SPEECH BY MR LEE YI SHYAN, SENIOR MINISTER OF STATE FOR TRADE AND INDUSTRY AND NATIONAL DEVELOPMENT AT THE 28TH WORLD LPG FORUM SINGAPORE AT SUNTEC CITY CONVENTION CENTRE ON WEDNESDAY, 30 SEPTEMBER 2015, 11.00 AM
Mr Kimball Chen, President of the World LPG Association,
Mr James Rockall, CEO & Managing Director of the World LPG Association,
Ladies and Gentlemen,
1. It is my pleasure to join you at the 28th edition of the World LPG Forum in Singapore. To our overseas guests, a very warm welcome to Singapore.
RECENT TRENDS IN LPG LANDSCAPE
2. The recent slide in oil prices has had an impact on global energy markets, including the LPG sector. While the low energy price environment presents fresh challenges for the LPG community, there continues to be sustained demand for secure energy supplies and cleaner energy. Hence, we continue to see steady global LPG demand growth, especially in the residential, commercial and petrochemical sectors.
3. The Asia Pacific is expected to contribute to almost 40%1 of global LPG demand by 2020. This demand is predicted to grow at a Compounded Annual Growth Rate (CAGR) of about 4.4% over the next 5 years, reaching approximately 125 million metric tons by 2020. This growth is fuelled by three key trends:
- Firstly, rapid urbanisation and the rise of the Asian middle-class will continue to drive the need for LPG-related products and services in this region. This demand is primarily driven by China, India, Indonesia, Japan and Korea.
- Secondly, the push towards environmental sustainability and government promotion of cleaner alternative fuels like LPG will drive further adoption of LPG in this region.
- Finally, the expansion of the Panama Canal will present opportunities for increased volumes of LPG trade flows from the US to Asia, allowing traders to benefit from increased optionality in the region.
SINGAPORE’S ATTRACTIVENESS AS AN LPG HUB
4. Singapore is strategically located at the heart of Asian trade routes, close to many of the world’s major growth economies. This makes us well positioned to tap into Asian-centric trade flows and become a major player in LPG. Our dynamic trading ecosystem is supported by an extensive network of buyers and sellers. This enables Singapore to be an effective and neutral marketplace for global traders to structure their deals.
5. Today, close to 1,400 companies dealing in petroleum and petroleum products – including LPG – have a presence in Singapore. For example,
- SK Gas, the largest supplier of LPG in Korea, manages its global LPG supply and trading business from Singapore.
- Petredec, the world’s largest integrated LPG logistics company and trader, conducts its regional trading operations out of Singapore.
- And BW LPG, the world’s biggest ‘very large gas carrier’ (VLGC) owner and operator, is headquartered in Singapore.
6. Oriental Energy is the newest entrant to the LPG cluster this year. It is the largest LPG importer in East China, responsible for the international procurement of LPG for its Propane Dehydrogenation (PDH)2 plants and supply to the larger Chinese market. Oriental Energy’s Singapore office marks its first foray into the international market, as the company looks to leverage on Singapore’s advantages to grow its business globally.
7. These LPG companies have chosen to locate in Singapore due to the availability of low-cost trade financing, sophisticated risk management solutions, top-class logistics and trading talent here. Our reliable, transparent legal and regulatory framework also supports companies’ long-term business planning. This is complemented by Singapore’s excellent physical infrastructure that enables businesses to effectively run their regional and global operations out of Singapore.
8. Singapore will house South-East Asia’s first independent import LPG facility by 2016. The terminal, which is co-invested by Vopak and SK Gas, will be located on Jurong Island with an initial capacity of close to 80,000 cubic meters. This LPG facility will cater to the rising demand for cost-effective and energy efficient feedstock in Singapore and has the potential to catalyse regional trade in LPG. It will supplement our existing 10 million cubic metres of independent storage capacity and support the overall trading of oil-related products here. This will enhance Singapore’s position as the choice location for businesses looking to take advantage of Asia’s growth story in LPG.
9. In closing, the global energy landscape remains challenging and uncertain. Nonetheless, there continues to be exciting opportunities as long as the LPG industry can adapt and position itself for the future. As a global business and energy trading hub, Singapore remains a choice location for businesses to access expanding Asian LPG markets.
10. I trust that this Forum will provide an excellent platform for you to discuss the future of the LPG industry. I wish all of you a fruitful conference. Thank you.
1 IHS Energy, 2014
2 PDH converts propane into propylene, a common petrochemical building block used in the manufacture of plastics and other products.