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DIRECTORY OF SINGAPORE PROCESS & CHEMICALS INDUSTRIES 2021/2022
built a depot to import and distribute kerosene from Russia. Today, Jurong Island, an amalgam of seven islands including Pulau Bukom, is home to over 100 companies in petroleum, petrochemical, specialty chemicals and auxiliary services.
As economists Dr Tilak Doshi and Professor Euston Quah noted in their commentary, ‘Can Singapore really transition to a post-oil economy?’, in Singapore’s national accounts, the ‘chemical’ industrial cluster (which includes petroleum refining, petrochemicals, speciality chemicals and others) contributed 9.3% of value added to total manufacturing in 2018. The marine and offshore engineering segment (primarily drilling rigs and offshore oil and gas equipment) accounted for a further 11.3%. Together, these two industries accounted for over a fifth of manufacturing gross domestic product.
“Comparing the value-added contribution of these two industries against those of electric vehicles, battery storage, green buildings and solar power ignores the issues of legacy, scale and inertia.”
But for Singapore to achieve its target, it would have to make the chemical cluster greener. As Magzhan Sovetbek and Melissa Low, researchers at the National University of Singapore’s Energy Studies Institute, observed, “a green economy does not preclude the petrochemical and refining industry”. Companies can adopt technologies for carbon capture, storage and utilisation, which can cut carbon emissions of the petroleum refining and chemical industries without significantly affecting economic output, though the technology’s cost and energy efficiency would have to be improved first.
Singapore is fully cognisant of this. One of the goals under the Singapore Green Plan 2030, the country’s blueprint for sustainable development, is to make Jurong Island a sustainable energy and chemicals park by 2030.
Addressing Parliament during the Committee of Supply 2021 – Joint Segment on Sustainability on 4 March, Minister Chan Chun Sing said, “Our Energy and Chemicals (E&C) sector is becoming more vital in accelerating our charge towards environmental sustainability. It will continue to enable many other parts of our economy and it will continue to produce for the world. But it will do so more sustainably. To get there, we are taking active steps to transform the sector.”
Singapore is stepping up decarbonisation and resource optimisation efforts at both the plants and systems levels, to transform Jurong Island into a sustainable energy and chemicals park. “We are partnering companies that are developing cleaner products and decarbonisation solutions,” said Mr Chan.
“We are enhancing the Investment Allowance for Emissions Reduction (IA-ER) scheme (previously known as the Investment Allowance for Energy Efficiency Scheme). Apart from improving energy efficiency, the IA-ER will also support projects that result in direct reduction of greenhouse gas emissions,” he added.
Singapore’s refining sector, the fifth largest in the world, is already making the transition. Thishasasmuchtodowitheconomicsaswith companies’ shift to a greener future. Refining
margins are feeling the squeeze from refining overcapacity across Asia.
As Dr Kang Wu, head of global demand and Asia analytics at S&P Global Platts told The Business Times in March 2021: “Cracking refining margins in Asia/Singapore have been under pressure since the outbreak of Covid-19 last year, plunging to an average of negative US$3.3/barrel in April 2020. The margins have since recovered to minus US$0.5/barrel in February 2021 before getting a lot worse again so far in March.
“S&P Global Platts Analytics does see the margins to improve to zero in Q3, but coming months are challenging with rising crude prices, surplus capacities and higher runs so the margins are likely to slide further.”
Shell, which built the nation’s first refinery in 1961, has announced plans to half its refining capacity on Pulau Bukom as part of a group- wide revamp of its energy portfolio. While Pulau Bukom will remain one of its Shell’s six energy and chemicals parks, it will be reconfigured to refine cleaner fuels.
While refining capacity are being scaled down it will remain an intrinsic part of the chemical cluster as most of the refineries are supported by deep integration with petrochemicals.
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