 MW power plants by 2020. Equally, Southern Philippines could require up to 45 plants, while the estimated demand for Northern Vietnam might be seven small power plants.
The distribution of LNG to these power plants would require close to 60 small scale LNG carriers by 2020 if this number of plants is built. As the price of crude oil is rising faster than the price of natural gas, the financial incentives for using LNG for power generation are equally increasing with considerable environmental benefits to be gained from such a fuel switch.