Mr S Iswaran at The Singapore International Energy Week 2015

​SIEW Opening Remarks by Mr S Iswaran, Minister for Trade and Industry (Industry), at The Singa​pore International Energy Week 2015, on Monday, 26 October 2015, 9:00 am, Sands Expo & Convention Centre, Marina Bay Sands

Distinguished Guests

Ladies and Gentlemen

Welcome

1.            A very good morning.  It gives me great pleasure to welcome you to the Singapore International Energy Week 2015.  Now in its 8th year, SIEW is an important platform for top policymakers, industry leaders, and academics to discuss global energy issues, exchange ideas and facilitate closer cooperation.

Global Energy Transitions

2.            The global energy landscape continues to evolve, sometimes unexpectedly, presenting new opportunities and challenges.  Oil prices are a case in point.  When we gathered at SIEW last year, Brent was at US$85 per barrel; today, it is at about US$48[1].  Gas prices have similarly fallen during the same period.  This is due to both a sustained increase in supply, as well as a slowdown in demand due to weaker global economic growth and outlook.

3.            The current low energy prices have triggered a relook at upstream investments in oil and gas.  Supply and demand side adjustments will yield a new equilibrium, but it is unclear where that equilibrium will be.  For industry and governments, this is an important juncture at which to re-assess the robustness of strategies and policies across different energy scenarios.

4.            One potential game changer is natural gas.  We expect to see an increase in gas traded across regions[2], with most of the gas being exported to Asia.  Bloomberg projects that by 2025 global LNG export capacity may reach 500 million metric tons per annum (MPTA), 40% higher than projected LNG demand.[3] In the longer term, the growth of unconventional gas sources such as shale[4] and the building of more LNG infrastructure will allow more countries to produce their own gas and make it available for export.

5.            At the same time, renewables are expected to make more headway due to environmental and climate change concerns and technological advances.  According to the Bloomberg New Energy Finance’s New Energy Outlook 2015 report, renewable energy technologies are increasingly gaining support due to continued cost reductions, and growing accessibility through new financing models.  Renewables are expected to account for 60% of the 9,800 GW of new generation capacity installed from now till 2040.[5]

6.            What do these developments portend for the future and the relative competitiveness of different energy sources?  Who will emerge as winners from this energy transition?

7.            The answers to these questions will have a profound impact on producers and consumers, especially in the rising economies of Asia.  Governments and businesses in this region will need to adapt to changing market trends, even as they seek solutions to meet their growing energy needs.

8.            Against this backdrop, the theme for SIEW this year aptly focuses on “Global Energy Transitions” and its impact on Asia and global markets.  Today, I would like to share with you some of the strategies and initiatives in Singapore’s energy sector to adapt to these shifts, and foster resilience and competition in our energy markets.

More information to aid better energy investments in Singapore

9.            With significant and rapid changes in the global energy market, it is vital that Singapore adopts and sustains a long view to achieve the goals of a competitive, secure, and sustainable energy supply.  It is an approach that has served us well.

10.          Two decades ago, we restructured and commenced liberalising Singapore’s electricity industry.  In particular, we opened up the generation market to competition among commercial players, regulated the transmission/distribution monopoly, and progressively introduced retail contestability.  One beneficial outcome was that our gencos switched from fuel oil to cleaner, more efficient and carbon friendly natural gas.

11.          From 2006, we took steps to introduce LNG to supplement piped natural gas.  Today, our LNG terminal gives us greater energy security and access to competitive LNG supplies through source diversification.

12.          Technological and business developments continue to offer Singapore more energy options for the present and future such as advanced power generation, electricity imports and solar energy.  

13.          To realise the full potential of these and other options, thence directly to avoid  government must further enable businesses to make informed investment decisions to meet Singapore’s future energy needs.  In particular, information on our energy market and land allocation policy will enable the industry to plan for the long term.    

14.          EMA has already been providing market information such as energy generation and consumption data through its publication of the annual Singapore Energy Statistics.  This enhances market transparency and facilitates investment decisions.  Given that power generation investments entail high capital costs with commensurate payback periods, EMA intends to put out more information on the longer term energy market outlook in Singapore.  This could include information on the projected growth of electricity system demand, as well as an indicative mix of generation sources coming from gas plants, solar, and electricity imports by 2030.

15.          Further, to ensure that Singapore continues to optimise land use to meet our future energy needs, EMA will also seek feedback on a proposed land allocation framework for new power plants.  This takes on added significance in land scarce Singapore.  EMA will release more details on the industry consultation today.

Increasing options for industry players – EMA to seek industry feedback on design for domestic Secondary Gas Trading Market

16.          Besides facilitating investments in the energy industry, the government will create modalities that allow energy users and businesses to adapt and respond flexibly to market developments.  One such development is in our natural gas market.

17.          Trading in short-term LNG supplies will increasingly become an important means to manage volatility in gas market.  The increase in LNG trading activities is expected to continue as new supplies such as shale gas come onto markets over the coming years, and more countries build LNG infrastructure.  With the LNG trading desks of about 30 companies located here, Singapore is already a regional leader in this space.   

