X

Register to download the report. Already a member?

Download PDF

Click Here for $250 / 6 months

Click Here for $450 / year

Singapore oil and gas: an evolving ecosystem

16.01.2014 / Energyboardroom

Despite a complete lack of hydrocarbon resources within the sovereign territory of Singapore, the city-state has been linked to the oil and gas sector for more than a century. Singapore has been an oil trading hub for over 120 years, and since the 1960s, the country has been a major refining base. Nonetheless it is in the last generation that Singapore’s oil and gas industry has really undergone a major revolution, with a boom in oil and gas related activities on both the hardware and software side of the business: from storage, shipping, manufacturing and offshore services, to financial and legal services. How does a country with no oil and gas resources of its own achieve this position of regional leader, or justify such an evolution? Is the shift a result of top-down policies or bottom-up business strategies? Finally, yet perhaps most importantly, how will Singapore continue its evolution?

On the tangible, ‘hardware’ side, Singapore has grown to become a major energy and petrochemicals hub for Southeast Asia as a result of its solid infrastructure and strategic positioning. Singapore is also one of the world’s top three export refining and oil and gas trading centers, with a refining capacity in excess of 1.3 million barrels per day (bpd) in 2012. In 2012, oil exports accounted for 21 percent of total exports. Furthermore, the so-called ‘little red dot’ is one of the world’s busiest marine bunkering hubs and a major oil and oil product pricing center.

In addition to this, Singapore is recognized as a premier global offshore hub. Located along one of the most important shipping lanes in the world, the Strait of Malacca, Singapore has enjoyed a maritime tradition for decades. Lim Kok Kiang, assistant managing director of Cluster Group Engineering at Singapore’s Economic Development Board (EDB), highlights how the offshore sector in Singapore began to take off in the 1960s. “Part of this emergence was down to Singapore’s longstanding position as a marine hub for Southeast Asia. In the 1970s and 1980s, Singapore started to develop its vessel conversion capabilities, prior to building a footprint in the offshore oil market through jack-up rigs in the 1990s. It was an incremental evolution, which followed a natural skill-set transition.” In effect, the country’s strategic position along the trade route has enabled it to gradually develop its maritime engineering and manufacturing capabilities.

Today, Singapore is the undisputed global market leader in the construction of jack-up rigs and conversion of Floating Production Storage and Offloading Vessels (FPSOs). Michael Chia, chairman of the Singapore Maritime Foundation (SMF), summarizes that “Singapore will maintain itself as both a shipping hub and a port city; we try to leverage our strength as a trans-shipment port. Combined with the fact that Singapore is also a world leader in rig building and FPSO conversions, it is very much a formidable contender on the hardware side and we fully intend to continue along that path.”

Singapore has also made significant leaps in the development of the ‘software’ side of the oil and gas industry. As a crucial trading hub for refined petroleum products and petrochemicals and a leading supplier of a range of offshore assets, Singapore offers a wealth of engineering expertise and is has often been a source of innovation for the global oil and gas industry.

Singapore has also made significant efforts to use its positioning as the world’s fourth largest financial center, and fully applies this to its oil and gas ecosystem. Singapore’s exchange, the SGX, has implemented a number of initiatives to attract energy companies seeking to raise capital to the island state. Moreover, in 2013, Singapore was designated by the Baltic and International Maritime Council (BIMCO) as the third named seat for maritime arbitration in BIMCO’s Standard Shipping Forms. On that topic, Chia of the SMF proudly notes that “this is quite a feather in our hat and demonstrates that Singapore has grown into a critical node in the global maritime network.”

Despite its resounding success, Singapore has never stood still. The IEA’s Southeast Asia Energy Outlook report boldly states, the region’s “energy demand [will] increase by more than 80% in the period to 2035.” As a result of the accompanying increase in competition across the refining and offshore manufacturing industries, Singapore is constantly reassessing its competitive position and building upon its strengths. In order for Singapore to maintain its regional energy leadership and global competitiveness, it must actively promote and develop each branch of its oil and gas industry and assert its value on the global energy scene.

 

To read more articles and interviews from Singapore, and to download the latest free report on the country, click here.

LATEST ISSUE

DOWNLOAD

Most Read