Singapore takes up LNG floating storage to boost energy security

Singapore has chartered vessels to be used as LNG floating storage to ensure fuel supply and hedge against disruptions due to the war in Ukraine, according to the operator of its main LNG import and storage terminal Singapore LNG Corp, shipping fixtures and vessel-tracking data.

Vessels are used for temporary fuel storage when access to onshore terminals is limited or too costly, and they also provide flexibility in moving cargoes around.

While floating storage has been a popular tool for traders looking for optionality, importers have found it useful to make up for insufficient storage infrastructure.

SLNG has chartered LNG ships to use as floating storage units on a short-term basis to enhance energy security, a company spokesperson said June 17, but declined to provide more details.

On June 16, the energy regulator Energy Market Authority said Singapore had "established a standby LNG facility (SLF), which power generation companies can draw from to generate electricity when their natural gas supplies are disrupted", without providing further details.

Shipping fixtures showed at least two vessels on short-term charter, although not whether the vessels were currently loaded or were loaded in recent months. There was a likelihood they could be used for restocking in the months before the coming winter, according to market participants.

In early March, the Bermuda-flagged LNG carrier Gaslog Singapore was signed up for a 12-month charter, fixtures showed. The 155,000 cu m capacity tri-fuel diesel electric ship arrived in Singapore March 20, according to Platts cFlow. It entered the Sudong Special Purpose Anchorage off southern Singapore April 13 and has remained there.

The 263,000 cu m Bauhinia Spirit, one of the world's largest floating storage regasification units was also fixed in March for about 6 months, according to fixtures. The Bahamas-flagged vessel arrived in Singapore April 11, and has been there for 67 days, according to Platts cFlow.

The Bauhinia Spirit was previously named MOL FSRU Challenger and deployed at an LNG terminal in Turkey in 2017, after which it moved to Hong Kong where it was renamed Bauhinia Spirit. According to MOL's specifications, the vessel has LNG re-shipment and gas transfer capabilities and its specifications allow for the re-export of LNG and supply of LNG to neighboring regions where the vessel is located".

The has regas discharge capacity of 540 MMcf/day, making it as large as the Q-Max vessels operated by Qatar, which are the world's largest.

On Feb. 25, SLNG was seeking a March delivery LNG cargo, with the tender closing on the same day. More recently, on June 13 SLNG had closed a tender for an LNG cargo for delivery in the first half of August.

Typically Singapore's LNG imports are met by designated suppliers like Pavilion Energy while SLNG has played the role of an infrastructure operator.

However, even before the demand surge last winter, SLNG was looking in mid-October 2021 at options to boost LNG inventory at its terminal due to market disruptions at the time. Pavilion Energy and EMA declined to comment on the floating storage.