Powering to Success

Despite its lack of natural resources, Singapore has risen to become one of the world’s top three export oil refining centres and the world’s third largest oil and oil products trading hub – making it the undisputed oil hub in Asia.

Asia’s Premier Oil and Gas Hub

Singapore is further translating its strengths in the oil sector to natural gas too. In 2013, the International Energy Agency (IEA) backed Singapore to become the natural gas trading hub for Asia, citing its good location and status as a global oil trading hub.

Indeed, the oil and gas sector has grown to be of vital importance to Singapore’s economy, contributing almost 5 per cent of Singapore’s gross domestic product according to the Economic Development Board of Singapore (EDB). Growth prospects for the sector remain sound, with global energy demand set to rise by 35 per cent from 2010 to 2040, due to population increase, rapid urbanisation and the growth of economic powerhouses China and India.

While Singapore has many strengths that make it an attractive location to oil and gas multinationals, it has one critical advantage in the form of Jurong Island, an integrated complex hosting more than 95 leading petroleum and chemical companies from all around the world. With its unique "plug and play” infrastructure, Jurong Island enables companies to enjoy cost savings through shared utilities and services, while building synergy through product integration.

Building from a Position of Strength

Far from resting on its laurels, Singapore is committed to further widening its lead in the oil and gas sector. One way it is doing so is by growing oil refining capacity through expansion and upgrading of existing facilities, as well as attracting new refinery investments. Another way is continual investment in Research & Development (R&D) and talent development to preserve its cutting edge in the industry.

Yet one more way involves the development of innovative logistics solutions, such as the S$950 million Jurong Rock Caverns (JRC), which opened in September 2014. The JRC is Southeast Asia's first underground liquid hydrocarbon storage facility, located 130 metres beneath Banyan Basin on Jurong Island. The facility provides infrastructural support to manufacturers on Jurong Island, and meets their storage needs for crude oil, condensate, and more.

Another infrastructure development that is set to consolidate Singapore’s leadership position in the sector is the Singapore LNG Terminal located at the Southern-most tip of Jurong Island. The facility commenced operations in 2013 and is the first open-access, multi-user LNG terminal in Asia. With the announcement of a fourth LNG tank and regasification facilities in 2012, the terminal’s capacity is set to rise to 9 million tonnes per annum (Mtpa).

Securing Power

Singapore’s position as a leading natural gas hub also has the additional benefit of strengthening the Republic’s own energy security. This is because 90 per cent of the electricity in Singapore is generated using imported natural gas. The Energy Market Authority (EMA) is the government agency charged with the regulation and development of Singapore’s energy sector, as well as the operator of critical energy delivery infrastructure. Since its establishment in 2001, the EMA has been championing the liberalisation of the electricity market, opening up the generation and retail markets to commercial players to ensure effective competition and keeping prices competitive for consumers.

Ultimately, the EMA’s key remit remains the security, reliability and adequacy of Singapore’s electricity supply. And while the EMA has previously approved local power generation company YTL PowerSeraya to supply electricity to Malaysia in 2011, this was largely a one-off situation, as the electricity supply in Malaysia supply had been disrupted by the maintenance shutdown of gas production platforms owned by state oil company Petronas.

Growth of Renewables

While Singapore has secured a strong position in the oil and gas sector, it is also committed to developing clean energy technologies to position itself for the next stage of growth. The IEA reported that global renewable energy capacity grew at its fastest pace ever in 2013, and now accounts for 22 per cent of the world's electricity generation. And Asia is at the heart of global clean energy growth, driven by the region's robust energy demands, which is expected to more than double by 2035, and a desire for sustainability.

Singapore’s strong R&D capabilities and experience and capabilities in the semiconductor, industrial equipment and chemicals sectors place the country in good stead to capture emerging opportunities in the solar, fuel cells and biofuels markets. It is also leveraging on its strengths as a key financial centre to support the region in clean energy project development and financing.

The inter-agency Energy Innovation Programme Office (EIPO) has been set-up to coordinate clean energy R&D, pilot and test-bedding initiatives. Led by the Singapore Economic Development Board (EDB) and EMA, the Programme Office has since expanded its coverage from an initial focus on solar energy, into new R&D areas such as smart grids, green buildings, and other renewable generation sources. This strong focus on research has also attracted companies to set up clean energy research facilities in Singapore to tap on the infrastructure and ecosystem.

Better Living Through Chemistry

Singapore's chemicals sector is one of the key pillars of its manufacturing sector. In 2013, the chemicals sector accounted for the largest share of Singapore's manufacturing output at 33.4 per cent or S$97.1 billion. The sector also employed close to 25,000 workers, with a value added per worker of more than S$159,700. Looking ahead, the world economy is set to experience sustained growth as it shakes off the worst of the global financial crisis. With Asia being the key seat of growth in the coming years, its urbanisation and growing middle class will generate strong demand for chemical products.

While Singapore's oil industry was the initial catalyst for the development of its chemicals sector - providing a plentiful supply of raw materials for petrochemical production - the Republic has since built on this advantage to attract many of the world's leading chemical companies. To date, Jurong Island has attracted more than S$35 billion in investments.

In line with its advanced manufacturing ambitions, the country is also leveraging its expertise to move into the higher-value specialty chemicals segment. Industry players are responding too by investing in new facilities, attracted by the Republic's mix of advanced R&D capabilities, strong intellectual property (IP) protection, deep talent pool, excellent logistics and connectivity, and strategic location in Asia.

Realising a Vision

Much of Singapore’s economic success today is a result of big bets on its oil, gas and chemicals sectors, which have paid off handsomely. Each segment has grown into a major economic contributor in its own right, while generating a whole host of additional benefits and spinning off new growth sectors. Looking ahead, the Republic is committed to further strengthening its competitive edge across each sector, and will be looking towards rolling out more forward-thinking policies and measures to consolidate its position.

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