Singapore may add a third liquefied natural gas storage facility to a proposed import terminal after BG Group Plc signed additional supply contracts with local companies, the operator of the port said.

BG will supply 2 million metric tons a year of the fuel to utilities and may boost sales further as power plants switch to gas, said Neil McGregor, chief executive officer of Singapore LNG Corp., which will operate the 3.5 million tons a year terminal. The third tank may increase options for sales to China and other Asian buyers, he said.

 

“To us it makes sense to make a break-bulk facility here, with volume in tanks, you can set up a paper market as well,” Singapore-based McGregor said today in an interview at the PowerGen Asia conference. “There is a limit to the receiving terminals that can be built in northeast Asia.”

 

Samsung C&T Corp. will build Singapore’s first import terminal, due to start operations by 2013, the Energy Market Authority of Singapore said in February. The third tank, which is in addition to the two 180,000 cubic meters units already being constructed, will help Singapore diversify its energy supply and stretch its oil-trading experience to the gas business.

 

Singapore LNG will receive additional funds for the third tank from the government, “thought to be in the vicinity of $200 million,” McGregor said. The terminal may use the facility, slated to start operations in 2014, for domestic use, re-exporting cargoes and trading the fuel, McGregor said.

 

BG may complete negotiations to sell as much as 1.5 million tons of the fuel to utilities in Singapore “very soon,” half of what it has agreed to bring in to Singapore, Lawrence Wong, chief executive officer of Energy Market Authority, said in February. That volume has since climbed by 500,000 tons, prompting storage expansion.

 

Samsung has an option to build a third tank, Paul Shin, vice president of Samsung C&T, said in February. Korea Gas Technology Corp., a unit of Korea Gas Corp., will design the gas storage tanks for the project, Lee Sang Hyup, general manager at the company, said earlier this year.

 

BG Group Plc, the biggest supplier of LNG from the Atlantic Basin to Asia, won a 20-year contract to provide the fuel to the import terminal, located on the south-western part of Jurong Island in Singapore. The terminal may have provisions for an expansion to 6 million tons a year, McGregor said.

 

The import facility may process about 1.5 million tons in the first year, and as demand rises that will increase to 3 million tons by 2018, according to McGregor and the Energy Market Authority. The storage facility, which has two jetties, helps LNG producers in the Middle East and Australia respond promptly to demand swings as port constraints in their home countries may restrict swift supplies.

 

The project will be funded by loans and equity from the Singapore government, which took over the project after the global financial crisis reduced funding. The island, which currently buys its gas from neighboring Malaysia and Indonesia, suffered gas supply cuts from Indonesia that caused blackouts in November 2003 and June 2004.