Published on: 07/06/2017
Of Pipes, Tankers, Liquids, & Gas: Part 3 of this 3-part series concludes with an overview of Singapore’s sources of energy supplies.
History of electricity generation in Singapore (awfully briefly)
The use of natural gas as fuel source for electricity generation is a recent development, showing how fast Singapore progresses. Once upon a time, coal and oil ruled our sunny island.
St James’ Power Station, the place we now know as a nightlife hub, was previously a power plant. Opened in 1926, it was Singapore’s second power plant, and when it first opened, relied on coal as its feedstock. In 1940, it made history when it became Singapore’s first power plant to use fuel oil for electricity generation. The Japanese were probably rather grateful for this development, and so were we hence after.
It was only in 1991, that Senoko Power Plant became the first ever plant in Singapore to use natural gas from Malaysia. This development signalled the start of the era that we know now.
Why do oil prices even matter to us? We use gas!
You might have noticed (seeing how we’re already at the third installment) that the previously-mentioned factors; supply and demand of oil, and SP Tariff Prices, were all discussed in relation to oil. At any given moment, Singapore’s electricity supply is at least 95% provided for by gas-fired power plants. The logical question is then, why do oil prices matter if we are using gas?
Briefly, this matters because of the way our gas contracts are structured and calculated. Singaporean gas can be split into 2 types: Piped Natural Gas (PNG), which is imported through underground gas pipes from Malaysia and Indonesia, and, in more recent times, Liquefied Natural Gas (LNG), a gas that has been cooled into a Liquefied form before being shipped to Singapore. PNG prices are indexed against HSFO180cst prices, a refined oil product whose raw material is crude oil while LNG prices are indexed against Brent Crude Oil.
In recent times, SGX LNG Index Group, or Sling (very punny, these guys) was conceived as a “trusted Asian LNG Spot Index” to be used as a price marker for spot gas that is traded in the region; this pricing index is independent of oil price fluctuations. In time, maybe gas prices in the region—and those of our gas-supply contracts—will finally delink themselves off oil, but that development will probably take quite a while.
Who wants to be a millionaire?
Now you can probably see why oil prices matter, but the crucial question is this: will this save you money? In all honesty, probably not unless you’re going to start dabbling in oil futures. But hopefully, this does provide you with that crucial bit of context that you have been lacking, so that annoyingly short and repetitive SP media bulletin might make more sense when it comes out the next time around. But if you’re after cheap electricity in Singapore, there are simpler ways to find it. Find out more at ELECTRIFY.SG.