Singapore oil, gas and petrochemicals

Oil and gas

Due to aggressive investments in new facilities, BMI has said that Singapore will remain a key oil hub and will most likely become the region’s gas trade hub in the next to years. LNG is also expected to overtake pipeline gas imports from Indonesia and Malaysia as Singapore’s dominant source of gas. Singapore is expected to remain a significant refining country, however, growing competition from emerging markets within the regional oil products market will cause problems.

BMI has also reported that the country’s large refining sector is likely to keep crude oil import requirements high. It is also heavily exposed to the Middle East and this will give the region 90% of the supplies it needs. Condensate imports should also increase as more refining capacity comes online.

In total, Singapore is heavily reliant on imports for its energy needs. Last year, the country’s total energy import bill was estimated at US$49.3 billion. However, BMI has said that given favourable price trends in international markets, Singapore’s energy import bill will decline slightly over the coming years, and forecast it at US$47.5 billion by 2018 before it begins to rise again to 2023 levels of US$53.98 billion.

Petrochemicals

Last year Singapore’s petrochemicals sector surged as aromatics production capacity was increased by projects on Jurong Island, and the securing of the city state’s position as a major supplier to the Chinese market. BMI has estimated that in 2014, petrochemicals output from the country grew by approximately 16%, compared to 7% in chemicals growth. The task now facing the industry is to add value to basic chemicals output.

China is expected to be the driver of Singapore’s petrochemicals exports with aromatics and synthetic rubber likely to dominate. BMI has said that PX is a notable segment where Chinese supply has failed to keep up with demand for polyethylene terephthalate (PET) production, but where Singapore has been increasing domestic production. On the downside, according to BMI, Singapore’s olefins segments are going to be squeezed by soaring capacity in China and the US, forcing it to consider increasing downstream iderivative production in order to defend margins. Ethylene capacity in China is also expected to increase to approximately 39.1 million tpy by 2019, an increase of 52% on 2014 volumes. The forecasted decline in the price of naphtha, which is the country’s main petrochemicals feedstock, will however help protect margins as low cost ethane based production in the US increases.

Edited from report briefs by Claira Lloyd

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