Mr Teo Ser Luck at the 6th Annual Platts Top 250 Global Energy Companies Awards Dinner, 2 Nov 2011

SPEECH BY MR TEO SER LUCK, MINISTER OF STATE FOR TRADE AND INDUSTRY AT THE 6TH ANNUAL PLATTS TOP 250 GLOBAL ENERGY COMPANIES AWARDS DINNER ON WEDNESDAY, 2 NOVEMBER 2011, 1850HRS AT THE PAN PACIFIC HOTEL

Mr Larry Neal, President, Platts,

Distinguished Guests,

Ladies and Gentlemen

Introduction

I am pleased to join you this evening to celebrate the Top 250 award winners in the global energy industry. This evening, we will recognise the industry’s most creative and influential executives, innovators and thought leaders and we are glad that Platts has once again chosen to hold this prestigious event as part of the Singapore International Energy Week.

Securing our Energy Future

The theme this year is “Securing Our Energy Future” – an issue of growing importance globally due to rising energy demands and the challenges of climate change.This is especially pertinent for Asia – as Asia’s economy continues to grow at an extraordinary pace, and so will its demand for energy to fuel this growth. This challenge will be crucial to all of us in the public, private and people sectors.

As the world becomes increasingly carbon-constrained, Asia needs to find a solution to meet its energy needs in a competitive, reliable and sustainable manner.This energy challenge is all the more critical because of the impact of recent geopolitical developments in the oil-producing nations of the Middle East and North Africa, and the Fukushima Daiichi nuclear accident in Japan that have compromised the reliability of energy supplies.

Global Energy Mix – Fossil Fuels and Clean and Renewable Energy

Fossil fuels are likely to remain the world’s dominant energy source for some time to come. Renewable energy sources (such as solar, wind, hydro and geothermal power) are contributing a greater share to the global energy mix.However, they are still unable to replace fossil fuels as baseload generation due to their intermittency and higher costs of production.There may be some fortunate exceptions – for example, countries that are blessed with plentiful hydro and geothermal energy resources, which can be tapped at relatively low cost.Such options, unfortunately, are not available to all countries – especially small countries, like Singapore, that are disadvantaged when it comes to alternative energy supplies.

Emergence of Natural Gas

Hence, in the near term at least, our focus has to be on efficient energy utilisation while mitigating carbon emissions.The International Energy Agency (IEA) has projected that natural gas will gradually overtake coal as the most dominant fuel option, and that it will account for as much as 25 per cent of the world's energy mix by 2035.The natural gas supply increase has been driven by significant discoveries of unconventional sources of gas in different parts of the world, including the United States, China and Australia.This is a positive development, as natural gas is considered a relatively cleaner fossil fuel.

Over the past two decades, the use of gas in Asia has increased threefold [1].In the case of Singapore, our fuel mix has evolved dramatically over the past decade from 71 per cent reliance on fuel oil to more than 80 per cent natural gas today. Natural gas emits half as much carbon dioxide as fuel oil – so each unit of electricity that Singapore uses today is cleaner than it was 10 years ago.

This improvement is one of the positive outcomes of market liberalisation, which had led to the rapid replanting of more efficient and cleaner gas-fired combined gas turbines, which replaced oil-fired steam plants. This change has also benefitted consumers, since gas-fired plants produce electricity more cost-effectively and more efficiently than oil-fired steam plants.In addition, the increased use of natural gas will be boosted by improvements to energy security brought about by diversification of sources and liquefied natural gas (LNG) trade.

Within the Association of Southeast Asian Nations (ASEAN), we are seeing infrastructure developments by several countries to prepare for the integration of liquefied natural gas (LNG) as a major fuel source for the region. The region’s prospects for energy security are further boosted by ASEAN's long-term goal of creating an integrated energy market – underpinned by such initiatives as the ASEAN Power Grid and Trans-ASEAN Gas Pipeline.

New Solutions and New Opportunities

Managing energy demand

As a small city-state with very few natural resources, Singapore is acutely aware of its energy challenges.We seek to make the most of our limited energy supply options by mitigating demand, thus making us more carbon-efficient. We encourage the efficient use of energy by households and businesses through incentives to encourage more energy-efficient household appliances and industrial equipment, as well as promoting the “greening” of commercial buildings.

Singapore’s strong focus on energy R&D

Singapore is also investing heavily in energy R&D. We recognise that technology is a key enabler for achieving our objectives of having a competitive energy market, secure energy supplies and a dynamic energy sector. We recently invested S$195 million under the Energy Innovation Programme Office (EIPO) to continue the support of new advances in areas such as solar energy, smart grids, green buildings, and carbon capture and utilisation. This will involve industry, government, and the scientific community to develop innovative energy solutions, thus strengthening our local research capabilities in clean energy. A further S$300 million has been dedicated to the National Innovation Challenge (NIC) to seek “Energy Resilience for Sustainable Growth”, bringing the total grant support, close to S$500 million.

Conclusion

With South-East Asia priming itself as part of the booming Asian economy, Singapore is well-positioned for greater connectivity with regional and international partners. The product of the Singapore International Energy Week is a reflection of Singapore’s keen interest to facilitate discussions on pertinent energy efficiency, environmental strategies and smart solutions; and to engage various energy stakeholders – locally, within the region, and beyond. Your thought leadership and active engagement in the global drive for greater energy efficiency and energy security will inspire all toward a smarter, cleaner and greener economy.

Finally, I would like to congratulate all the award recipients. Each of you have contributed significantly in advancing the industry toward new supplies, new sources and new technologies which are crucial in meeting increasing energy demands globally; I would also like to thank Platts for organising the awards. On this celebratory note, I wish you all the best in these exciting years ahead for the industry. Thank you

[1] 2011 Pacific Energy Summit paper by Mikkal Herberg titled "Natural Gas in Asia: History and Prospects"