Latest News
Singapore: Still the Houston of the east?
Opinions differ on whether a new storage hub in Malaysia will compete with or complement the one in Singapore
The first phase of European trader Trafigura’s 400,000m3 Tanjung Langsat oil storage terminal in Johor has just been completed, global oil trader Vitol is planning its own terminal at Tanjung Bin and Vopak is conducting a feasibility study to develop a storage facility in Pengerang.
These are just a handful of the major projects that have been announced for Malaysia this year.
Other plans for the region include Malaysia's privately held Merapoh Resources, which has signed a MoU for a proposed $10 billion (€6.7 billion) refinery in Yan, Kedah, northern Malaysia; Malaysia's Pristine Oil, which is building tanks to hold up to 1.5 million barrels of oil and Malaysia's Trans-Peninsula Petroleum, which is working on a $7 billion oil pipeline across the northern part of Peninsula Malaysia.
So is Malaysia looking to take the status of Asia’s oil storage hub away from Singapore?
Singapore has no natural resources and is rapidly running out of space, so no one could blame its neighbour for trying. But will it succeed where others have failed?
In early 2004, Thailand tried to challenge Singapore to become a regional energy hub in order to strengthen the country’s energy security and lower domestic oil prices.
It launched its Sri Racha oil centre and introduced generous tax incentives. The Thai government also examined the possibility of cutting a canal through the narrowest part of Kra Isthmus, north of its border with Malaysia, as an alternative shipping route to the Malacca Strait.
The estimated $20 billion project would have shortened the passage from the Indian to the Pacific Ocean by up to 700 nautical miles, but the plan did not received sufficient backing from the Thai leadership.
In response Singapore announced plans to lower corporate income taxes on oil companies that do business in the country by 50%.
So it is unlikely to sit back and let Malaysia muscle in on its position. Total storage capacity in the Singapore oil products hub stands at close to 10 million m3 and demand remains high.
Despite strong competition Singapore is in a strong position to defend its reputation. It has earned its status over the years due to its robust infrastructure, effective processes and refining capabilities that have made the region synonymous with efficiency – something which is not easy to replace overnight.
taken from the Tank Storage magazine website www.tankstoragemag.com
