The Energy Market Authority intends to set up a central gas company in 2024 and will consult the industry on the details of the centralised gas procurement framework in the coming months.
Describing this as a fundamental shift in the country’s gas procurement strategy, Mr Gan said: “We believe that this is necessary to create a more stable and secure power system that will ultimately benefit the consumers and also the gencos themselves.” For instance, during the 2021-2022 global energy crisis, the gencos reduced the volume of their gas contracts when prices were high, which led to large swings in wholesale electricity prices, said the authority.
Slightly more than 40 per cent of total gas supply comes from LNG, said Mr Chong Zhi Xin, the director of gas, power and climate solutions at S&P Global Commodity Insights. However, the proportion of LNG supply is expected to increase significantly over the next two years as legacy contracts with Indonesia are expected to expire soon.
This means that generation companies will still be allowed to continue with the existing gas supply arrangements that they have with their respective suppliers. Trade and Industry Minister Gan Kim Yong said the new centralised gas procurement framework will create greater economies of scale. ST PHOTO: KELVIN CHNG