advertisement

SINGAPORE
An Evolving Ecosystem

This sponsored supplement

was produced by Focus Reports.
Project Publisher: Ines Nandin.
Project Director: Kirsty Avril Jane Walker.
Editorial Coordinator: Roslan Khasawneh.
Contributors: Fraser Wallace.
For exclusive interviews and more info,
log onto www.energyboardroom.com or
write to contact@focusreports.net

DECEMBER 2013

1312OGFJ_51 51

espite a complete lack of hydrocarbon resources within the sovereign territory of Singapore, the city-state has been linked to the oil and gas sector
for more than a century. Singapore has been an oil trading hub for over 120
years, and since the 1960s, the country has been a major refning base. Nonetheless
it is in the last generation that Singapores oil and gas industry has really undergone
a major revolution, with a boom in oil and gas related activities on both the hardware and software side of the business: from storage, shipping, manufacturing and
offshore services, to fnancial and legal services. How does a country with no oil and
gas resources of its own achieve this position of regional leader, or justify such an
evolution? Is the shift a result of top-down policies or bottom-up business strategies?
Finally, yet perhaps most importantly, how will Singapore continue its evolution?

O IL & GAS FINANC IAL JOURNAL

W W W.O GF J. C OM

E N E R G Y.FOC U SR E POR TS.N E T

51

12/9/13 11:32 AM

EVOLUTIONARY RECAP

tion for the global oil and gas industry.

On the tangible, hardware side, Singapore has

Singapore has also made signifcant efforts to use its positioning

grown to become a major energy and petrochemi-

as the worlds fourth largest fnancial center, and fully applies this to

cals hub for Southeast Asia as a result of its solid

its oil and gas ecosystem. Singapores exchange, the SGX, has imple-

infrastructure and strategic positioning. Singapore

mented a number of initiatives to attract energy companies seeking

is also one of the worlds top three export refn-

to raise capital to the island state. Moreover, in 2013, Singapore was

ing and oil and gas trading centers, with a refning capacity in excess of 1.3 million barrels per
day (bpd) in 2012. In 2012, oil exports accounted
for 21 percent of total exports. Furthermore, the

designated by the Baltic and International Maritime Council (BIMCO)

Lim Kok
Kiang, AMD,
Cluster Group
Engineering, EDB

so-called little red dot is one of the worlds busi-

as the third named seat for maritime arbitration in BIMCOs Standard

Shipping Forms. On that topic, Chia of the SMF proudly notes that
this is quite a feather in our hat and demonstrates that Singapore
has grown into a critical node in the global maritime network.

est marine bunkering hubs and a major oil and oil

Despite its resounding success, Singapore has never stood still.

product pricing center.

The IEAs Southeast Asia Energy Outlook report boldly states, the

In addition to this, Singapore is recognized as a

regions energy demand [will] increase by more than 80% in the

premier global offshore hub. Located along one

of the most important shipping lanes in the world,
the Strait of Malacca, Singapore has enjoyed a
maritime tradition for decades. Lim Kok Kiang,

period to 2035. As a result of the accompanying increase in compeMichael Chia,

chairman,
Singapore
Maritime
Foundation

tition across the refning and offshore manufacturing industries, Singapore is constantly reassessing its competitive position and building upon its strengths. In order for Singapore to maintain its regional

assistant managing director of Cluster Group

energy leadership and global competitiveness, it must actively pro-

Engineering at Singapores Economic Develop-

mote and develop each branch of its oil and gas industry and assert

ment Board (EDB), highlights how the offshore

its value on the global energy scene.

sector in Singapore began to take off in the 1960s.

