SPEECH BY THE MINISTER OF STATE FOR TRADE & INDUSTRY, MR S ISWARAN, AT THE OPENING CEREMONY OF OFFSHORE SOUTH EAST ASIA (OSEA) 2006 ON 5 DECEMBER 2006, 9.30 AM, AT SUNTEC CITY, CONCOURSE LEVEL 3

The Honorable Konstantine Vatskalis,

Member of the Legislative Assembly,

Minister for Business and Economic Development, Northern Territories, Australia

Distinguished guests,

Ladies and gentlemen,

Introduction

Good morning. I am pleased to be here with you to launch Offshore South East Asia 2006. OSEA is the longest-running and most established oil and gas industry exhibition in the region, and it proudly celebrates its 30th anniversary this year.

The hosting of this conference in Singapore underscores the key role that Singapore plays as a hub for the region’s oil and gas exploration and production (or E&P) activities. These are exciting times for the industry as offshore and oil equipment companies are significantly shifting their attention to the Asia-Pacific region and accelerating their E&P activities.

Singapore is the Houston of the East

The oil and gas sector is a very important to Singapore, with a history stretching back over 100 years.Over the years, we have built up a comprehensive cluster with oil majors, drilling contractors, specialized equipment and rig manufacturers, service providers, and offshore engineering companies.

Singapore is currently the leading oil trading hub in Asia and the world's third largest oil refinery centre. All this has been accomplished despite the fact that we do not have any hydrocarbon resources of our own.

In the offshore sector, Singapore has also achieved a global leadership position. Our shipyards are world leaders in the construction of oil rigs and the conversion of Floating Production, Storage and Offloading platforms (FPSOs). We also have the largest base of oil and gas equipment manufacturing companies in Asia.In 2005, the output of the offshore and oilfield equipment manufacturing sectors grew by an impressive 68% to a record S$4 billion. Over the past year, Singapore has become a leading location for offshore engineering, with world leaders such as KBR[1], MODEC[2], WorleyParsons[3] and Acergy[4] significantly stepping up their presence here.

Going forward, our shipyards and oil and gas equipment manufacturers will continue to invest heavily in expanding their manufacturing operations in Singapore to address the burgeoning global demand for their products.Set against this promising backdrop, I am confident that the industry will continue to experience strong growth over the next few years.

Singapore is Expanding the value Chain of Activities in this Sector

As part of Singapore’s vision to be a truly integrated hub for this sector, we have also expanded our focus to include activities both up and down the oil and gas value chain

Oil and gas research analyst Douglas-Westwood has forecasted that deepwater production will leap from the current 10% to 25% of total offshore production within the next 5 years. It will also comprise 30% of global expenditure on oil and gas exploration and production by 2010.This will translate into a US$20 billion a year opportunity, with the Asia-Pacific as the fastest growing region. New technologies will be required to overcome the extreme temperature and pressure conditions presented by the elements at up to 10,000 feet under water.

Singapore is committed to developing these new technologies, including but not restricted to deepwater exploration and production. To this end, we have established a Centre for Offshore Research & Engineering, or CORE, and also introduced a 2-year offshore oil and gas technology specialisation for mechanical engineers at the National University of Singapore.Companies can tap on our well-trained engineering talents, established research infrastructure and strong intellectual property protection to carry out development activities

In the petrochemicals sector, we were delighted when, in July 2006, Shell committed to the construction of a new world-scale, 800,000 tonnes per annum ethylene cracker in BukomIsland.It will nearly double Singapore's capacity to process ethylene once it becomes operational. This significant commitment is another major step in elevating Singapore’s oil and gas industry to the next level, as it reaffirms the confidence that companies have in the strength of our sector, and their willingness to invest in upstream and downstream activities that will grow the industry as a whole.

Logistics Solutions for the Oil and Gas Industry

From the logistics perspective, the increasing complexity of offshore development work has resulted in a greater demand for sophisticated support to deploy manpower and material.Singapore has a large base of logistics service providers, excellent infrastructure and efficient customs processes, to execute and support offshore development. To better serve the needs of the industry, the Loyang offshore supply base, home to some 200 oil and gas companies operating in Asia, is also due to be redeveloped, promising to make Singapore a truly one-stop shop for offshore Exploration and Production activity.

Conclusion

The oil and gas industry is crucial to Singapore, and we are determined and committed to grow it further.Through exhibitions like OSEA, we hope to create even more commercial buzz and activity for the sector.Such events play an important role by facilitating an increase in business and networking opportunities, creating a more robust exchange of ideas, as well as reinforcing Singapore’s value proposition as an ideal location and a catalyst for business success. Singapore is proud to be able to host OSEA. Given its track record and the growing significance of the oil and gas industry in this region, I am confident that OSEA will continue to grow from strength to strength in the years to come.

On this note, I wish all of you a very successful and productive time at the exhibition, as well as a pleasant stay in Singapore. While here attending the conference, I hope you will also take time out to experience Singapore’s unique blend of tourism offerings, and experience Christmas in the tropics.

I would conclude by wishing OSEA a very happy 30th anniversary.I look forward to many more years of growth and success for OSEA and the industry.It now gives me great pleasure to declare the exhibition open.

Thank you.