Friday, August 31, 2012

EDB refines its refinery strategy

13 June 12  The Business Times  by ronnie lim

[SINGAPORE] Singapore may shut the door on new greenfield refineries, at least for a while.

Instead, in a strategic twist, the world's third biggest oil refining centre will get existing players like Shell, ExxonMobil, PetroChina and Chevron to upgrade or expand their facilities to produce higher-value petrochemicals, fuels and lubricants.

This comes as competition intensifies with new capacity emerging in Asia and the Middle East, and as concerns grow over greenhouse emission here. There is also the question of how much more Jurong Island can be expanded through reclamation.

"It's a survival issue for the Singapore industry," Fereidun Fesharaki, chairman of Facts Global Energy said recently. He was talking about emerging competition, including from the shale gas-fuelled US petrochemical crackers.

The Economic Development Board's deputy director of energy & chemicals, Eugene Leong, told BT this week: "EDB does not have a specific aim of attracting a greenfield refinery investment at the moment."

"With the strong refining base Singapore has built up - operated by world class companies, efficiently run and well integrated with the chemicals sector - the focus is on upgrading the complexity of these refineries to build on this strong foundation and remain globally competitive."

"Upgrading efforts include further downstream integration, not only with higher value petrochemicals, but also lubricants and fuels upgrading."

Mr Leong said this when asked for an update on a Hin Leong Trading-led consortium's plan - which includes one of China's "biggies" - to build a 300,000-500,000 barrels refinery costing US$6-8 billion here. Singapore's biggest local oil trader first mooted the plan in December 2010 and is understood to be still keen on building an integrated refining complex, including a petrochemicals element, and has gone back to the drawing board on this.

EDB's Mr Leong however, did not want to comment on this, stressing that "discussions with our clients is strictly confidential, and we cannot comment on specifics."

Singapore officials had previously stressed the need to draw more refineries here to anchor the thriving oil trading hub, and this is also cited in an industry background paper on EDB's website currently. This long-term strategy of growing refining capacity here remains, sources said.

In Singapore, ExxonMobil's 605,000 barrels per day Chawan refinery (ranked 5th) and Shell's 500,000 bpd Bukom facility (14th) are ranked among the top 20 biggest refineries worldwide by Oil & Gas Journal, with Reliance of India's new Jamnagar facility overtaking them at number four position.

BP's 2011 Statistical Review also showed that refining capacity here has stagnated at 1.38 million bpd, while other rival hubs are growing. In 2010, new refinery building boosted capacity in China to over 10 million bpd, while India's refining capacity has grown to 3.7 million bpd.

But the oil majors here have been expanding in other ways, with Shell's new petrochemicals complex and ExxonMobil's second such facility - currently being started up - helping attract a slew of new downstream investors, including synthetic rubber makers from Japan and Germany.

There is also upgrading, with ExxonMobil currently building a US$500 million "green" diesel project here, with PetroChina and Chevron also preparing to invest a similar sum on "green" petrol and lubricant feedstock plants at their Singapore Refining Company facility.

Competition is also knocking at Singapore's doorstep, with Malaysia's Petronas just announcing that it expects to make a final investment decision on its US$20 billion refinery in Pengerang, Johor by mid-2013.

Ngau Boon Keat, executive chairman of Dialog Group which is building a S$778 million oil storage terminal with Vopak next to the Petronas project, told StarBiz earlier this month that "Singapore is not building refineries because it has limited land. Singapore's Jurong (Island) is full. The only way it can grow is buying sand... It has gone downstream into producing petrochemical products."

But conceding that it will take Malaysia at least 10-15 years to catch up with Singapore petrochemicals-wise, he said that Johor, instead of being a competitor, can instead complement Singapore by "buying the raw materials they need from us, and vice versa."

Industry observers believe that Singapore is also becoming concerned about carbon emissions from having more refineries, and that is why it has taken a breather on this. The need for a large influx of foreign workers to build a refinery (ExxonMobil employed 22,000 workers at the construction peak of its petrochemical complex) is another.

Monday, August 27, 2012

SINGAPORE: Tougher emission standards to affect oil refineries, power plants and chemical facilities

(EnergyAsia, August 27 2012, Monday) — Singapore's oil refiners, power plant operators, chemical producers and automobile importers will be among the companies most affected by the National Environment Agency's (NEA) plan to raise emissions standards and improve air quality by 2020.

According to environment minister Vivian Balakrishnan, the agency will be implementing measures to meet World Health Organisation (WHO) air quality standards for particulate matter 10 (PM10), nitrogen dioxide, carbon monoxide, ozone and sulphur dioxide.

