The Importance of Oil and Gas Industry in Singapore

What will be the impact on Singapore amid of collapse of the oil industry? 

First and foremost, we need to understand how the significance of the oil and gas industry to Singapore's economy.

Singapore has world-class refining, storage, and distribution infrastructure. However, the country, in surprise that it has no domestic oil reserves and must import all its crude oil. It is also one of the most important oil trading hubs in the world.

The oil and gas sector is so crucial to Singapore that it contributes about 5% of our annual GDP. 

Singapore ranks fifth in entire Asia with a refinery capacity of 1.51 million barrels per day in 2018. The country contributed 1.5% to the world's total refining production capacity. It sounds insignificant but imagines it is only the size of Singapore island, that capacity is incredibly insane. The sector currently has given an opportunity to more than 25,000 people to work.

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The refining capacity was shared by three major refineries in Singapore.

• ExxonMobil Jurong Island Refinery (Exxon Mobil) 592,000 bbl/d (96,200 m3/d)
• Shell Pulau Bukom Refinery (Royal Dutch Shell), 500,000 bbl/d (79,000 m3/d)
• SRC Jurong Island Refinery (Singapore Refining Company), 290,000 bbl/d (46,000 m3/d)

Singapore itself covers the midstream and downstream of the entire oil value chain. Most refineries are located at Jurong Island, a sprawling 3,000-hectare infrastructure formed from the seven offshore islands. Jurong Island is the key industrial area for the petrochemical industry where it houses more than 90 well-known International Companies.

Jurong Island is home to many companies such as LANXESS, Afton Chemical, BASF, BP, Celanese, Evonik, ExxonMobil, DuPont, Mitsui Chemicals, Chevron Oronite, Shell, Singapore Petroleum Company Singapore Refining Company, Stepan Company, Petrochemical Corporation of Singapore, The Polyolefin Company, Chevron Phillips, Mitsui Elastomer and Sumitomo Chemical. Aside from Jurong Island, there are some other islands that also play a vital part in the industry such as Pulau Bukom, Semakau Island, and Sebarok Island.

The impact is inevitable

Let's ponder and rewind back to the years 2014 to 2016 respectively, the oil price collapsed from more than 100 USD to less than 30 USD per barrel. It shuttered Singapore's entire oil and gas industry and there are many projects that have been halted. 

That scenario is repeated again right now and it comes with even far worse than what happened from 2014 to 2016 with the COVID-19 pandemic driving down the demand and entirely collapsing the world energy demand significantly. Seems like this severe impact will never be improved within months and it may take years to recover. US Whitting Petroleum is the first company to declare insolvency and recently Singapore's local oil trader Hin Leong also might go into potentially debt default. There is more bad news to be surfaced within weeks. Nonetheless, it is still in the early stage of the challenges ahead.

The impact on the O&G will also be spilled over to industrial construction when more and more projects to be halted and workers to be laid off without any further delay. As Singapore is one of the most important oil hubs in the world, the impact is inevitable.

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