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This is part of a strategy by Singapore to diversify the nation's energy sources and cut the level of reliance on piped gas from Malaysia and Indonesia.
BG, which operates about 25 vessels, is the main supplier of LNG to the United States, the world's largest gas market.
The company, previously part of British Gas, beat four competing firms to the contract, which will last up to 20 years, said the Energy Market Authority (EMA) yesterday.
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Neither party would comment on the value of the deal, but the terms stipulate that BG has been chosen as an aggregator to consolidate demand from all end-users of gas in Singapore, and to supply up to three million tonnes a year of LNG to the local market.
EMA project director Rod Duke said yesterday that once the three-million-tonne level has been reached, EMA will re-evaluate the arrangement.
Currently, 80 per cent of Singapore's power is generated using piped gas - but a 2004 supply glitch caused a blackout for 300,000 Singapore homes, highlighting the need for diversity.
A $1 billion LNG terminal to be built on Jurong Island will process the LNG, shipped from various sources around the world, for sale to power plants in Singapore. This could provide about one-third of the current level of piped gas, earlier reports said.
EMA chief executive Khoo Chin Hean said at a press conference that BG had been chosen after careful evaluation following the call for proposals for the job in September last year.
'BG was selected for the attractiveness of its total solution for Singapore, including the security and reliability of its supply from BG's diverse LNG supply portfolio at a competitive price, and also its capability to grow the Singapore gas market.'
Senior Minister of State (Trade and Industry) S. Iswaran said BG would be a key player in Singapore's energy sector and would have a 'strategic role' in energy diversification efforts.
'We have taken a significant step into the global LNG market and with the entry of BG, Singapore will gain greater access to competitive, reliable and secure gas supplies from different parts of the world.'
BG executive vice-president and managing director Martin Houston said BG's position as a gas major in 27 countries put it in an ideal position to supply competitively priced gas here.
The deal is the first long-term contract for BG in the Asia-Pacific. It has been in Singapore for over 15 years and employs more than 50 staff, including geologists and other professionals.
BG commercial manager Christian Iturri said the next step for the company would be to meet PowerGas - which will build and operate the LNG terminal - to discuss terminal design.
'We will also meet end-users to discuss terms. We will need about nine months to finalise all these details.'
Mr Khoo said reclamation work had already begun on the terminal site, which is set to be finished by year-end. Construction is due to start early next year.
Separately, an industry expert has lauded Singapore's proactive stance in building up oil stockpiles and its efforts to develop alternative energy sources.
Mr Michael Richardson, a visiting senior research fellow at the Institute of Southeast Asian Studies, said Asia's reliance on Middle East oil - with 83 per cent of all its imports coming from the region - was worrying.
Speaking at a seminar yesterday, he said the longer-term risk for Asia of a growing reliance on Gulf oil was that it gives the Opec cartel more power to dictate prices to the region.
'Moreover, if any of the Middle East's many conflicts erupt into war, Asia would be liable to suffer most from a disruption in oil supply.
'But Singapore's stockpiles of oil, stored in underground caverns in Jurong, and its work to develop alternative sources of fuel such as LNG, set it apart from its regional counterparts.'
DIVERSIFYING SUPPLY
'With the entry of BG, Singapore will gain greater access to competitive, reliable and secure gas supplies from different parts of the world.'
SENIOR MINISTER OF STATE (TRADE AND INDUSTRY) S. ISWARAN
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