The NEA will also increase the reporting frequency of the nation's pollutant standards index (PSI) which measures PM10, ozone, nitrogen dioxide, carbon monoxide and sulphur dioxide in the ambient air from once a day to three times. For the first time, the daily reports will also include PM2.5, a fine pollutant responsible for causing a range of respiratory and heart illnesses.

Some key measures are being progressively enforced, starting with higher emission standards for off-road diesel engines from July 1 2012, to be followed by Euro V emission standards for new diesel vehicles by January 1 2014, and Euro IV emission standards for new petrol vehicles by April 1 2014.

From July 2013, transportation diesel must contain less than 0.001% sulphur while motor vehicles will only be allowed to use gasoline with sulphur content less than 0.005% by October 1 2013.

By January 1 2014, Singapore will require new diesel vehicles to meet Euro V emissions standards, while new gasoline vehicles will have to comply with Euro IV emission standards three months later.

The NEA said oil refineries and power stations will reduce sulphur dioxide output through use of natural gas and lower-sulphur fuels, while refiners have pledged to improve their processes to reduce emissions by 2020.

"These targets will enable Singapore to achieve a high standard of public health and economic competitiveness," said Ministry of the Environment and Water Resources (MEWR).

Once regarded as among the world's best, Singapore's air quality has deteriorated over the past decade to the point that it has fallen below WHO standards.

"Like many other major cities, air emissions from the industries and motor vehicles are the two key sources of air pollution domestically. Transboundary smoke haze from the land and forest fires in the region is also a problem which affects Singapore's air quality intermittently during the South West Monsoon period from August to October," said the NEA.

"Integrated urban and industrial planning, as well as development control have enabled the government to put in place preventive air pollution control measures during the planning stage. In addition, legislation, strict enforcement programme and air quality monitoring have helped to ensure that air quality remains good despite our dense urban development and large industrial base."

In 2009, the government launched the Sustainable Singapore Blueprint (SSB) to target its sulphur dioxide (CO2) content at an annual mean of 15 micrograms (one-millionth of a gram) per cubic meter air (µg/m3), and 12µg/m3 of PM2.5 by 2020.

The new air quality targets which are pegged to WHO standards will be aligned with the SSB targets. Singapore will adopt the final WHO standards for PM2.5 and sulphur dioxide at its long-term targets.

 

Friday, August 17, 2012

Singapore's Hin Leong Keen to Develop $8B Grassroots Complex

August 15, 2012

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Singapore's biggest local oil trader Hin Leong Trading is moving on the vertical integration track as the company awaits regulatory approval for the proposed construction of a mega 300,000 to 500,000 barrel-per-day (bpd) green field integrated manufacturing complex on Jurong Island, the company's Executive Director Evan Lim told DownstreamToday in an exclusive interview.

The planned integrated manufacturing complex -- meant to produce green fuels such as ultra-low sulfur gasoline, diesel and naphtha -- will cost around $6.5 to $8 billion (SGD8 to SGD10 billion), Lim said. "Hin Leong is also exploring the possibility of producing petrochemicals in the proposed integrated manufacturing complex," Lim added.

The proposed site for the refiner is on a plot of land sited next to Hin Leong's $602 million (SGD750 million) Universal Terminal (UT).

Making the Case for Hin Leong's Proposed Integrated Manufacturing Complex

Singapore-based Hin Leong, well-known in the oil products industry for its trading capabilities and mammoth tanker fleet, has recently expanded into the oil storage arena with the establishment of UT in January 2008.

"Moving up the value chain into manufacturing oil products and petrochemicals is a natural step for Hin Leong," Lim said.

There are three strong arguments for the Singapore government to consider approving Hin Leong's integrated manufacturing complex.

The first reason relates to cementing the country's position as a pricing center for oil products.

"Singapore is at present the Asian price discovery center for oil products. The country should seek to cement this leadership role by developing its manufacturing capabilities in the oil products sector," Lim said.

A published report by the National Climate Change Secretariat (NCCS) of the Prime Minister's Office of Singapore this year supports Lim's view. "Singapore is the third-largest export refining center worldwide," the NCCS said in the report. "Our significant oil storage and trading infrastructure has made Singapore the Asian price discovery center for oil products," the NCCS added in the report.

The second reason in support of the project pertains to Singapore's fuel security.

Lim expounded on the benefits that their push for vertical integration can bring to the island-city. In addition to supplying Singapore's buses, cabs and tug boats with diesel, Hin Leong is also able to supply heavy diesel oil to the nation's power stations. Heavy diesel oil serves as stand-by fuel for local power stations which generally burn natural gas. The proposed integrated manufacturing complex provides Hin Leong with a more secure source of diesel that is critical for the operations of Singapore's power plants in the event that natural gas sources are compromised.

