Bloomberg News

Shell Shifts Gas Business to Singapore on Asia Demand Growth

December 05, 2012

Royal Dutch Shell Plc (RDSA), Europe’s biggest oil producer, plans to move its natural-gas business to Singapore from The Hague in response to growing demand for liquefied natural gas in Asia.

“We see the major gas trading, the growth of the gas market, the growth of the integrated gas business will be Asia- based,” Andy Brown, upstream director at Shell, said today in London. “The LNG business is going to be in the Far East, and Singapore is a central part of the Far East trade.”

Asian demand for LNG, which is gas cooled to a liquid for transport by tanker, has grown as China feeds its booming economy and cuts reliance on coal for power generation. Japan has also increased purchases since shutting almost all its nuclear capacity following the Fukushima reactor disaster, while consumption in Europe is weakening as economic growth slows.

“We still see potential in Europe with some growth, but the major growth will come now in Asia,” Brown told reporters.

Shell plans to open its new Singapore gas business at the start of 2013 after gaining approval from local authorities.

“If we get all permissions we are looking for, we are going live on Jan. 1,” Brown said. “This is our integrated gas business, our global LNG business, and it’s an important step for us to demonstrate how important Asia is for us.”

LNG Growth

Global LNG trade will double to 500 million metric tons a year by 2025, he said. While the biggest Asian buyers are Japan, South Korea and China, Shell has forecast an increase in demand in the Philippines, Vietnam, Malaysia and Indonesia. The company has 22 million tons of annual LNG capacity, 7 million tons under construction and options to develop 20 million tons, Brown said.

Singapore, Asia’s biggest center for oil trading, said Oct. 24 it will build a fourth LNG tank to meet growing demand and take advantage of increased spot trading. The S$500 million ($410 million) tank, to be built by 2016 or 2017, will boost the capacity of Singapore’s LNG terminal to 9 million tons a year, S. Iswaran, second minister of trade, said in October.

The city-state’s first two LNG storage tanks, as well as a regasification plant and a jetty, will begin operating on Jurong Island in the second quarter of 2013, according to Neil McGregor, chief executive officer of operator Singapore LNG Corp. A third tank, expanded processing facilities and two more jetties will be completed in 2014.

While the U.K.’s BG Group Plc (BG/) plans to be among suppliers to the terminal, Shell hasn’t committed to provide fuel.

Petrochemical Plans

The Anglo-Dutch energy company also has petrochemical expansion plans in Singapore, adding capacity at its Pulau Bukom ethylene plant to tap growing demand in Southeast Asia.

Engineering work to increase output at the facility by more than 20 percent will take place during the next maintenance shutdown, the company said Nov. 15, without specifying dates. The Singapore site is its largest petrochemicals production center in Asia, according to the company.

“There is going to be a little bit more news coming in the next few months about things that we are pursuing in Singapore,” Ben van Beurden, executive vice president for Shell Chemicals, said today in London. The company is building a “large, integrated refining petrochemical hub” to access new markets, he said.

To contact the reporters on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net; Winnie Zhu in Singapore at wzhu4@bloomberg.net

To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net


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