Part of this emergence was down to Singapores

RIDING THE OFFSHORE WAVE

longstanding position as a marine hub for South-

Following the emergence of the offshore industry in the 1970s, Sin-

east Asia. In the 1970s and 1980s, Singapore

started to develop its vessel conversion capabili-

Lawrence Wong,
executive vice
president & head
of listings, SGX

gapore was able to convert its traditional skills in the marine and ship
repair industry into ship conversions and rig building with great suc-

ties, prior to building a footprint in the offshore oil

cess. To some extent, this refects Singapores capacity to respond

market through jack-up rigs in the 1990s. It was an

to the marine and offshore industrys constantly evolving market

incremental evolution, which followed a natural skill-set transition.

dynamics, in line with its national motto Majulah Singapura (Malay

In effect, the countrys strategic position along the trade route has

for Onward, Singapore). In the offshore industrys latest upturn, for

enabled it to gradually develop its maritime engineering and manu-

instance, Singapore was the frst mover to secure a slew of rig orders.

facturing capabilities.

Singapores two largest offshore rig builders, Keppel Corpora-

Today, Singapore is the undisputed global market leader in the

tion Limiteds subsidiary Keppel FELS and Sembcorp Marines units

construction of jack-up rigs and conversion of Floating Production

Storage and Offoading Vessels (FPSOs). Michael Chia, chairman of
Port Authority of Singapore

the Singapore Maritime Foundation (SMF), summarizes that Singapore will maintain itself as both a shipping hub and a port city; we
try to leverage our strength as a trans-shipment port. Combined with
the fact that Singapore is also a world leader in rig building and
FPSO conversions, it is very much a formidable contender on the
hardware side and we fully intend to continue along that path.
Singapore has also made signifcant leaps in the development of
the software side of the oil and gas industry. As a crucial trading
hub for refned petroleum products and petrochemicals and a leading supplier of a range of offshore assets, Singapore offers a wealth
of engineering expertise and is has often been a source of innova-

52

1312OGFJ_52 52

ENE RGY.FOC U SR EP OR TS. N ET

WW W. OG F J. CO M

OI L & G A S FI NA N C I A L J OU R N A L

DECEMBER 2013

12/9/13 11:32 AM

Always Do Better
Drilling Headquarter
Address: P.O.Box 232 BeiJing 101149China
Website: www.cosl.com.cn / Fax:+86 0316 336 7009
Tel: +86 10 84522856 / Email: Zhangfy2@cosl.com.cn

COSL Mexico S.A. de C.V.

COSL Drilling Pan-Pacific Ltd

Address: Edificio de Oficinas TAKIN ,Avenida Isla de

Tris # 28, Kilmetro 5 ,Fraccionamiento San Miguel
,Ciudad del Carmen, Campeche, C.P. 24157
Tel: +52 938 119 5678 / Email:wangsheng@cosl.mx

Address: 6 Temasek Boulevard, Penthouse Level Suit

2,Suntec Tower Four, Singapore 038986
Website: www.cosl.com.sg / Fax: +65 6491 2361
Tel: +65 6491 2360 / Email: jin.qingyong@cosl.com.sg

1312OGFJ_53 53

12/9/13 11:32 AM

PPL Shipyard and Jurong Shipyard, account for 70

company, Singapore provides us with the ideal

percent of global jack-up rig construction. Singa-

platform from which we can make the transition

pore also controls the market for the conversion of

into Western markets.

FPSOs, with two-thirds of the global share.

Despite the rising costs of business in Singapore,

Jack Zhou Minghua, executive director at COSL

A Two-way Springboard
Given the positive industry outlook in the region

Jin Qingyong,
president, COSL
Drilling PanPacific

Jack Zhou
Minghua, executive
director, COSL
Drilling Pan-Pacific

and Singapores business environment - condu-

Pan-Pacifc, agrees. Although the costs associated

with doing business in Singapore have been on the
rise in terms of offce or land space and human

cive for international operations has and with an ability to attract top

resources, the country more than makes up for that with the structural

global talent - it is easy to see why so many international players have

advantages it offers. Companies based in Singapore are exposed to a

established regional, or even global, operations in the country.

