SINGAPORE: Singaporeans will likely face higher power bills if a shutdown at Qatar’s giant liquefied natural gas (LNG) export plant proves lengthy.
The city-state is among countries that rely the most on imported natural gas, with more than 90% of its electricity generated from it.
Last year, around half of its purchases of LNG were from Qatar, according to ship-tracking data compiled by Bloomberg.
“The situation in the Middle East is likely to increase global energy prices and lead to higher domestic electricity prices,” Singapore’s Energy Market Authority (EMA) said in an email.
Singapore takes two to three cargoes a month from the Middle Eastern nation, with most of its imports covered by a long-term contract, said Lu Ming Pang, an analyst at Rystad Energy. It would need to turn to the spot market if it can’t get those shipments, he said.
Spot prices in Asia have already more than doubled from last week to the highest since 2023 after Qatar shut the Ras Laffan facility, which accounts for about a fifth of global LNG supply, after being targeted by drone attacks.
The city-state will need to compete for a limited amount of gas with buyers elsewhere in Asia and in Europe, where prices are also surging.
SP Group, the state-owned grid operator, adjusts power prices on a quarterly basis to reflect changes to costs of imported fuel.
It raised electricity prices by 10% in the second quarter of 2022 after Russia’s invasion of Ukraine cut global gas supplies.
Electricity consumers are “cushioned from immediate price volatility as they are purchasing electricity either through a fixed-price retail contract or the regulated tariff from retailers and SP Group respectively,” EMA said.
Since 2021, the authority has rolled out measures to mitigate price volatility and ensure secure electricity supply, including establishing a standby LNG facility for use if incoming supplies are disrupted, and requiring utilities to maintain sufficient fuel stocks.
Most of Qatar’s LNG goes to Asian buyers, and the shutdown is spurring a scramble for alternatives across the region.
Taiwan and South Korea are hunting for different supply sources, while Indian gas importers are already cutting the amount the provide to industrial customers.
Singapore’s import volumes are relatively small, so it’s more likely to be able to source the replacement volumes it needs compared with some other countries.
“Although it will be at an increased spot price given recent price spikes,” Pang said.
“The longer the situation drags on, the more cargoes will be needed to replace the delayed Qatari LNG volumes for future delivery months.” — Bloomberg