"When there are interruptions in the feedstock supply of Singapore's power stations, the company can step in and supplies them with fuel," Lim said.

In view of Hin Leong's strategic position in Singapore's oil products market and the company's formidable assets both in storage and oil products transportation, it alludes that the company's proposed integrated manufacturing complex could deliver high operational efficiencies. This will result in greater stability of oil products for Singapore's transport and power industries, at possibly more competitive prices.

The third advantage that should be considered is the possible strengthening of bonds with China that this project could provide.

Hin Leong's proposed integrated manufacturing complex could be an avenue for Singapore to strengthen its ties with mainland China. UT is a high-profile project that Hin Leong has embarked on with PetroChina creating another inroad for Singapore and China to join hands in the oil products market. This relationship between the two countries -- in oil products and petrochemicals sectors -- could be further enhanced if Hin Leong manages to attract increased commitments from the Chinese national oil companies (NOC). Lim confirmed that Hin Leong remains keen on working with the Chinese NOCs on the integrated manufacturing complex project, pending governmental approval.

Hin Leong's interest in moving into manufacturing oil products was first revealed in 2010 by Singapore's Business Times. The daily reported that Hin Leong was at that time in discussions with Chinese NOCs for a possible partnership.

"There could be a business case [for Hin Leong] if the refinery (integrated manufacturing complex) is geared towards petrochemicals," Singapore's Energy Studies Institute Principal Economist Tilak Doshi told Reuters in December 2010.

The NCCS report supports Tilak Doshi's published opinion in 2010.

"Our refining and chemicals cluster is focused on moving up the value chain. This involves expanding the production of petrochemicals and specialty chemicals," the report stated. "Our strategy of moving up the value chain could also reduce the over-carbon intensity of the chemical cluster -- by up to 25 percent -- in the long term," the report added.

Other Developments in the Pipeline

Hin Leong is at present studying plans to replicate the success of UT beyond Singapore's shores. As the company already has a successful working relationship with a Chinese NOC, China is the "logical" choice for Hin Leong when considering its terminal expansion plans, Lim explained.

"But it is not appropriate to disclose details on the project as it is still in the planning stage," Lim added.

When asked about the company's plans to launch an initial public offering (IPO), Lim was noticeably coy, saying that the company is "always getting itself ready." He added that an IPO is all about timing.

"When we feel that the market is good enough, we will proceed," he said.

About Hin Leong

The Hin Leong Group -- established in 1963 -- is involved in trading, terminalling, shipping, bunkering and in-land tank trucking. The Group consists of Hin Leong Trading (HLT), Universal Group Holding, Ocean Tankers (OT), Ocean Bunkering Services (OBS) and Hin Leong Tank Trucks.

UT is the largest independent petroleum terminal in Singapore and one of the biggest commercial storage facilities worldwide. UT occupies 56 hectares of land (equivalent to 60 international-sized football fields) and it houses 15 jetties. The terminal inner basin has nine bunker barge berths.

OT, the company's petroleum and oil products transportation arm, has a fleet of over 100 tankers. The company's tanker fleet consists of 500-deadweight-tonne (dwt) coastal barges to 318,000-dwt VLCCs.

OBS was one of the first companies to achieve the "Accredited Bunker Supplier" status under the Maritime and Port Authority of Singapore's Accreditation. OBS offers offshore bunkering services to include oil rig operations in the South China Sea and drill ships and storage tankers in offshore oil fields.

HLT has 120 employees, while UT and OT have around 110 and 250 employees, respectively. OT's manpower count excludes the number of employees that are based offshore.

 

Thursday, August 9, 2012

Evonik breaks ground on S$766m plant in S'pore

by Millet Enriquez

04:45 AM Aug 03, 2012

SINGAPORE - German firm Evonik Industries yesterday broke ground on a €500 million (S$766 million) plant on Jurong Island to produce amino acid for animal feed and signalled plans to further expand its operations in Singapore and in the region.

The methionine plant - the company's largest single investment and its first such facility in Asia - is set to begin operations in the third quarter of 2014 with an annual production capacity of 150,000 metric tons.

It is expected to create more than 200 jobs in engineering and technology within the Republic.

The company has operated an oil additives production plant on Jurong Island since 2008 and will also add a polyamide-12 plant in 2014.

"All in, our plans include not less than €2 billion for Asia in the next few years. That will result in the doubling of our Asian sales to €4 billion by 2015," said Evonik Industries Chairman Klaus Engel.

By 2020, Evonik hopes to generate 30 per cent of its revenue from Asia, with plans to add 2,000 new employees in the region. Millet Enriquez