The artificial island of Jurong, lying off the southern coast of western Singapore, is a world-leading centre for the region’s downstream industries. Reclaimed from an archipelago of seven smaller islands between 1995 and 2009, the sprawling industrial site has, over the past decade, helped Singapore become a global player in oil refining and processing despite its lack of natural reserves. Home to more than 100 global petroleum and petrochemical firms, the island has attracted investment of some $42 billion since land reclamation began.
As the government and industry look to the future, changes have been set in motion to further improve Jurong Island’s long-term prospects. Through the Economic Development Board and Ministry of Trade and Industry’s Jurong Island Version 2.0 (JIv2.0) expansion plan, improvements are underway in the areas of energy, logistics and transportation, feedstock, environment and water supply, preparing Jurong Island, Singapore and the region as a whole for a changing world.
ISLAND CONSTRUCTION: The Jurong Island project was conceived in the 1980s. Buoyed by a rapid industrialisation and a successful but space-restricted refining sector, the government of Singapore decided to merge seven small offshore islands. The site was chosen for its proximity to the mainland town of Jurong, and its position at the mouth of the Malacca Strait. By 1991, contractors had been appointed to begin the task of creating 1,022 hectares of new land, and a completion date of 2030 was announced. The project was bold – by viewing the development as an interconnected whole from the outset, the designers planned shared facilities, common corridors and centralised logistics, reducing capital investment and minimising operational costs. In the years since, their synergised and clustered approach to business has been vindicated.
In 1995, land reclamation began, with contactors Penta-Ocean and Koon Construction dredging material from the seabed around Batam Island in neighbouring Indonesia, before transporting it to Jurong by barge and depositing it onto newly-created sand keys around the Jurong site. A complex system of phases meant existing businesses on the islands could keep functioning, and by 1996 the first of these were underway. Phase one linked the islands of Pulau Merlinau, Pulau Seraya, Pulau Ayer Chawan, Pulau Ayer Merbau and Pulau Sakra, while phase two joined Pulau Pesek and Pulau Pesek Kecil, before linking the two sections.
Phases 3A and 3B followed, the former linking the final two islands, and the latter, valued at some $2 billion, forming the largest reclamation contract in history and providing for a road link between the new island and the Singaporean mainland. In April 1999, the bridge was completed, and the first trucks trundled across. Though still almost 10 years from its eventual completion (some 20 years ahead of schedule) in 2009, the island was already home to some of Singapore’s most important industrial tenants.
BUSINESS AFLOAT: By 2000, when Prime Minister Goh Chok Tong officially opened the site, a roster of energy and chemical majors had already begun operations on the island, including DuPont, Sumitomo, Chevron, Exxon, Mobil, Celanese, Mitsui and Lonza. In their wake had come operational service firms, including SembCorp, Vopak and Oiltanking Singapore - output from the island was estimated at $13.5 billion (S$23.7 billion) in the preceding year, and thousands of new jobs had been created. A ‘plug and play’ network for feedstock, logistics and utilities meant new business could set up quickly and operate efficiently.
Jurong Island’s planners had created a regional powerhouse – in 2005, the island’s output was estimated at $39.9 billion (S$66.5 billion) , an increase of more than 30 percent over the previous year – in 2006, the Associated Press claimed Jurong Island had “a GDP bigger than some nations.” Five years later, the island’s refineries were processing 1.3 million barrels of crude oil per day, making Singapore the third-largest refiner of oil globally, despite its lack of oil reserves. Development continued apace, and by 2009 the planned reclamation was completed. Business on the island had grown further, and it was now home to facilities run by CIBA, Huntsman, Natural Fuel, Nexsol, Tate & Lyle and a host of other new energy and chemical players
Keen to capitalise on the project’s success and stay ahead of a changing global industry, the government of Singapore has, since official completion of the island, begun planning for further expansion and modernisation. In May 2010, Singapore’s Trade and Industry Minister Lim Hng Kiang announced JIv2.0, a wide-ranging initiative focused on “areas such as system-level energy efficiency solutions” and “new competitive feedstock and logistics options” over the coming 10 to 15 years.
