SPEECH FOR SENIOR MINISTER OF STATE DR KOH POH KOON AT THE Asia Pacific Petroleum Conference (APPEC) ON 24 SEP 2018, 0910 HRS, AT RAFFLES CITY CONVENTION CENTRE
Mr Martin Fraenkel, President, S&P Global Platts,
Ladies and gentlemen,
1. It is my pleasure to join you here today at the 34th edition of the Asia Pacific Petroleum Conference (APPEC) 2018. To our many foreign guests, a warm welcome to Singapore. Your presence today reinforces APPEC’s position as a landmark event for the global energy industry.
Asia drives energy demand growth
2. We are witnessing a shift in the world’s economic centre of gravity towards the East. As the middle class in Asia continues to grow, developing countries in the region are set to account for about two-thirds of global energy demand growth from now to 2040.
Energy trading has an important place in Singapore’s economy
3. Energy trading has an important place in Singapore’s economy. Our strategic location along major trade routes has long made us a natural stop for bunkering. In the 1960s, as our newly-independent nation begun its economic development, oil majors including ExxonMobil and Shell started their refining activities here. As trade volumes grew, service providers in storage, price discovery and financing were also drawn here. Today, Singapore’s energy trading ecosystem is thriving: over 80% of the world’s top companies in the oil & gas sector have established their presence here.
Developments in energy trading
4. Leveraging on Singapore’s central location and its existing ecosystem, energy traders here have been able to capitalise on new developments to serve Asia’s energy needs. For example, since the United States lifted its ban on crude oil exports in 2015, companies here have been connecting American producers to Asian buyers. Likewise, with China opening up its crude oil import quotas to privately-owned enterprises, independent Chinese refiners have begun procuring crude oil in Singapore for their operations.
5. I am pleased to share that one of these refiners, Hengli Group （恒力）, the largest global producer of purified terephthalic acid (PTA) and a major supplier of polyester materials, is amongst the newest entrants to our crude oil trading scene. Hengli Petrochemical International, which commenced operations in June this year, will undertake global procurement, third-party trading and marketing activities to support its 400,000 barrels-per-day refinery in Dalian that will be commissioned later this year.
The trading ecosystem in Singapore facilitates business
6. Singapore has developed a strong and conducive energy trading ecosystem over the years. By bringing together buyers, sellers and decision-makers; as well as having world-class logistics, storage, financing, risk management and legal service providers all in one place, our ecosystem facilitates companies to conduct their business quickly and conveniently in this fast-paced market environment.
7. This is amongst the key considerations for Aramco Trading choosing to establish its first overseas office here. Aramco Trading Singapore was established in 2015 and has been steadily expanding its operations here. Since July this year, the Singapore office has been managing Saudi Aramco’s trade flows in crude oil, refined products and chemicals for all its markets east of India.
Energy trading is evolving, and new areas have come to the for
8. While Singapore has come a long way in developing itself as a global energy trading centre, we must continue to evolve to meet new demands and overcome new challenges. Allow me to highlight how Singapore has adapted to some of the recent developments in this industry and remain relevant in an ever-changing landscape.
Increasing focus on Liquefied Natural Gas
9. We are looking to develop Singapore’s liquefied natural gas (LNG) industry further, as LNG becomes a more important component of Asia’s energy mix. Many countries are now advocating the use of cleaner fuels, including LNG, as the impact of air pollution and climate change becomes clearer. To handle increased demand for LNG in the region, Singapore has been expanding our LNG infrastructure. We have increased LNG storage capacity and are also adding capabilities to bulk-break cargoes. As such, increasing numbers of energy traders in Singapore have begun expanding into LNG. We now have over 45 companies with an LNG trading or business development presence here.
10. We are happy to see industry-led efforts to develop a transparent LNG pricing benchmark for Asia that better reflects regional demand and supply fundamentals. For instance, S&P Global Platts’ Asian headquarters in Singapore introduced the Market-on-Close (MOC) window in its Japan Korea Marker (JKM) assessment process in June to enhance price discovery. This is an important step towards developing an LNG derivatives market that complements the physical trading market.
New ways of doing business
11. We are also seeing new technologies that will significantly change how the energy trading industry operates, in ways such as streamlining business processes and opening up access to financing. Start-ups play a key role in developing solutions for businesses, and many of them have established their Asian base here in Singapore. Let me share two examples.
12. Kpler is a track-and-trace tool which monitors global trade flows, and provides granularity down to the inpidual cargo level. Traders will no longer need to pore over countless pages of port data to track ship movements. Another tool is Tradeline, built on blockchain technology, that connects various stakeholders on a single platform. This significantly reduces the processing time of cargo documentation from two days to less than six hours.
13. The Government is keen to partner with companies on innovation initiatives that boost the competitiveness of our trading community. Today, I am pleased to announce that S&P Global Platts will establish a full-time innovation lab in Singapore. Platts Labs in Singapore will work with Enterprise Singapore, and players across the industry, to co-develop technological solutions benefitting the commodity trading sector.
Building up skillsets and capabilities
14. As the energy trading industry evolves, preparing our workforce to be future-ready is paramount. A keen understanding of new technological aspects, such as data analytics and artificial intelligence, will become increasingly relevant in creating value.
15. Enterprise Singapore’s Leadership Development Initiative (LDI) helps promising commodity trading companies to put together customised leadership development programmes for their next-generation leaders. Enterprise Singapore will also continue to work with the Institutes of Higher Learning to enhance the digital skills of both students and mid-career professionals on trading-track courses.
Closing
16. Singapore is keen to foster collaborations with companies of all sizes, from new start-ups to large firms with a global reach. Enterprise Singapore, as a government agency, stands ready to partner you in capturing opportunities across Asia. On this note, I wish you all a fruitful conference ahead. Thank you.