thoroughly international environment, seamless and transparent legal

In this regard, Singapore is often cited as the ideal springboard for

Western based companies into the East. However, the opposite holds

and fnancial systems and an effcient regulatory environment that is

highly supportive of business development.

equally true. As Jin Qingyong, president of COSL Drilling Pan-Pacifc,

Going further, COSL Pan-Pacifc is looking to leverage Singapores

the international branch of COSL China for the jack-up division, puts

oil and gas ecosystem with the establishment of a global supply

it, Singapore has proved to be the ideal launching pad from which

base in Singapore. Minghua notes that not only will we be able to

COSL can work towards these long-term goals and establish itself

take advantage of Singapores excellent logistics infrastructure and

as a truly international company. In terms of its policies and human

geostrategic location, but the supply base will position us closer to

resource management, among others, Singapore offers a Western

offshore manufacturers including the worlds largest rig producer,

style business platform in an Asian environment. There is a great bal-

Keppel.

ance between Mandarin and English speaking people. As a Chinese

Asserting its Competitive Position

Speaking at the opening ceremony of the Offshore
Southeast Asia Conference and Exhibition (OSEA)
in November 2012, Second Minister for Trade
and Industry S. Iswaran highlighted that with rising offshore drilling and production activities, the
demand for offshore rigs, platforms and support
vessels is set to increase. Singapore is well placed
to ride this offshore wave as our shipyards have

Mr S. Iswaran,
Second Minister
for Trade and
Industry

built up a sound track record of providing costeffective, safe and timely deliveries. We are also able to meet customers needs by offering a full spectrum of customized products and
in-house proprietary designs for offshore rigs.
Singapores supremacy in rig construction could, however, be
diluted: its yards must now contend with existing competition from
established Chinese yards such as Cosco Corporation (which have
recently gained signifcant traction in rig building through aggressive
pricing), as well as South Korean yards. In addition to this, they must
also compete with new players that have moved into the sector due
to a glut in yard capacity in Asia from the downturn in shipbuilding.
Nevertheless, Singaporean rig builders appeared unfazed by the
competition from Asia as the fow of new orders continues. During
the frst nine months of 2013, Keppel heads forward with a USD
$10.95 billion order book. The company is slated to deliver 20 offshore rigs this year, a record number for any shipyard worldwide.

54

1312OGFJ_54 54

ENE RGY.FOC U SR EP OR TS. N ET

WW W. OG F J. CO M

OI L & G A S FI NA N C I A L J OU R N A L

DECEMBER 2013

12/9/13 11:32 AM

WHEN EXPERIENCE COUNTS...

...COUNT ON FUGRO
For 40 years, Fugro Singapore has been a key partner in the
exploration, development, production and distribution of energy
resources, and in the construction and maintenance of regional
infrastructure. Wed like to thank our customers for their support
over the last four decades.
Combining local expertise and state-of-the-art technology with
Fugros global service and resource network, we acquire and
interpret the survey, geotechnical and environmental data essential to
delivering project-wide assurance.
Count on Fugro to provide onshore, offshore and subsea solutions
- when and where you need them.

Fugro - Local Support - Global Reach

Fugro Singapore Pte Ltd

Tel: +65 655 28 600
Email: fsininfo@fugro.com
www.fugro.com

1312OGFJ_55 55

12/9/13 11:32 AM

Despite the stiff cost competition, Choo

Chiau Beng, CEO of Keppel Corporation,
expects that offshore clients will place

GROWTH IN ASEAN PRIMARY ENERGY DEMAND

1,200

40%

1,000

35%

800

30%

600

25%

Malaysia
Philippines

greater emphasis on having products deliv-

Mtoe

ered on time, rather than risking the costs

associated with project delays. Chinese

Bloomberg News. They were offering crazy

terms to attract customers.

