Singapore regulator takes special measures to clinch energy security
Singapore's energy regulator announced rare preemptive measures to safeguard the country's energy security as surging global gas prices roiled the city-state's electricity market.
The measures will include providing standby reserves to ensure gas is available for power generation firms to tap if needed, the Energy Market Authority (EMA) said in a statement.
As Singapore, which imports nearly all of its energy needs, is one of the few Asian countries to have a fully liberalized electricity market, such action by the regulator is unusual.
"Having a secure and reliable energy supply is critical to Singapore's survival and economic competitiveness," the EMA said. "Singapore will be taking temporary pre-emptive measures to safeguard our energy security and resilience."
Lower gas supply from Indonesia, where production issues in the West Natuna gas field have resulted in reduced output to Singapore, is expected to last until the end of this year, the regulator said. Gas pressure from South Sumatra has also decreased.
With spot liquefied natural gas (LNG) prices trading over 500% above the same period last year, it is significantly more expensive for power generation firms in Singapore to turn to LNG purchases to make up for reduced piped gas supply, the EMA said.
LNG prices <LNG-AS> have been driven up by global supply tightness and increased demand during the northern winter months. About 95% of electricity in Singapore is generated from imported natural gas.
A recent spike in electricity prices in the country has left retailers that have locked in contracts with consumers but have not sufficiently hedged against a big price spike vulnerable.
At least four energy providers - Best Electricity Supply, Ohm Energy, bewitch Energy, and Silver Energy - have announced their exit from the market in the last week, with one announcing a re-organisation of the business.
While the EMA said Singapore's overall gas supplies remain sufficient, it will work on measures to further secure fuel and electricity supply and is urging consumers to conserve energy where possible.
It plans to establish standby fuel facilities which generation companies can draw upon if needed. It is working with the firms to track their fuel supply levels, and will provide standby fuel to them if gas supplies are affected.
It has also told generation companies to contract sufficient fuel to at least meet demands of customers of their retail arms.
To help those who have not contracted enough gas, EMA has told companies with excess gas supply to provide other power generation firms or the EMA itself with first right of refusal before diverting to third parties.
The EMA added that it is monitoring the Singapore Wholesale Electricity Market closely and will intervene if necessary. It will review the measures again by March next year.
"These pre-emptive measures are extraordinary but necessary to secure our fuel and electricity supply," EMA said.
Reporting by Jessica Jaganathan; Editing by Louise Heavens and Jan Harvey
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