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  Business Times 5 Jul 07
S'pore needs one more world-class refinery: EDB
Simultaneously, it must develop renewable energy sources like solar, biomass, fuel cells By Ronnie Lim

SINGAPORE is trying to attract at least one more world-scale oil refinery investment here, even as it develops renewable energy areas like solar, biomass and fuel cells, the Economic Development Board's energy chief says.

This reflects EDB's two-prong strategy of securing the Republic's position as an established oil-and-gas hub, while it tries to develop new energy verticals.

In the same vein, trading of carbon credits here could start soon, although Singapore aims to develop trading of liquefied natural gas, much like what it has achieved with global oil trading centre here.

Speaking on 'the Economic Development Board's role in the changing energy landscape', Julian Ho, EDB's executive director of energy, chemicals and engineering services, said that the energy sector here is currently anchored on oil refining, trading and logistics.

And with oil, gas and coal expected to remain the mainstays of energy demand till 2030, 'it is important for Singapore to secure its position in the oil industry'.

Oil is still very important for the Republic economically and strategically, he stressed.

But total refining capacity here has remained unchanged at 1.3 million barrels per day (bpd) over the last decade. As a result, Singapore's share of global capacity has fallen to 1.4 per cent from 2 per cent previously.

By comparison, according to the latest BP Statistical Review, China's share has grown to 8.1 per cent and India's to 3.4 per cent as new refineries emerge in those countries.

'We will need to expand refining capacity here, and will probably need at least one more world-class refinery,' Mr Ho said.

A world-scale refinery will have about 300,000 bpd capacity, similar to Singapore Refining Company's 285,000 bpd plant here, but smaller than ExxonMobil's 605,000 bpd and Shell's 500,000 bpd Singapore refineries.

While the oil majors here - like ExxonMobil, Shell and Chevron - will likely carry out some plant expansions, EDB feels that there are investment opportunities here for national oil companies 'like the Chinese companies looking at international investments, and also others from the Middle East who want to capture a bit more value downstream beyond selling just crude', Mr Ho said. 'There may also be independent traders who want to take on some refining assets,' he added.

One recent example is trader Concord Energy, which had planned to build a US$200 million, 75,000 bpd condensate splitter here. Unfortunately, the project was called off last month as Concord could not finalise arrangements.

Mr Ho said that beyond widening Singapore's lead in the oil-and-gas sector, the Republic wants to build strengths in new energy verticals, and has identified solar, biomass and hydrogen fuel cells as three target sectors.

Solar was picked because there is already relevant technology, like the strong silicon, electronics and precision engineering industries here it can tap. Besides, Singapore is also located in the sun belt, and there is huge potential for solar in the off-grid (that is, without electricity connections) market in this region.

Similarly for biomass, the Republic is smack in the centre of countries growing biomass crops like sugarcane and palm oil, and the biomass companies can make use of the integration with the chemicals and energy sector here.

On clean energy, Mr Ho disclosed that EDB and IE Singapore are working on the trading of carbon credits here, although he added that 'we first need a sufficient level of locally generated carbon credits to start trading'.
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