Commentary: Singapore’s oil and gas sector should embrace transition to a green

SINGAPORE: The global energy transition is gaining pace. 

This transition will open new opportunities in emerging growth industries in Singapore and trigger transformation for many sectors.

Value pools will shift, creating economic opportunities for the nation. As an example, the transition from internal combustion engines to electric vehicles (EV) and battery manufacturing is an obvious opportunity. 

Positive steps can already be seen in Hyundai’s recently announced US$400million investment to build an EV manufacturing facility in Singapore, capable of manufacturing 30,000 electric vehicles a year when completed at the end of 2022.

Singapore’s Keppel Corporation, the world’s largest rig-builder, also recently announced that it will be pivoting from its rig business to clean energy.

READ: Commentary: Keppel’s exit of rig business may have bigger implications for Singapore’s offshore and marine sector


However, the oil and gas industry faces significant pressures to transform — with over a century of operational history, and investments in global infrastructure and stock of assets in the trillions of dollars. 

This is an industry with investment lifecycles often stretching over multiple decades. Decisions made now have significant financial impact for many years to come.

In the face of the energy transition, oil and gas companies will need to transform their businesses. 

Singapore makes half the world's top 10 drugs, 70 percent of its oil rigs and is the fifth

Singapore makes half the world’s top 10 drugs, 70 per cent of its oil rigs, and is the fifth biggest source of refined oil. (file photo: AFP/Roslan RAHMAN)

A successful pivot will require decarbonisation of existing assets while leveraging new and emerging technologies.  It will also necessitate investment in new growth, partially financed by the operation of conventional assets. 

Early moves in this arena can be seen by the likes of Shell, BP, and Total all pivoting towards renewable and green energy opportunities.

The industry’s traditional strengths in complex project delivery, deep technical and technology expertise, and operational experience in challenging environments can provide a competitive edge to grow through transition.

For example, with decades of offshore oil and gas development experience, the industry is well-placed to compete in offshore wind power, as evidenced by many oil and gas players investing in this space.

READ: Commentary: Air-conditioning – the unspoken energy guzzler in Singapore

The industry’s technical expertise and legacy gas infrastructure places it in an advantaged position to scale hydrogen as a source of clean energy. 

Oil and gas companies are also well-placed to scale large and complex carbon capture, utilisation, and storage (CCUS) projects, particularly when carbon dioxide can be stored in depleted oil and gas reservoirs.

Equally, it is well-positioned to collaborate and innovative across sectors on alternative low-carbon fuels for transport and adjacent technologies with the industry’s deep understanding and application of new technologies.

READ: Commentary: Making pledges was the easy part but it’s a long road to net-zero emissions


In the long-run, oil and gas companies need to embrace a multi-technology approach for a successful transition.

As they move towards low-carbon technologies, there will be a shift in the types of skills and capabilities the industry needs.

Fortunately, oil and gas is an industry with a legacy of attracting deep technical expertise and talent. 

Harsh and remote environments have required remarkable engineering prowess to access, develop, and process oil and gas resources, such as deep-water developments in waters up to 3km deep.

Oil tankers are anchored off the western shores of Singapore, where tycoon O.K. Lim built up his oil

Oil tankers are anchored off the western shores of Singapore. (Photo: AFP/Roslan Rahman)

While the energy transition drives a shift away from oil and gas, it also represents opportunities for expert industry talent. These skilled professionals can be redeployed in adjacent high-growth sectors such as low-carbon energies.

As an example, advanced technical talent will be valuable in areas such as hydrogen production. 

READ: Commentary: The world is hungry for green cooling solutions. Thankfully, Singapore is pioneering them

Here there is a need to overcome technical challenges to economically produce, store, and safely transport hydrogen to meet long-term demand. 

Advanced mechanical, electrical, chemical, process, and instrument engineers from oil and gas represent existing talent with the skills that can be retrained and redeployed into building and operating the infrastructure required for a future hydrogen economy.

READ: Commentary: Making pledges was the easy part but it’s a long road to net-zero emissions

READ: Commentary: Electric vehicles in Singapore – how much is just hype?

Redeploying oil and gas professionals to engage their skills in the emerging green economy addresses both the short-term need for talent in sustainable technologies and the long-term challenges of changing workforce demand in this key regional industry.

As an example, Shell has partnered with the Singapore Shell Employees’ Union (SSEU) to set up a council focussed on retraining and upskilling employees for future roles as the company transitions its core business to be net-zero by 2050, aiming to cut its emissions in Singapore by around a third by 2030.

More broadly, creating a sustainable landscape of long-term talent will require an end-to-end approach. 

This begins with childhood education to increase awareness of environmental responsibilities and develop the foundations to actively address them as career opportunities in future years.

