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07 Dec 2004
Speech by Dr Vivian Balakrishnan, acting Minister for Community Development, Youth and Sports and Senior Minister of State for Trade & Industry at the opening ceremony of OSEA 2004 at Suntec City Level 3 Concourse, on 7 December 2004 at 10:30 am
Your Excellencies,
Distinguished guests,
Ladies and gentlemen,
Introduction
- A very good morning. It is my pleasure to be here at the opening ceremony of OSEA 2004. I am happy to know that close to 900 companies from over 45 countries will be participating at the show over the next 4 days. This is an 8% increase over the last show and clearly reflects the tremendous importance of and interest in the oil & gas sector in the region.
Global Oil & Gas Industry Outlook
- Today, the world is experiencing robust growth in energy needs. The return of economic growth in the US, the increase in energy demand in Asia, particularly in China and India, and the continued political uncertainty in a number of major oil producing areas, have led to unprecedented high oil prices. These developments pose challenges but also offer tremendous growth opportunities for this industry.
- The expenditure for global exploration & production activities is expected to grow by about 10% to US$135 bil in 2005. A large part of this investment will go towards boosting declining production from existing oilfields, which are more than 30 years old. However, a significant amount of investments will also be made in new oil & gas production fields, to meet the growing demand for energy. Many of these new fields are in deepwater regions. This will require companies to invest heavily in new technologies.
Oil & Gas Industry - Key Underpinning of Singapore's Growth
- In Singapore we are observing these exciting global developments with great interest as the oil and gas industry is a very important one for us.
- Singapore's oil and gas industry has its roots back in the late 19th century when oil giants like Shell and Standard Oil (the predecessor of ExxonMobil) located their kerosene trading operations here. Over the years, we have built a strong base of industries supporting the growth of the oil & gas sector, from refinery centres, oil trading, oil & gas equipment manufacturing to offshore supply services.
- Today, Singapore is the leading oil trading hub in Asia and the world's third largest oil refinery centre. In terms of oil trade, Singapore registered over US$104 bil in physical trade and US$101 bil in derivative trade last year alone. We are a major oil storage hub in the region with over 3 mil m3 of installed independent capacity.
- Singapore also has a significant manufacturing base supporting the oil and gas equipment industry. The Singapore shipyards have 70% market share for floating production storage & offloading (FPSOs) conversions and 60% market share for jack-up rigs. In addition, we also serve as an engineering, manufacturing and services centre for specialized oil & gas equipment. Leading global companies such as Schlumberger, Halliburton, FMC, Cooper Cameron and Baker Hughes all have a significant presence in Singapore. The manufacturing output of this sector exceeded $1.2 bil last year. In addition, Singapore is also an important base in Asia for offshore supply services. From here, companies not only serve regional fields but also those as far off as Sakhalin in Russia and West Africa from here.
- We have made good progress in developing the oil & gas sector. Our conducive business environment, excellent connectivity, strong manpower and manufacturing capabilities have helped the growth of the industry in the past four decades. Today, the Oil & Gas industry is a key sector of our economy and we are committed to supporting its growth and strengthening our position in this sector. To do so, we intend to not only add value, but also to create new value for the companies operating here. I would like to broadly outline some of the initiatives we have in mind for the industry.
Oil & Gas Industry Initiatives
- In the downstream sector, we will work with and support refiners in Singapore as they upgrade to meet the tighter specifications that will be introduced as countries in Asia move towards greater usage of cleaner fuels. We shall also facilitate closer integration between the refineries and petrochemical plants on Jurong Island through feedstock linkages and shared infrastructure. With more than 70 companies operating there, Jurong Island today is recognized as one of the world's major oil and chemical hubs.
- In the upstream sector, we will work closely with oil & gas equipment manufacturers to move up the value chain in high value-added manufacturing, product development and R&D. I would like to emphasise here that manufacturing is, and remains, a key component of our economy and we are committed to working with the Oil and Gas equipment companies to strengthen their value manufacturing and engineering operations here. We shall also continue to develop our local supporting industry so that it can better serve the manufacturing outsourcing needs of the original equipment manufacturers (OEMs).
- In the area of R&D, we recently launched the "Centre for Offshore Research & Engineering". This one-stop research centre for the oil & gas and offshore engineering industry will work in close collaboration with the industry to address its technology needs. We have also stepped up our efforts to train specialized manpower for this sector. For example, The Nanyang Technological University has introduced the Marine and Offshore Engineering specialization program while the National University of Singapore has introduced petroleum engineering modules into its chemical engineering courses. These programmes will better prepare our graduates for a career in the oil and gas industry.
- In terms of physical infrastructure, we are studying the possibility of constructing a liquefied natural gas (LNG) receiving terminal. With such infrastructure, we could import LNG to diversify our gas sources and also have the opportunity to develop a market for gas trading. Five companies have been shortlisted and will be submitting their tender proposals for the study soon. The government is targeting to commence the study in Jan 05 and complete it in 12 months. We believe that gas could, over time, develop into a more widely traded commodity that will play a pivotal role in the energy market. We hope to ride on Singapore's experience as an oil hub to establish a firm foundation to develop Singapore into a hub for gas.
Conclusion
- These are exciting times for the oil & gas industry promising enormous opportunities. As you develop your growth strategies, we would like to invite you to consider how the South East Asian region, and particularly Singapore, could play a role.
- In closing, I would like to thank the organisers of OSEA 2004 for inviting me to be a part of your event and I wish all the participants a fruitful time here. It is now my pleasure to declare OSEA 2004 open. Thank you.
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