Thailand
Indonesia

yards were desperate because they ran out

of conventional ships to build, Choo told

Other ASEAN

400

20%

200

15%

Bobby Wong, country manager at the

2000

American Bureau of Shipping (ABS) Singa-

OECD and IEA, 2013

2011

2020

2030

Energy demand
per capita as share
of OECD (right axis)

2035

pore, states that although cost is an important consideration for rig owners, brand

This push towards innovation and R&D is also supported by a slew of

track record and quality are also key con-

international organizations in the industry that have made signifcant

cerns. In this regard, Singapore has earned

investments in establishing knowledge and research centers in Singapore.

its recognition as the hallmark of safety, qual-

Other world leading classifcation societies that have recognized the ben-

ity and innovation in the marine and offshore

industries.
As a leading marine and offshore classifca-

efts of locating their activities alongside their clients. Det Norske Veritas
Choo Chiau Beng,
CEO, Keppel
Corporation

(DNV), for instance, has established two technology centers in Singapore;

the Clean Technology Center and the Deepwater Technology Center, in

tion society and key partner of Keppel and

2010 and 2012, respectively. Ernst Meyer, vice president and regional

Sembcorp in Singapore, Wong highlights his

manager for DNV South East Asia and Pacifc, notes that these invest-

companys role in helping clients to achieve

ments were a result of DNVs ambition to continue along its growth path

some of the industrys fastest rig delivery

and spread its innovation genes instilled in the company towards Asia.

times. As an integral part of the production

Historically, our Asian operations have not played a big role in innovation

process, ABS has a dedicated team of proactive surveyors and engineers on the ground
that provide customers with the full range

Bobby Wong,
country manager,
ABS Singapore

but this is something we intend to change.

Meyer goes on to explain that this corresponds well with Singapores
national ambition to be a regional competence center for deepwater and

of services in a timely and effcient manner

clean energy technologies. As such, we have been working closely with

while maintaining the highest attention to

the EDB in order to realize this shared ambition.

detail. Our efforts support our clients abil-

As a company associated with offshore survey, site investigations and

ity to consistently deliver quality and reliable

engineering works, Fugro has also grown into a globally recognized tech-

assets on schedule or even ahead of sched-

nological leader. For its Singaporean offces, 2013 marks forty years since

ule, as is often the case. The potential losses

that would result from delayed projects help
to offset the cost premiums relative to the

Ernst Meyer, vice

president and
regional manager,
DNV South East
Asia and Pacific

competition.
Simultaneously, Singapores yards are moving up the technological ladder and focusing
on niche market segments that require significant investments in R&D and innovation. For
instance, Keppel Offshore & Marine (Keppel
O&M), and ConocoPhillips are jointly designing a frst-of-its-kind ice-worthy jack-up rig to
operate in the Arctic Seas, one of the harshest marine frontiers.

56

1312OGFJ_56 56

Jerry Paisley,
regional manager
for Asia Pacific
Offshore
Geotechnics,
Fugro

ENE RGY.FOC U SR EP OR TS. N ET

Fugro Voyager

WW W. OG F J. CO M

OI L & G A S FI NA N C I A L J OU R N A L

DECEMBER 2013

12/9/13 11:32 AM

incorporation. Jerry Paisley, regional man-

tures that can be used for drilling units from a safety and operational view

ager for Asia Pacifc Offshore Geotechnics,

point, he says. In addition to this, we are in the process of developing

Fugro, explains the regional offces role in

some rather interesting concepts in relation of subsea units and the ways

promoting innovation and R&D.

in which they can be monitored and in turn interpreted. Furthermore, we

The National University of Singapore

are working closely with a number of universities and A-Star to provide

(NUS) has a Center for Offshore Research

insights for the very large hydrodynamic test facility that is being built

& Engineering (CORE) which carries out a

here.

signifcant amount of research programs.