The expansion project was conceived with the help of Singapore’s Economic Development Board (EDB), JTC Corporation, the Maritime Port Authority, the Singapore Land Transport Authority, the Ministry of Environment and Water Resources, the Public Utilities Board and firms based on the island.
SUB-PROJECT PLANNING: Aside from seeking new efficiencies and building existing business, JIv2.0 includes major sub-projects, each linked with existing or planned facilities on the island. One of these, announced by the island’s operator JTC Corporation, is the possible use of tapping wasted ‘cold’ energy from Singapore LNG’s terminal to power a new seawater desalination plant. Another involves Shell Chemicals, which, following the construction of a $3-billion petrochemical complex on the island, announced plans for a new high-purity ethylene oxide plant to start operation in 2013 . Combined with the plug and play nature of the services, this may attract detergent manufacturers and others, helping to generate a new high-purity chemicals hub.
Another project under the JIv2.0 umbrella is the introduction of new feedstock, including coal-based synthetic gas, liquefied petroleum gas and biorenewables. Long-term competitive access to feedstock is considered a priority – ExxonMobil Chemical is currently constructing a 1-million-tonne-per-year flexible-feed cracker and on the island, due for completion at the end of 2012, while Japan-based firm Asahi Kasei is building a 100,000-tonne-per-year solution-styrene butadiene rubber plant, due to go come online gradually between June 2013 and early 2015. German firm LANXESS is following suit, with plans for the world’s largest neodymium polybutadiene rubber plant – it is slated for completion in mid-2015.
In March 2012, JTC announced that 10 projects under JIv2.0, including the construction of a second road bridge to the Singaporean mainland, had been researched with positive results, and that some were “already in the process of being implemented.”
CHEMICALS CENTRE: Though Jurong Island now accounts for a significant portion of Singapore’s manufacturing economy, JIv2.0 also seeks to build on the long-term intellectual value inherent to the chemicals industry. According to one Economic Development Board spokesman, Singapore’s longstanding tradition of intellectual property rights protection has brought growth as a centre for the development and marketing of proprietary chemical products – secure facilities help to protect efforts in research and development.
A green campus, opened on the island in October 2012 by US management consultancy McKinsey & Company, builds on the research-oriented environment in Singapore, offering training in sustainable development and energy efficiency. According to McKinsey, Jurong offers not only a home for the new campus but an example of its principles, using advanced mechanisms to harness wasted energy, while sharing logistics and infrastructure to reduce emissions.
NORTHERN COMPETITION: As JIv2.0 presses forward in its aim to help Singapore become Asia’s premier chemical and refining hub, it will face challenges, not least from rivals in China and the Middle East. As China seeks to grow its own capacity and reduce imports, local production of commodity petrochemicals has been ramped up, leaving Singapore struggling to keep pace. Middle Eastern producers, already benefiting from their own oil and gas reserves, are able to produce commodities at a lower price.
In this competitive environment, Singapore has sought to move up the value chain, meaning JIv2.0 has a particular focus on producing advanced, high-margin chemicals. This leaves the country dependent on imports, and as China become more self-reliant and the traditionally large Western chemicals market slows, Jurong and Singapore’s wider manufacturing sector may find itself squeezed.
Another potential challenge lies with Singapore’s lack of access to renewable energy. With no immediately available hydro or geothermal energy resources, an average wind speed of just 2 metres per second, and a lack of space for solar installations, efficiency is key. JIv2.0 seeks in part to counter this through energy audits, shared systems and industrial recycling, but some commentators have called for changes in subsidies and regulation to slow domestic consumption. Space, ever a consideration in the city-state of Singapore, may present another challenge as Jurong’s importance grows.
JURONG STRONG: Despite the potential pitfalls, Jurong Island will remain a major feature of the regional and international energy and industrial landscapes. As the global economy pivots east, Singapore must rise to new challenges, building on its location and expertise while fending off rivals and mitigating its natural limitations. As Singapore fights for its position, so too must Jurong Island, more firms must be attracted, and diversification sought.
Since its inception, Jurong Island has consistently exceeded expectations – it was completed some 20 years early and became home to a businesses from across the world, before defying the financial downturn and cementing its place at the heart of Singaporean manufacturing. If the Jurong Island version 2.0 expansion plan can help steer a course through the coming years, the future may be just as bright.