Singapore in Race to be Green Fuel Refinery Hub

Spire Research and Consulting estimates that biofuel demand in Asia will grow by more than 50% a year over the next three years. As the region ramps up biofuel production, Singapore will be well-placed to compete for refinery contracts, but will face competition from producer countries eager to develop integrated biofuel value chains, such as India, Malaysia and the Philippines.

According to the World Bank’s World Development Indicators (2006), trade in fuels totaled US$715 billion worldwide in 2004. Coupled with the fact that fossil fuel supplies are diminishing at an alarming rate, renewable energy sources are also expected to compete economically with more conventional energy sources in the long term.

As a successful petrochemical hub in Asia and the world’s third largest oil refining center, Singapore would be well-positioned to diversify its portfolio to include biofuel refinery.

Peter Cremer (Singapore), the Asian arm of Germany's Cremer Gruppe, has already planned to set up a US$20 million plant in Singapore by mid this year with enough capacity to produce 200,000 tonnes of biodiesel. Natural Fuel, too, announced this year that they have chosen Singapore as its site for their US$130 million state-of-the-art biodiesel production refinery. Expected to be one of the largest biodiesel facilities in the world, it is currently undergoing construction on Jurong Island, Singapore's petrochemical hub, and scheduled to begin production by the end of 2007.

Van Der Horst is building a biodiesel refinery in partnership with the local Institute of Environmental Science and Engineering. It plans to build a second, similar plant in the country. The first plant, which will cost US$25 million, will be able to produce up to 200,000 tonnes/year of biodiesel from jatropha and other feedstocks, when it opens at the end of 2008. The second plant will be a similar size when it opens in 2012.

However, other countries in the region are giving the Island Republic a good run for its money:

Philippines state-owned PNOC-Alternative Fuels Corp. recently signed a US$1.3 billion deal with British company NRG Chemical Engineering Pte. to build a biodiesel refinery and two ethanol plants in the country.

Mission Biofuels is establishing a 100,000 tonnes-per-year biodiesel refinery at Kuantan Port, Malaysia.

In India, private sector giant Reliance Industries Limited (RIL) set aside US$500 million to set up a biodiesel refining plant last year and earmarked 200 acres of land at Kakinada in Andhra Pradesh as a pilot project to cultivate jatropha shrubs.

Engineering firm MPI Group will build one of the biggest biodiesel refineries in the Asia Pacific region in a deal with East Timor that will create up to 20,000 jobs there. The 250 million litre-a-year biodiesel refinery is planned for Darwin, Australia, although MPI may be considering other sites in Asia.

Regional countries which have a comprehensive plan to develop biofuel refining capabilities include India, China, Indonesia, etc. These countries may have the advantage of being able to build an integrated value chain spanning crop cultivation to refining. To stay ahead, Singapore will need to leverage its established fossil fuel logistics sector, its existing refinery base and above all its government’s ability to act quickly and invest in infrastructure ahead of demand.

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