Singapore will see an even higher percentage of the world’s crude oil pass its coastline over the next couple of decades as the center of global energy demand shifts toward Asia from the U.S.
October 3, 2013 Leave a comment
Oct 2, 2013
Singapore Will Be Seeing Lots More Oil Traffic
By Eric Yep
Already one of the most important transit points in the global energy trade, Singapore will see an even higher percentage of the world’s crude oil pass its coastline over the next couple of decades as the center of global energy demand shifts toward Asia from the U.S. The narrow sea lane that runs through the straits of Malacca and Singapore is expected to carry as much as 45% of global crude trade by 2035, according to the International Energy Agency. That amounts to 16.5 million barrels a day, up from 12 million barrels a day in 2012, when a little over a third of globally traded crude was routed past the city-state, the Paris-based organization said in its “Southeast Asia Energy Outlook.”Part of oil’s pivot to Asia is the result of a reduced reliance on imports in the U.S., the world’s largest oil consumer, as a result of a boom in oil and gas production over the past few years using hydraulic fracturing.
This means more supplies are being diverted to Asian markets including China, the world’s No. 1 energy consumer–and the No. 2 oil consumer.
That puts Singapore in the sweet spot of this trade flow.
“The Malacca and Singapore straits constitute one of the most important waterways in the world,” with more than 60,000 vessels a year sailing the 800-kilometer stretch along the coasts of Malaysia, Indonesia and Singapore, the IEA says.
The sea lane is only three kilometers across at its narrowest, carries 25%-40% of everything traded globally. It connects the Indian Ocean to the South China Sea and Pacific Ocean and is the “shortest sea route between major oil and gas producers in the Persian Gulf and the fast-growing Asia-Pacific market,” says the agency, which represents 28 developed, energy-consuming member countries.
Alternatives to this critical “choke point,” such as pipelines and new shipping routes, have made little progress so far, it says.
Singapore has boosted its naval strength to keep the route safe from pirates, a traditional scourge of the shipping industry, as part of efforts to ensure its continued economic growth.
The city-state’s ports and refineries face challenges from upcoming trade centers, including Malaysia and Shanghai, as they try to duplicate its business model and trump its key weakness–a lack of land mass for expansion. So far the “little red dot” is holding its own.
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