Arno Bracco
Gartner, energy
division director,
Brunel

The establishment of CORE in 2003 marked

the frst step in NUSs plan to help shape
the development of Singapore into a center
for offshore and maritime research. Within
the few years since its inception, CORE has
established strong links with the offshore
oil and gas industry, and has established an
enviable track record in R&D and education
in offshore technology. Some of the highend research topics taking place there today
are mainly centered on the engineering
space, as opposed to exploration and production, and ranges from arctic engineering
to methane hydrate research.
In that respect, Fugro engages in and
funds a number of joint industry projects
with various research and academic institutions and industry players. With over 130
jack-up rigs in operation in the Asia Pacifc
region, we carry out a good deal of survey and geotechnical engineering work to
ensure the safety of the sites. Because it constitutes such a large proportion of our work,
we are conducting a fair amount of research
into improving the prediction and avoidance
of jack-up punctures and are actively funding these joint industry projects with NUS.
Similarly, Lloyds Register has recently
inaugurated its Global Technology Center
in Singapore, one of two in the world which
is exclusively focused in the energy sector.
Although only inaugurated in September of
2012, Claus Myllerup, senior vice president
of energy technology at Lloyds Register,
outlines the advancements the GTC has
made already. We have made signifcant
contributions towards publishing the frst
foating offshore rules in terms of struc-

DECEMBER 2013

1312OGFJ_57 57

O IL & GAS FINANC IAL JOURNAL

W W W.O GF J. C OM

E N E R G Y.FOC U SR E POR TS.N E T

57

12/9/13 11:32 AM

BEST PLACE TO DO BUSINESS

KrisEnergy, an independent upstream company focused on explo-

Singapore has historically been a commodity and

ration, development and production in the basins of Southeast Asia,

refning hub as well as the worlds largest bunker-

pioneered Singapores efforts in attracting energy companies to

ing point. This enabled the country to play a criti-

raise capital in the country. Having previously been involved in the

cal role in the development of the region. Today,

fotation of two oil and gas companies including Pearl Energy, which

Singapore remains central to the regional devel-

was subsequently acquired by Abu Dhabis Mubadala Petroleum in

opment from a fnancial perspective as well.

The Singapore Exchange (SGX) has made clear
its intentions to become a regional center for oil
and gas frms seeking to raise capital. Lawrence

Richard Lorentz,
co-founder
and director
of business
development,
KrisEnergy

Wong, executive vice president & head of listings

2008, the companys founding trio made a calculated decision to list

their latest company, KrisEnergy, on the SGX. Richard Lorentz, cofounder and director of business development at KrisEnergy, admits
that their ability to stand out on the SGX was a key motivating factor
behind their Singapore listing.

at SGX, explains that for any country to develop

itself into a successful exchange hub, a number of

A STEEP LEARNING CURVE

fundamental factors are necessary. For a coun-

By making capital more accessible for regional

try to be an effective exchange platform, it must

energy companies, the emergence of Singapore

have an affnity to the industry in question while

offering an attractive business environment, says
Wong. As a destination with a number of fourishing industry clusters that was ranked best country

as a regional fnancing center is creating further

Simon Crellin,
director, Deloitte
Petroleum
Services

opportunities for junior players to capitalize on the

regions oil and gas resources.
Many of the oil and gas assets in Indonesia

Ben Arnott,
director, Oil &
Gas Corporate
Finance, Standard
Chartered

to do business for the seventh year running by the

and Malaysia, for instance, are now at a rather

World Bank, Singapore fts the bill perfectly. From an oil and gas per-

mature stage, smaller companies are needed to

spective, Singapore is an oil hub, a refnery hub and a commodities

develop smaller felds and rehabilitate the older

hub, and gives Singapore the crucial background it needs to become

felds. Singapore is positioning itself well to pro-

a leading exchange platform for oil and gas companies.

vide opportunities for investors looking towards these brownfeld

When compared to global exchanges such as those in Australia,

developments.

