SINGAPORE - Singapore is drafting new rules to facilitate setting up a second liquefied natural gas (LNG) terminal for the city-state, a government official said on Tuesday, a significant move forward for a project that could boost regional LNG flows.

Tan See Leng, second minister for trade and industry, said Singapore's Energy Market Authority (EMA) is developing a regulatory framework to "facilitate the entry of such infrastructure" after issuing a non-binding expression of interest (EOI) invitation last November for private companies to build, own and operate an offshore LNG terminal.

The EOI, aimed at boosting Singapore's position as an LNG hub in Asia, was "well-received", Tan said, speaking at a video conference on LNG and hydrogen gas markets during Singapore International Energy Week.

The second terminal is part of Singapore's plan to develop LNG-related services and infrastructure, he said, adding that there are currently more than 50 LNG trading or business development companies in Singapore.

Located strategically on the main shipping route between Europe and Asia, Singapore started commercial operation at its first LNG terminal in 2013 on Jurong Island, with an initial capacity of 3.5 million tonnes per annum (mtpa). It currently has a peak regasification capacity of 11 mtpa.

Prime Minister Lee Hsien Loong announced in 2014 that a second LNG terminal would be built to support new industrial sites, power plants and to enhance energy security.

In July this year, Singapore issued a request for proposal to appoint up to two new LNG term importers by first-quarter 2021. On Tuesday, minister Tan said the move would give gas buyers more options to purchase supply at better terms and more competitive prices.

Natural gas currently makes up 95% of Singapore's energy mix, up from 26% in 2001 when it first began using gas as an energy source for electricity generation.

(Reporting by Jessica Jaganathan; Editing by Kenneth Maxwell) ((Jessica.Jaganathan@thomsonreuters.com; +65 6870 3822; Reuters Messaging: jessica.jaganathan.thomsonreuters.com@reuters.net; Twitter: https://twitter.com/j3ssi3))