How to accelerate the development of smaller LNG infrastructure in Asia

Neil Semple's picture
Neil Semple, Principal, The Lantau Group
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In this interview, Gastech News asked Neil Semple, Principal at The Lantau Group - and speaker at the 4th Annual Asia Pacific Small & Mid-Scale LNG Forum 2015 - for his views on small-mid scale LNG infrastructure in Asia.

Gastech News: What are the main existing infrastructure and planned infrastructure for small-mid scale LNG in Asia?

Neil Semple: The greatest amount of small and medium scale LNG plants are located in China. But utilisation is low. Demand has been hit by the new city gas pricing for new gas supplies introduced in 2013, which linked prices to a mixture of the imported fuel oil and LPG price. In addition, the fall in crude oil price has eroded the price gap between LNG and traditional liquid products. A change linking all gas to imported fuel oil and LPG prices would assist small scale LNG producers as inexpensive legacy gas would be re-priced to market linked indexes. Tighter environmental rules, and the enforcement thereof, would also encourage industry and transport to switch to natural gas from fuel oil and diesel.

In Indonesia, the state power and gas companies (PLN and Pertamina) have plans to build out infrastructure to get R-LNG into power plants currently using diesel on the smaller islands. Initially this is taking the form of CNG from the CNG storage tanks at the Grati power plant and transporting the fuel by CNG vessels to power plants in Bali and Lombok. But in time new supplies of domestic market obligation LNG are expected to provide a supply push to the build out of LNG milk runs to other smaller power plants and industrial loads scattered around the archipelago.

There are truck loading facilities at the Map Tha Phut LNG terminal in Thailand. Some initial truck loads are being used at factories not connected to piped gas and even transported over the border to Myanmar to run captive power plants. Clarity in regulations on LNG commodity pricing, terminal access, and regulations on the road transport of LNG would be welcomed.

An LNG terminal on Luzon in the Philippines could set the stage for getting LNG into other islands in the archipelago. In the power sector there are many small to medium power plants in Visayas that could switch to LNG from diesel and fuel oil. In addition, as the fuel would be delivered as LNG (and not gas) the transportation of it via truck on Luzon could easily serve industry and also supply the fuel to service stations to refill LNG powered trucks and commercial vehicles or else be turned into CNG for passenger vehicles.

Gastech News: What needs to be done to accelerate the development of smaller LNG infrastructure in the region?

Neil Semple: The removal of any subsidies for other fuels is the main requirement. In addition, in the power sector some companies even in liberalised markets have a fuel pass through mechanism approved by the regulator for purchases of diesel or fuel oil, but no incentive to change to a potentially cheaper and cleaner fuel source. Next would be clear rules and regulations on the transport and storage of LNG. For many countries LNG is a new fuel especially regarding the on shore transportation of it by truck. Tighter emissions standards and enforcement of those standards would also be a boon to LNG which is much less polluting than diesel or fuel oil. A sustained recovery in the crude oil price is needed to restore the pricing advantage of LNG.

To meet Neil and attend the upcoming Asia Pacific Small & Mid-Scale LNG (APAC LNG) Forum 2015 in Singapore click the banner below.

APAC LNG Singapore

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