Tokyo or London, some might view Singapore as a minnow. How-

Singapore does boast a great blend of economic, fscal and legal

ever, Simon Crellin, director at Deloitte Petroleum Services, sees

regimes that provide for an excellent business environment, but the

this as an advantage. Although smaller independents on those

challenge for Singapore positioning itself as a regional fnancial hub

exchanges might have a good story to tell, their share prices have

for energy companies relates to the absence of an oil and gas list-

been fat-lining. Crellin explains that there are simply too many

ing track record and the unfamiliarity of investors with the particu-

companies listed, each one is like a tree in a forest, unable to stand

larities of the upstream sector, says Ben Arnott, director of project

out. By contrast, the SGX has a concentrated list of oil and gas E&P

fnance for oil & gas at Standard Chartered.

companies, and because of this, a good story will get a lot more traction than on the larger exchanges.

In order to overcome these hurdles, the SGX introduced a set of

new admission rules and continuing listing obligations to facilitate
the listing of mineral, oil and gas (MOG) exploration companies. To

SE Asia conventional E&A

drilling activity (2007 to 2012)

achieve this, the SGX frst had to develop rules that would cater
specifcally to the MOG industries, while simultaneously raising

SE Asia conventional drilling activity

Discoveries
(D)

Success
Ratio
(D/E)

the fnancial requirements and standards of any company looking

Year

Onshore

Offshore

Exploration (E)

Appraisal
(A)

2007

101

143

128

116

26

20%

2008

100

108

122

86

18

15%

2009

112

108

155

65

24

15%

2010

102

128

174

56

16

9%

as energy consultants RPS, that altogether helped craft the listing

2011

116

117

171

62

25

15%

rules for MOG companies. Among other initiatives, RPS aims to help

2012

91

142

179

54

38

21%

educate investors and routinely advises non E&P companies who

1312OGFJ_58 58

ond, the SGX invested signifcant resources in educating investors,

holding more than a dozen training events over the course of a few
months, spearheaded by industry experts, including companies such

are considering getting involved in E&P projects in South East Asia.

Source: Deloitte Petroleum Services Group

58

to list on the SGX as part of its market development strategy. Sec-

ENE RGY.FOC U SR EP OR TS. N ET

WW W. OG F J. CO M

OI L & G A S FI NA N C I A L J OU R N A L

DECEMBER 2013

12/9/13 11:32 AM

At the outset, many new entrants into the E&P business might not

edent and may be viewed as the most likely guidelines that would

understand the fnancial risk. Wong reinforces that the aim is not

apply to upstream oil and gas companies looking to list on the

only to educate ourselves about the dynamics of the MOG industry,

SGX Mainboard. Wong shares these views, saying that the listing

but also the fnancial researchers and retail and institutional inves-

allowed the SGX to gain an invaluable insight into the functioning

tors. That is how you build an ecosystem.

of the industry and how companies operate at their different stages

As one of the frst companies to reach compliance with the new

of development. As a refection of Singapores pragmatic and open

MOG rules on the SGX Mainboard, Lorentz, of KrisEnergy, acknowl-

approach to promoting business, Wong admits that when it comes

edges that the process was not entirely seamless. During the devel-

to the technical aspects, we are not experts in the feld. Instead, we

opment phase, the SGX, along with the Monetary Authority of Sin-

rely on experts who share their knowledge and insights to help us to

gapore (MAS), shaped the regulations governing the listing of MOG

understand the particular issues at hand.

companies. These are not even rules yet, Lorentz stresses, so during the KrisEnergy listing process we had to fgure out what would

RE-ENGINEERING THE TALENT

satisfy the SGX and MAS based on the guidelines put forward from

Due to a lack of natural resources, Singapore is highly dependent on

a consultation paper. We drafted the prospectus in accordance with

its workforce. This is particularly true for Singapores talent intensive

the highest standards of the SGX guidelines that we knew to work.

maritime, construction, engineering and manufacturing sectors. As is

At the same time, we also consulted with the SGX on those points

the case with the rest of the global oil and gas industry, Singapores

which we knew to be operationally counterproductive or inapplica-

growth in the energy industry is mired by an aging workforce and a

ble to our industry to help them understand the specifc nature of

shrinking talent pool.

the upstream oil and gas business.

