"The key is to seek a critical mass of LNG players that will conduct LNG trading out of Singapore," Minister for Trade and Industry Lim Hng Kiang said at a conference on trading in Singapore.

He added that Australia's Woodside Petroleum had already started spot trading out of Singapore.

Lim said LNG trading income would get a special tax rate of 5 percent for the next 10 years.

The number of LNG cargoes sold on a prompt basis is increasing, though the development of a liquid spot market has been slowed by fears supplies from major producers could run short, leaving big users such as Japan preferring long-term contracts. Rising production costs also stand in the way.

But as more countries build regasification plants, and the number of tankers increases, it will be easier for spot cargoes to reach new markets. Short-term deals grew to around 13 percent of LNG traded in 2005, from 6 percent in 2000, BP says. China received its first spot cargo of LNG last month.

LNG, natural gas super-cooled to a liquid state for tanker transport, is normally sold years before production begins on a long-term basis to lock in revenues for multi-billion-dollar projects.

Singapore has long sought to diversify its gas supplies, all of which come via three pipelines from Indonesia and Malaysia, to fuel growing power generation.

Lim said the country also saw opportunities in emissions trading, with most carbon dioxide (CO2) emissions credit deals between buyers in Japan and Europe and sellers in countries like China done on an opaque bilateral basis.

"We are attracting emissions trading activities, as well as supporting industries such as carbon-related consultancies, verifiers and fund managers to Singapore," he said.