Iran war could be first ‘stress test’ for Singapore’s centralised gas buyer

[SINGAPORE] The escalating conflict in the Middle East has put Singapore’s energy safeguards in the spotlight, and could be an early test for its recently-formed central gas buyer, Singapore GasCo.

The conflict “could prove to be GasCo’s first stress test in managing a gas supply shock”, said Amanda Kang, principal analyst for South-east Asia gas research at S&P Global Energy.

On Wednesday (Mar 18), Iranian missiles struck Qatar’s Ras Laffan facility, the world’s largest LNG export plant. Rebuilding the facility is said to take three to five years, noted Tan See Leng, minister-in-charge of Energy and Science and Technology.

“We need to really brace ourselves for a bumpier ride ahead,” he said on Friday, highlighting that electricity tariffs could rise.

The last time the Singapore energy market was this volatile was during the global energy crisis from 2021 to 2023, when post-Covid demand and the Russia-Ukraine conflict led to large swings in wholesale electricity prices. Several domestic electricity retailers exited the market.

The formation of GasCo was mooted in October 2023, in the wake of the crisis, to procure natural gas from more diverse sources and enter into longer-term contracts. The entity was set up in 2025, in what was deemed a “major milestone” by the Energy Market Authority (EMA).

The energy regulator has since said that GasCo “stands ready to procure additional LNG cargoes if needed”.

Singapore has also put in place other contingency measures, which Dr Tan referred to as “multiple lines of defence”.

For instance, EMA has maintained a standby LNG facility since 2021, which power generation companies can draw on if natural gas supplies are disrupted. Gencos also have to maintain sufficient fuel for power generation based on their available generation capacity.

In 2024, EMA was granted the ability to implement emergency power rationing “as a last resort”.

Gas shortage unlikely

As Singapore leans on safeguards such as the standby LNG facility, S&P’s Kang reckons it is unlikely that the Republic will face an outright shortage of the fuel.

Pang Lu Ming, Rystad Energy’s vice-president for gas and LNG research, likewise sees Singapore “actively managing its supply sources” to prevent a gas shortage.

Singapore had imported about 2.97 million tonnes (Mt) of LNG in 2025 from Qatar, accounting for about 43 per cent of its total LNG imports that year, he noted.

Major deals with Qatar include Shell Singapore’s 1.8 Mt long-term LNG contract, which started in 2023 and is set to end in 2032.

However, Shell and QatarEnergy LNG have both declared force majeure for Qatar-origin volumes, Pang noted. A force majeure notice excuses parties from obligations and liabilities under circumstances such as war and disasters.

Singapore could fill the shortfall by importing more LNG from other sources.

Pang said: “(It) may be able to negotiate with sellers to receive earlier deliveries of cargoes from existing LNG long-term contracts, or purchase cargoes on the spot LNG market to make up for this shortfall.”

But while Singapore is not short on options, “replacing these volumes at market prices will come at a cost, which will inevitably trickle down to the electricity market”, said S&P’s Kang.

Intervention possible

With the continued uncertainty, Rystad’s Pang expects that the Singapore government “may come up with new measures and intervene in the market.”

Dr Tan, in a speech on Jurong Island on Friday, when he visited Singapore LNG Corporation’s terminal, said that the government is ready to introduce more measures if necessary, but wants to ensure sufficient “dry powder for us to use when the situation gets worse”.

LNG markets could indeed get more volatile, especially if the conflict extends into the mid-year.

Dr Sung Jinseok, a research fellow at the National University of Singapore’s Energy Studies Institute, said: “If this conflict goes into the summer, then there will be much higher air-conditioning demand, which will increase gas demand.”

This could intensify competition between Asia and Europe for gas supplies, he noted, adding that the situation reinforces the importance of energy diversification through efforts such as the Asean Power Grid.

With additional reporting by Benicia Tan