The Gasco agenda: how centralisation is set to transform Singapore’s gas procurement

Singapore's gas market is undergoing significant transformation with the creation of Singapore GasCo Pte Ltd (Gasco), a government-owned enterprise that will centralise the procurement and supply of gas to the city-state’s power generation companies. 

Wood Mackenzie analysts recently examined the Energy Market Authority's (EMA) reasons for the shift, Gasco’s role, and the impact it may have on Singapore's energy landscape. Fill in the form to receive a selection of key insights from the report and read on for a brief introduction. 

In 2024, Singapore relied on natural gas for about 95% of its electricity generation. It must now reconcile its commitment to achieving net zero by 2050 with the need to ensure a stable and secure power supply ‒ a balancing act that will shape its energy strategy for years to come.  

The EMA created Gasco for five main reasons: 

1. A decline in pipeline import volumes and contract extension uncertainties: Singapore pipes most of its gas from Malaysia and Indonesia, but a fall in gas sales from Indonesia prompted a sizeable 20% drop in piped import volumes in 2023. Indonesian piped gas contracts due to expire that year were extended at lower volumes, disrupting Singaporean supply and making it more dependent on liquified natural gas (LNG). 
2. The complexity of pipeline and LNG imports in the gas supply mix: Attempts to secure alternative gas supplies have hit regulatory hurdles, underscoring the complexity of securing new gas sources from Indonesia. Singapore’s existing gas contracts with Indonesia are set to expire by 2028, and Indonesia's prioritisation of domestic energy security may limit future exports. We expect Malaysian pipeline gas exports to Singapore to end by 2027, as domestic production in Peninsular Malaysia declines and its LNG import dependency grows.  
3. Decentralised gas procurement is a threat to energy security: Before the creation of Gasco, Singapore's power generation companies (gencos) managed their gas procurement independently, based on their own commercial considerations. This decentralised approach posed significant risk to the city-state's energy security, particularly during periods of market volatility. 
4. Volatile electricity prices: Global energy shortages, regional gas supply issues and the absence of systematic, strategic gas procurement have resulted in wild swings in wholesale power prices in recent years. The average monthly Uniform Singapore Energy Price skyrocketed to more than SGD 480/MWh in October 2021, January 2022 and May 2023, compared with the SGD 84.6/MWh average from 2016 to 2020. This volatile pricing has prompted power producers to cut gas purchases, worsening price spikes and supply concerns. 
5. The exit of independent power retailers: Market volatility forced six independent power retailers to exit Singapore between 2021 and 2022. They struggled to hedge rising wholesale prices, which squeezed profits on fixed-rate plans. Consequently, many customers moved to state-owned electricity and gas distribution company SP Group, facing higher regulated tariffs or wholesale rates in the process.