Out-Law News 1 min. read
27 Oct 2023, 1:41 am
Singapore’s government will establish a centralised gas procurement framework which will be responsible for all the power sector’s future gas demand including gas contract renewals.
A new company, Gasco, will be set up in 2024 by Singapore’s Ministry of Trade and Industry (MTI) and the Energy Market Authority (EMA), according to a statement by the EMA. The decision has been taken to improve the safety and stability of the Singapore power system.
Bryan Chapman at Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, said: “Over the past decade, Singapore’s consumption of natural gas has been steadily rising. The announcement from the Singapore government stems from the observations from the recent global energy crisis. At the heart of this announcement is the desire to provide stability to the gas market in Singapore, avoiding the volatility the world has seen in gas prices.”
Under the new framework, if overall electricity demand exceeds what the generation companies are able to supply, Gasco will procure the additional gas required.
Generation companies will be allowed to continue their existing gas supply contracts with their respective gas suppliers and industrial gas customers will still be permitted to buy gas via license gas importers without being bound by the new framework.
According to the EMA, once the new framework comes into force, Gasco will be better able to negotiate for more favourable contract terms. Gasco will also be better placed to procure gas from different companies, lowering concentration risk and ensuring more stable price and supply for the market.