Such an educational foundation will enable local industry to scale and embrace the necessary technologies as part of this energy transition while providing the backbone to design novel solutions that empower us to achieve Singapore’s green transition ambitions.

Managing a jobs transition while balancing needs for existing industry talent against new technology talent will be critical. 

This period of transformation will also create challenges for profitability, as investments required for long-term growth that reflect the energy transition could negatively impact short-term profitability.


Government will play a crucial role in leading a successful transition. Cross-sector as well as sector-specific policies will be needed to drive effective change.

Gas flares from an ExxonMobil oil refinery in Singapore

FILE PHOTO: Gas flares from an ExxonMobil oil refinery in Singapore, February 26, 2019. (Photo: REUTERS/Edgar Su)

Policies which help shape and steer the behaviour of businesses and consumers towards greener products and services will also be an important enabler. Recent enhancements to Singapore’s Energy Conservation Act are valuable steps along this journey.

Mandatory energy management practices introduced in 2013 ensure companies must monitor, manage, and mitigate energy loss and greenhouse gas (GHG) emissions, saving 250 kilo-tonnes of carbon dioxide equivalent (tCO2e) from 2014 to 2018.

Recently introduced enhancements set more stringent efficiency requirements for water-cooled chilled water systems in industrial facilities, a system which accounts for around 16 per cent of electricity consumed in these facilities.

On Monday (Feb 1), Minister for Sustainability and the Environment Grace Fu revealed in parliament that Singapore will launch a Green Plan that would be a major policy priority for the government in the coming years, with more details shared by Deputy Prime Minister Heng Swee Keat during his Budget speech on Feb 16. 

Therefore, the government remains an important catalyst to enable markets to deliver on this transition. Pricing carbon and other externalities into investment and purchasing decisions is one-way governments can do this.

READ: Commentary: Is there a fairer way to help emerging markets decarbonise?

READ: Commentary: Making pledges was the easy part but it’s a long road to net-zero emissions

Carbon pricing is expected to grow in importance over the coming decade, as sustainability considerations inform purchasing decisions, investments, and potential pricing measures.

This will not only help signal the economy to deepen investment in low-carbon sectors but offer a framework that could be applied across the region.

Today, carbon taxes in Singapore – applied only to high-emissions companies with GHG emissions over 2,000 tCO2e annually and priced at S$5 per tonne of emissions – are largely a mechanism to signal the path of travel for the future.

Based on current estimates and experience from other countries, carbon pricing will need to gradually rise to a range of US$50 to US$80 to spur investments into emerging low-carbon technologies needed for a comprehensive climate transition. 

Countries in the European Union, such as France, Norway and Finland, are now pricing carbon in the US$40 to US$70 range.


In the longer term, Singapore is well-positioned to help establish a viable carbon offset trading market for the region.

Grace Fu at Asian Clean Energy Summit

Minister for Sustainability and the Environment Grace Fu speaking at the Asia Clean Energy Summit on Oct 27, 2020 as part of the Singapore International Energy Week 2020. (Photo: dmg events Asia Pacific and Sustainable Energy Association of Singapore)

Singapore is in a unique place when it comes to this global energy transition. Its own carbon emissions are relatively inconsequential at just 0.1 per cent of global emissions, yet its reputation as a respected global partner offers an opportunity to steer regional and global cooperation.

The nation’s success as a global finance hub offers a valuable pathway to regional investment. 

The Boston Consulting Group estimates that in Southeast Asia, up to 70 per cent of a 2 degrees Celsius path can be achieved with positive economic returns to the region at an investment rate of about 2 per cent of regional GDP into sectors such as energy, transport and infrastructure. 

READ: Commentary: Besides talking about responsibility, global collective climate action should also be a focus

Financing from private and public sector sources will need to be mobilised to achieve this transformation. Singapore could be a pivotal partner in attracting, informing, and facilitating required investments.

These investments could include a shared commitment to promising new technologies and building collaborative regional opportunities. It could include establishing market conditions to scale climate transition financing, with Singapore as a hub facilitating and encouraging green investment.

The Monetary Authority of Singapore (MAS) recently introduced environmental risk management guidelines for banks, building environmental concerns into future investment and operational decisions. 

The MAS has also announced it will invest US$2 billion in green investment funds in order to drive positive climate action. These are by no means exhaustive examples of climate-focused investment in Singapore.   

If Singapore is to build an effective low-carbon future, we must invest in the skills, and the opportunities, together. That is the path to ensuring a more climate-positive future for the nation, and its economy.

Listen to Pulitzer prize-winning author Dan Yergin reveal China’s calculations with going green and embracing electric vehicles on The Climate Conversations podcast:

Dave Sivaprasad is a Managing Director & Partner and SEA leader for Climate Action at Boston Consulting Group.

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