18.          To enhance the trading environment, we plan to establish a Secondary Gas Trading Market (SGTM) in Singapore, where gas buyers and sellers can trade gas on a short-term basis domestically.

19.          An SGTM can yield several potential benefits.  First, it will allow domestic gas price discovery that reflects Singapore’s demand and supply conditions.  Second, gas users will be able to complement their portfolio of long and medium-term gas supplies with short-term supplies, so that they can optimise their gas supply portfolios and mitigate price volatility.  Third, such a market will enhance Singapore’s position as a hub for LNG and gas trading activities and pave the way for the potential establishment of a gas futures market.  

20.          Establishing an SGTM will mark another major milestone in the development of Singapore’s gas market.  EMA will take steps to systematically develop the market, following reviews of gas trading in other jurisdictions such as Belgium, the Netherlands and the UK.  As industry engagement and support is key to the success of such a market, EMA will issue a consultation paper today to seek industry feedback on a proposed market design and implementation roadmap, as well as on the establishment of an industry working group to deliberate on the details for implementing a Secondary Gas Trading Market in Singapore.

21.          Industry feedback from the consultation will inform EMA’s decision on the next steps.

Promoting greater competition in our electricity market

22.          Beyond the upstream segments of the energy market, enhancing retail competition is a policy priority in order to render more choice and benefits to consumers.

23.          From 2001, we have progressively liberalised the electricity retail market to allow more consumers to choose their electricity retailer.  Most recently, on 1st July this year, we lowered the contestability threshold from 4MWh to 2 MWh.  To date, these efforts have allowed 33,000 commercial and industrial (C&I) consumers to participate in the contestable market - from large users such as petrochemical companies, manufacturing companies and shopping malls, to smaller users such as coffee shops, kindergartens, and community establishments.  These consumers can better manage their energy cost by purchasing from an electricity retailer a package that best meets their needs, instead of remaining on the regulated tariff with SP Services.  

24.          Our ultimate aim to have full retail competition.  Hence, EMA is working with industry stakeholders to fully open the electricity retail market to competition in the second half of 2018.  This will enable the remaining 1.3 million consumers, which are mainly households, to have flexibility and choice in their electricity consumption.  EMA will release more details on the plans for full retail competition soon.   

Developing capabilities and encouraging innovation to strengthen our energy industry

25.          Beyond Government initiatives, individuals and businesses play a key role in building a strong and vibrant energy industry.

26.          Hence, EMA’s biennial Singapore Energy Awards (SEA) aim to recognise individuals and organisations who have made outstanding contributions to Singapore’s energy industry in the areas of capability development and innovation.

27.          There are two recipients this year.  Neil McGregor, former Chief Executive Officer, Singapore LNG Corporation and current Senior Managing Director, Enterprise Development Group, Temasek Holdings, is the recipient of SEA 2015 in the ‘Individual’ Category, while the Housing & Development Board (HDB) is the recipient in the ‘Organisation’ Category.

28.          Neil and the HDB impressed the Judging Panel, chaired by Mr Kwa Chong Seng, Chairman of NOL and ST Engineering, with their pioneering efforts in Singapore’s energy industry.  In his role as the first CEO of SLNG, which planned and built Singapore’s first LNG terminal, Neil contributed significantly to the development of the local LNG eco-system and securing Singapore’s energy future.  HDB stood out for catalysing the deployment of solar photovoltaics in Singapore on a larger and more impactful scale, by aggregating solar demand for the public sector, investing in solar R&D, and promoting data sharing to catalyse further solar deployment.

29.          Please join me in congratulating the two winners.

Conclusion

30.          Energy remains a critical resource for all economies.  We all need resilient, sustainable and competitive energy supplies.    To this end, in Singapore, we continue to facilitate energy investments; increase options for our industry players; promote competition in the electricity market for the benefit of consumers; and develop capabilities and encourage innovation to strengthen our energy industry.

31.          We must also continue to foster dialogues and build partnerships so as to respond nimbly to the opportunities and challenges presented by shifts in the global energy landscape.  I hope that throughout this week of SIEW events, you will have ample opportunities to actively exchange views with energy professionals, policy-makers and industry players, learn from each other’s experiences and generate solutions to forge a sustainable energy future.

32.          Thank you once again for joining us at the Singapore International Energy Week 2015.  I wish you all a productive week ahead. 

[1] Data is accurate as of 23 Oct 2015.

[2] BP Energy Outlook 2035. LNG Production will show huge growth over the rest of the decade, with supply growing at up to 8% a year through the period to 2020. By 2035, LNG will take over pipelines as the dominant form of traded gas.

[3] Bloomberg New Energy Finance, H2 2015 Global LNG Market Outlook.

[4] A study by the US Energy Information Administration in 2013 found that technically recoverable shale gas worldwide is around 7,299 trillion cubic feet.

[5] Source: Bloomberg New Energy Finance’s New Energy Outlook 2015 report

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