As Arno Bracco Gartner, energy division director at Brunel, a pro-

Lorentz goes on to say that KrisEnergys prospectus set the prec-

vider of specialist knowledge to the international oil & gas, petro-

RPS is an international consultancy providing worldclass, local solutions in energy, mining, infrastructure,
urban growth and natural resource management.

FLEXIBLE
OPERATIONS
Global experience
Swift and rapid changes in business conditions,
stricter regulations, deeper waters and new
technology: Managing risk has never been more
complex demanding flexible operations.

Geology, Geophysics and

Petroleum Engineering

CPRs and Reserves Reports

Seismic Planning and Management

Wellsite Operations

Subsea Investigation

HSE, Risk Management and Training

Environmental Planning and Approvals

Environmental Impact Assessment

For further details contact

Through our extensive, worldwide experience in risk management within the offshore energy and maritime industries,
we understand risk at all levels from the detailed technical
through to long-term business strategy, helping you to handle the complexity of risk, and enabling flexible and robust
service delivery.

Perth
John Stanton or David Guise
T +61 8 9211 1111
Singapore
Dr Mike Reeder or Joseph Tan
T+ 65 6499 0060
E energy@rpsgroup.com.au

rpsgroup.com.au

www.dnv.com

DECEMBER 2013

1312OGFJ_59 59

O IL & GAS FINANC IAL JOURNAL

W W W.O GF J. C OM

E N E R G Y.FOC U SR E POR TS.N E T

59

12/9/13 11:32 AM

chemical, power generation and construction

industries, explains, a decade ago there was a
push by the government to develop ICT, pharmaceutical and fnancial services. This coincided with
a lot of graduates being steered in that direction.
As a result of this restructuring, Singapore has lost

PEC has the resources and capabilities to handle

your toughest jobs, armed with our understanding
of what you need to build and maintain your facilities
in an effective and cost-efcient manner.
We will work with you to create unique solutions
that meet your every need. We provide integrated
maintenance services across all disciplines, including
helping you safely plan and execute plant turnarounds,



 
 
well as engineering, procurement and construction
(EPC) services, backed by years of experience and
in-depth operational knowledge.
With a proven track record of more than
30 years in Asia and the Middle East,
you can count on us to deliver.

its edge in the engineering space and many companies have been affected by the expanding tal-

Robert Dompeling,
group chief
executive officer,
PEC Ltd

ent gap. In this sector, Singapore is rapidly losing

ground to Kuala Lumpur.
The issue in Singapores case is exacerbated by the governments
push to control the infow of foreign workers across a number of sectors. Robert Dompeling, group CEO of Singapore-based PEC Ltd,
explains that this was initially brought about with the governments
ambitions to improve labor productivity through The National Productivity and Continuing Education Council (NPCEC).
In 2012, the NPCEC identifed four new sectors of interest where
it intended to boost national productivity, including the process construction and maintenance sector. Essentially, these policies aim to
improve productivity and raise wages through innovation and automation while introducing tighter foreign labor restrictions. To put
it simply, Singapore businesses are expected to boost productivity
so that they can employ fewer workers while offering them better
wages, explains Dompeling.
These measures will have further implications on safety. As a company focused on the Engineering, Procurement and Construction
(EPC) and maintenance services to the oil and gas and petrochemicals sectors, among others, Dompeling stresses that, our people
are often working in high risk environments. If our most experienced
people have to leave as a result of these policies, this could potentially contribute to the higher workplace incidents due to replacements with inexperienced staff.
As a potential remedy, Dompeling suggests that, in order to limit the

OIL & GAS

PETROCHEMICAL

A SI A

OIL & CHEMICAL

TERMINAL

PHARMACEUTICAL

PEC Tanks

M ID DL E
E AS T

21 Shipyard Road Singapore 628144

 
  


