SOUTH Korea's Samsung C&T Corporation has clinched a contract to build Singapore's first liquefied natural gas (LNG) terminal.

The deal is to handle the engineering, procurement and construction (EPC) of the Jurong Island facility and could be worth up to $1 billion.

The terminal's total budget, funded by the Government, is $1.5 billion with about $1 billion earmarked for the EPC contract, said Mr Neil McGregor, executive director of the Singapore LNG Corporation (SLNG), which awarded the contract yesterday.

Issues of commercial sensitivity mean the exact value of Samsung's contract could not be disclosed but it is under $1 billion, added Mr McGregor.

Yesterday's signing ceremony marked the start of a key energy project that has been beset by delays.

The plant was first mooted in 2006 and was meant to be developed and operated by Singapore Power's unit PowerGas and French partner GDF Suez and completed by 2012.

But the global credit crunch threatened the plans. The Government said last June that it would take over the development and ownership of the terminal as it was central to the country's efforts to diversify its energy sources.

LNG is natural gas cooled to liquid form and exported via tankers from source countries such as Australia.

SLNG said yesterday it instructed Samsung to start immediately the detailed design, engineering and construction phases of the terminal.

Mr McGregor said Samsung clinched the deal over its competitors due to its 'novel and efficient design, which minimised the footprint of the new terminal' and freed up land that could be used for future expansion.

The other tenderers were CB&I (Chicago Bridge & Iron) and a consortium led by British company Whessoe and including SK Engineering and LG International.

Energy Market Authority chief executive Lawrence Wong said that 'with the award of this contract to Samsung, we have taken a major step forward in the project, and can look forward to the start-up of the LNG terminal in 2013'.

Samsung senior executive vice-president Jeong Ki Cheol said yesterday that Singapore was a key priority for the firm.

The terminal, which will be on a 30ha site on the south-western part of Jurong Island, will have an initial annual capacity of 3.5 million tonnes with provisions to increase capacity to 6 million tonnes.

SLNG yesterday also appointed Foster Wheeler Asia Pacific as its project management consultant. Both firms will jointly manage the EPC contract.

Mr McGregor said the remainder of the $1.5 billion budget will be for a second jetty and extra storage tanks for the terminal as well as development costs.