A shortage of oil storage space in Singapore has spurred expansion of the countrys independent storage facilities. Singapores major oil refineries hold 88 million barrels of storage capacity, or 88 percent of the countrys total storage capacity. Singapores independent storage operators have a total current capacity of 24.4 million barrels, although this number will grow as companies bring new facilities on line. Over the last five years Singapores independent storage providers have reportedly been running at above 90 percent capacity. In May 2006 Vopak began operations at its fourth storage terminal in Singapore, adding 2.1 million barrels of capacity at its Banyan site on Jurong Island. Oiltanking expects to complete a new facility in August 2006, also at Banyan, that would add 1.5 million barrels of storage capacity. Oiltanking anticipates that the new site would store clean petroleum products and will be linked by pipeline to its existing storage terminal on the island and also Shells Bukom refinery. Another new storage project comes from Horizon Terminals, a subsidiary of Dubai-based Emirates National Oil Corporation (ENOC), which expects to finish constructing a 5.3 million barrel storage terminal on Jurong Island by the end of 2006, likely adding a second phase in mid-2007.
While this growth in petroleum storage in Singapore is driven by high regional oil demand, some independent analysts have expressed concern that the new terminals may lead to excess capacity. In 2006, construction began on the joint Hin Leong Trading/PetroChina Universal Terminal on Jurong Island, which will reportedly have a storage capacity of 14.2 million barrels. In April 2006, Singapore also greenlighted the development of storage facilities in underground rock caverns on Jurong Island with a potential capacity of up to 20.1 million barrels. Phase 1 of the project is scheduled to begin in late 2006 and add 8.8 million barrels of new storage capacity by 2009, with a possible Phase 2 adding an additional 11.3 million barrels in future years if there is sufficient demand. The underground caverns will store petroleum liquids and products like naptha and gasoil.
The rapid growth of Singapores petrochemical industry has been a direct result of the countrys strong base in petroleum refining. Jurong Island is the center of Singapores expanding petrochemicals industry. Companies on the island have benefited from lower operating costs through creating synergistic relationships, sharing facilities, integrated utilities, tax incentives, and proximity to important regional markets.
ExxonMobil, which already operates a 25,400 bbl/d (800,000 metric tons/year) ethylene cracker on the island, has plans to build another cracker of comparable size. Petrochemical Corporation of Singapore (PCS), a joint venture between Shell and a Japanese consortium led by Sumitomo Chemical, operates two other ethylene crackers on Jurong, with a total capacity of 44,500 bbl/d (1.4 million metric tons/year). PCS is also slated to bring a 6,400 bbl/d (200,000 metric tons/year) propylene cracker onstream on Jurong Island by year-end 2006. Shell is carrying out a detailed engineering study for a planned steam cracker at Palau Bukom and is expected to reach a final decision on whether or not to build the facility in 2006. The new plant would reportedly produce 28,600 bbl/d (900,000 metric tons/year) of ethylene when it becomes operational in 2009. ExxonMobil Chemical is also evaluating plans to build a second naptha cracker in Singapore, which would reportedly have a 22,500 bbl/d (one million metric tons/year) capacity. Royal Dutch Shell also is moving ahead with a new naphtha cracker for its Jurong Island facility. The new plant is expected to produce 28,600 bbl/d (900,000 metric tons/year) of ethylene when it becomes operational in 2009. Several other firms also plan to build new smaller petrochemical facilities in Singapore or upgrade preexisting facilities in the coming years.
Singapore imports all of its natural gas, which is mainly used for power generation and petrochemical production. In 2004 Singapore consumed 233 billion cubic feet (Bcf) of natural gas, a greater than five-fold increase from the 2002 level of 41 Bcf.
Natural gas use is rising rapidly, as the government promotes policies aimed at reducing carbon dioxide and sulfur emissions, ensuring energy security, and promoting the country as a regional hub for an integrated gas pipeline network. In 2002, the government set a target of 60 percent of the countrys electricity to be generated from natural gas by 2012. By 2003, this goal had already been met, and the Singapores Energy Market Authority (EMA) reports that about 80 percent of the countrys electricity demand comes from natural gas today. In November 2003 and June 2004, Singapore experienced power outages that were the result of natural gas supply disruptions. After the June 2004 incident, the government set up the Energy System Review Committee (ESRC) to study the root causes of the gas disruptions and propose measures to strengthen the energy systems reliability. Among other recommendations, the ESRC called upon Singapore to diversify its sources of natural gas, as it has historically relied on Indonesia for its natural gas imports.