E: info@peceng.com
www.peceng.com

60

1312OGFJ_60 60

ENE RGY.FOC U SR EP OR TS. N ET

WW W. OG F J. CO M

OI L & G A S FI NA N C I A L J OU R N A L

DECEMBER 2013

12/9/13 11:32 AM

A REGIONAL CONTEXT
Singapores refning sector has also come under
pressure as a result of increased costs in Singapore, and importantly, increased regional
production capacity in countries like China and
Vietnam, as well as from the Middle East. However, to what extent are these developments a
threat to Singapores downstream industry and
how can it grow considering Singapores land Howard Pang,
general manager,
constraints?
Horizon Singapore
In overcoming its space limitations, Howard Terminals
Pang, general manager at Dubai-based Horizon
Singapore Terminals, points towards the great
Singapore area expansion project as a potential remedy. Pang
explains that the idea primarily revolves around some of the
Indonesian islands that surround Singapore as well as the south
Malaysian territory bordering Singapore offering land area that
can accommodate the construction of a variety of terminals and
ports that will complement Singapores limited land and shoreline
availability. As such, they will provide traders and oil companies
with greater capacity in peak times, explains Pang. He continues: Singapore has historically been the regions entrept which
has for long developed and honed the skills and infrastructures
needed to support that. In this respect, it would be very diffcult

to match and overcome the momentum that the

island-state has gained over time.
Clive Christison, director & CEO of Integrated
Supply & Trading for the eastern hemisphere
at BP Singapore believes that, Singapore will
remain a leading downstream location due to its
well engrained and sophisticated petrochemical
Clive Christison,
complexes one of the main challenges Sindirector & ceo,
gapore faces as of now are attempts by other
Integrated Supply
hubs to mimic infrastructure and support sys& Trading Eastern
Hemisphere, BP
tems here. However, the city-state has a clear
advantage of years of investments in its physical assets created through honing the specifc regulatory policies
and cultivating human capital needed to create a synergistic ecosystem. By any measure, these attributes are all very diffcult to
recreate.
Despite Singapores leadership, the island-state faces stiff
competition across the oil and gas value chain from aspiring and
energy hungry regional nations. However, where some might see
a threat, Singapore sees opportunities. The country has demonstrated its aversion to complacency and is continuously looking
towards the horizon, seeking to always punch above its weight
and champion the industry forward.

negative effects of these hurried policies, the government must tailor its approach towards the needs
of the different targeted industries. The authorities
should consider relaxing its stance on tightening the
foreign labor supply to allow businesses more time to
Thomas H. McNutt,
head of regional
and public
affairs, American
Chamber of
Commerce in
Singapore

absorb the changes.

Despite concerns surrounding the lack of locally
trained engineers, Dompeling, in line with strong
industry-wide opinion, still maintains that Singapore
is a great place for business. Gartner, for instance,

shares these views. Holistically, I do not think the region has ever been
so busy, he says. The variety of projects and clients is immense, and it
is an aspect which illustrates the thriving and developing energy ecosystem of the region.
Thomas McNutt, head of regional and public affairs at the American Chamber of Commerce (AmCham), insists that Singapore is not
turning off the spigot of non-nationals entering Singapore. The governments primary goal is to increase the quality of life of its citizens
and it is using foreign labor policies as the lever with which to do this.
It is important to stress that the business-government relationship
is not an adversarial relationship, but a collaborative one, McNutt
goes on to say. As a result, I am sure the Singapore government
understands that its policies are increasing costs, but I am also just as
certain that the government will closely monitor the effects of those
cost increases and adjust its policies as appropriate.

DECEMBER 2013

1312OGFJ_61 61

O IL & GAS FINANC IAL JOURNAL

W W W.O GF J. C OM

E N E R G Y.FOC U SR E POR TS.N E T

61

12/9/13 11:32 AM