March 11 (Bloomberg) -- Premier Oil Plc, the U.K. explorer that supplies natural gas by pipeline to Singapore, expects limited import capacity in the city state to hold back price competition until later this decade.
Premier ships gas from fields off Indonesia though the West Natuna Transportation System. It gets about $18 per million British thermal units, three times more than in Indonesia, Chief Executive Officer Simon Lockett said in an interview. The price for the fuel reached $23 last year, he said.
Singapore will need more liquefied natural gas facilities as soon as 2017, according to Premier’s Chief Financial Officer Tony Durrant. With “more import facilities they will have a choice of supply and then we might see price competition.”
Singapore is developing LNG terminals with the first cargo expected later this year after BG Group Plc in 2008 agreed on supplies. Royal Dutch Shell Plc, the largest LNG supplier, in December announced plans to move its gas business to Singapore, which is poised to become a maritime gas-trading hub in two to three years, according to the International Energy Agency.
“When we get to 2018 plus and there is excess demand from Singapore, then there will be our pipeline gas, there will be BG’s LNG and may be other people adding into that,” Durrant said. A shortage of land in Singapore restricts expansion on LNG and “they’ll start taking new volumes from us.”
Premier has been exploring the Indonesian fields to find more gas resources to meet growing regional demand, Lockett said. Together with partners it drilled deeper in the Anoa deposit on Natuna Sea Block A.
“Indonesia is also desperately short of gas and we will be trying to fulfil some of the local Indonesian needs first,” Lockett said. Pipeline gas supply “is going to be very competitive” with LNG deliveries in Singapore because of the higher regional demand for the fuel.
Premier’s Indonesian fields supply about 27 percent of gas consumed in Singapore, or 7 percent net to the U.K. company.
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