Matthew J. Aguiar, Chairman & Managing Director, ExxonMobil, Singapore
“The driving engine of the petrochemical industry is in Asia. We see the demand for global petrochemicals growing faster than GDP. Over the next decade, we expect that two thirds of global chemical growth will stem from Asia Pacific.” Matthew J. Aguiar, Chairman & Managing Director, ExxonMobil, Asia Pacific.
In 2012, ExxonMobil celebrated its 120th year anniversary in Singapore. Today, ExxonMobil stands as Singapore’s largest foreign manufacturing investor. Why is Singapore such a pivotal market for ExxonMobil?
ExxonMobil has had a presence in Singapore for over 120 years. After Singapore became independent in 1965, we established our first refinery in Singapore and added a second refinery in the early 1970s. In the early 1990s, the company built two world-scale aromatics plants and also started looking at Asia to build a world-scale chemical manufacturing facility. In 2002, ExxonMobil launched its first major chemicals investment in Singapore with its first cracker complex, located on a 200-acre site on Jurong Island. This facility replicated the model of integration that ExxonMobil had established in the US Gulf Coast and Western Europe. In January 2014, ExxonMobil re-affirmed its commitment to Singapore and the Asia-Pacific region with the unveiling of its Singapore petrochemical plant expansion.
With respect to its investments, ExxonMobil takes a long-term view. In terms of selecting the best place to locate our major AP manufacturing complex, we considered a number of advantages that Singapore had. It is strategically located at the apex of the region’s central trade routes, connecting vast crude supplies from the Middle East to Asia Pacific. Furthermore, the city-state has cultivated a transparent and stable pro-business environment, backed by a strong government philosophy. For decades, the government has actively encouraged the growth of our business in Singapore, promoting the protection of intellectual property, combined with an attractive tax regime. In addition, Singapore’s infrastructure is remarkable. There are few places in the world that have managed to create something new and of the scale and sophistication of Jurong Island. Finally, there is a very capable workforce here. Consequently, Singapore had and has all the necessary components for ExxonMobil to build out a robust and large scale manufacturing capability, from which we supply our products to the fast-growing Asia Pacific market.
The government has continued to stay one step ahead and maintains a long-term view. For instance, though Singapore has faced challenges in terms of constrained land space, they have established a pro-active and innovative approach to circumvent potential issues. The government wants to improve competitiveness and encourage specialty products, which is what we are in the process of doing. For example, we recently announced our next big investment in specialty products, which will allow us to manufacture 140,000 tons of premium halobutyl rubber. In addition, we are adding a new hydrogenated hydrocarbon resin unit, which will be the world’s largest with a capacity of 90,000 tons per year. In supporting one another, the relationship between ExxonMobil and the Singaporean government has been an enduring and symbiotic one.
In terms of maintaining its position as the region’s premier downstream energy hub, what are the kinks in Singapore’s armour?
I think the energy costs of Singapore are the biggest concern. It is not so much the absolute energy cost, but the relative difference compared to other regions, such as in the US and Europe.
We have been working closely with the Singapore government to mitigate this challenge. As usual, the government has been very pro-active and forward looking in seeking to ensure energy security. For example, they had established the LNG terminal in anticipation of what the country needed and industry demand. They are now even planning the construction of a second terminal, which exemplifies Singapore’s long-term view. In addition, ExxonMobil and the Singapore Government are both strong proponents of energy efficiency.
Enhancing our energy efficiency not only reduces our energy costs but is beneficial for the environment too. We have made great strides in this area. Indeed in Singapore, we have 360MW of co-generation capacity. The company is also progressing plans for its next cogeneration facility in Singapore.
The expansion of ExxonMobil’s Singapore Chemical Plant is the single largest investment in our chemicals business. It has doubled the size of our petrochemical complex, making it the largest integrated refining/chemicals facility in ExxonMobil Chemical’s global production network. The complex now makes up approximately a quarter of the company’s global chemicals capacity.
In the oil and gas industry, ExxonMobil has been a leader of technological innovation, such as steam cracker feedstock flexibility. Trying to achieve feedstock flexibility and take advantage of the feedstocks we have available have always been a core underpinning of our strategy. The new cracker gives us the capability to bypass the refining processing steps and process crude directly into petrochemical products. This is a first, not only in ExxonMobil but also in the petrochemical industry, allowing us to save energy while simultaneously enhancing efficiency and lowering emissions. Crude oil is not the only feed that we can use; we can take advantage of the feedstocks we have here. We have got in our technology toolkit the ability to go from the very heavy-end of the barrel to the light-end.
What role will Asia Pacific play in driving demand for ExxonMobil’s petrochemical products?
The driving engine of the petrochemical industry is in Asia. We see the demand for global petrochemicals growing faster than GDP. Over the next decade, we expect that two thirds of global chemical growth will stem from Asia Pacific. For example, in China and India, as the standards of living rises and consumerism ratchets up, the demand for plastic will duly increase.
Asia’s refining industry is facing challenges. In the face of squeezed margins and fierce regional competition with a number of mega-refineries due to come online in Asia-Pacific over the next few years, how do you assess the sustainability of Singapore’s refining hub status?
Growth in the refining sector is not as strong as in petrochemicals, though there are good prospects for diesel demand. The refining industry is a challenging business environment. The core challenge is that more refining capacity in Asia Pacific is being added in line with, or in excess of, local demand, putting pressure on refining margins.
As ExxonMobil operates around the world, we have a significant supply network. We are sourcing crudes from all over the world, and that diversity and flexibility allows us to remain competitive. Indeed, one of the company’s strengths has been to find advantaged crudes to supplement our refineries.
Our Singapore refinery is a strategic asset for us. With a distillation capacity of around 600,000 barrels/day, it represents a substantial part of Singapore’s total refining capacity, which stands at 1.4 million barrels/day. We continue to strive to make this refinery competitive. We have one of the largest lubricant base stocks facilities in the world in the refinery here, and we will continue to build on that advantage. For instance, we are currently undertaking a lubricant base stocks expansion.
ExxonMobil‘s new diesel hydrotreater began operations in January 2014 at its refinery in Singapore. What is the strategic significance of this investment?
As the world and Singapore move towards low sulphur economies in both gasoline and distillate, we see the investment into our hydrotreater as a necessary stepping-stone. We have built new ultra-low sulphur diesel facilities in Europe and the US, and we have been able to transfer that experience and technical know-how to Singapore. As discussed and projected in ExxonMobil’s Outlook for Energy, global demand for diesel is anticipated to grow by about 75 percent from 2010 to 2040.
Three years from now how would you have liked ExxonMobil’s Asia Pacific portfolio to have grown?
ExxonMobil has developed a global strategy to supply the Asian market. In Singapore, we are looking to add further speciality products to our portfolio. When we built the first chemical plant in Singapore, the intention was to supply commodity products with some speciality products. The expansion of the chemical complex has catalysed the production of more speciality products. For instance, through ExxonMobil’s Solution Metallocene Technology, the plant uses proprietary technology, including metallocene catalyst systems to ensure uniform and consistent polymers for greater strength, better sealing properties and improved clarity. Such investments are not the end of Exxon’s story in Singapore. We will continue to look for future opportunities to improve and build in the competitive strength and improve our energy efficiency.
In a sentence, what is the secret of ExxonMobil’s sustained success in the oil and gas industry?
There are numerous characteristics that have driven the company’s longevity but it is perhaps the company’s repeated ability to adapt, generate cutting-edge technology and innovate new products that underpins its enduring success in the industry.
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