Mr. Brian Wilson, UK Minister of State for Energy and Construction

Your Excellency Sir Stephen Brown

Ladies and Gentlemen

I am delighted to join all of you this morning for the Singapore-British Business Council’s "Energy Forum on Technology Applications and Business Networking".

The Energy industry faces several challenges. Technology, globalisation, market liberalisation and environmental protection are but some phenomena which impact its development. Industry structure has changed through mergers and acquisitions. The California energy crisis and the collapse of energy giant Enron have shown the challenges of energy regulation and need for stringent corporate governance and auditing.

At the same time, new opportunities are being created. Traditional oil majors are moving towards the concept of sustainable development in their business strategy and enterprises are investing in technology to provide clean fuels. Gas is increasingly favoured as a result of its cleaner image and better heating efficiency. Extensive research funds are being built up in the area of alternative energy. Opportunities have also opened up for R&D in materials, technology development for fuel cells and energy-related technologies.

ASEAN member countries are working towards a trans-ASEAN energy network for gas and electricity. In July this year, the Energy Ministers signed an MoU on the Trans-ASEAN Gas Pipeline (TAGP). It is projected that ASEAN’s energy requirements would reach nearly 400 million tones of oil equivalent (mtoe) by 2020. Natural gas can be expected to meet 18% of total ASEAN energy requirements by then. The TAGP would be the key to realizing this shift in fuel dependence. The Singapore-West Natuna pipeline and the Singapore-Grissik pipeline to bring in Asamera gas, will help us integrate into the ASEAN gas grid.

Singapore is adopting a 3-pronged response to these challenges and opportunities.

Today Singapore is the 3^rd largest oil-refining and trading centre in the world. We shall strengthen this existing base of industries by supporting their upgrading of assets, and encouraging industry integration. The EDB will continue to work with the refinery industry to deliver advanced technologies that can increase energy efficiency and improve environmental performance. It is also important to keep on pushing the frontiers of the industry, and anchor knowledge-intensive services to complement their large base of manufacturing activities.

As a result of the volume of oil trading and transaction of goods, services and data flowing through Singapore daily, Singapore can also be a natural choice for e-business, supply chain management, and management of information systems.

We believe that technology and innovation will uncover creative solutions for an efficient and sustainable energy system, and open the doors to new businesses. The Singapore government has stepped up efforts to promote more R&D and test-bedding activities in cleaner fuels and alternative energy sources.

To achieve these objectives, we shall firstly, build core capabilities and intellectual capital stock in fuel cell technology, and create the framework for a sustainable hydrogen economy; secondly, offer test-bedding opportunities to create first-mover’s advantage; and thirdly, promote the manufacturing of fuel cell systems and materials. SINERGY, or Singapore Initiative in New Energy Technology, serves as a collaboration platform to fund R&D and test-bedding activities in clean energy technology.

The liberalisation of the electricity and gas markets in Asia is a major development trend. Singapore has itself embarked on a programme to liberalise its electricity market in order to ensure long-term diversity, reliability and security of its energy supply at competitive prices. In 1995, the Government corporatised the vertically-integrated state-owned Public Utilities Board to form Singapore Power Ltd (SP). In year 2000 SP was broken up to separate ownership over the generation, the transmission and distribution, and the retail parts of the industry.

The transmission and distribution network is a natural monopoly and remains tightly regulated. The generation business is however fully open to competition. There are now three big Government-owned generation companies (namely Seraya, Senoko and Tuas). The Government plans to divest them when market conditions are favourable. There are also smaller Independent Power Producers. Retail will also be fully open to competition by 2003. Currently, there are a total of seven electricity retailers competing for large consumers.

Energy service companies (ESCOs) can play a useful role in companies improve energy efficiency and optimization. They can also provide assistance in areas like risk management, procurement of utilities, facility and energy management etc. Similarly, service providers who can provide power quality solutions, co- or tri-generation or multi-utilities management will be welcomed. Such multi-utility service providers can customise service solutions to large users of electricity, chilled water and steam.

We welcome British companies and research entities to form partnerships with their Singapore counterparts to create value for their businesses. Equipment and service companies are strongly encouraged to use Singapore as production base, as well as their regional headquarters to manage and co-ordinate their operations in the region.

I wish all the participants a highly successful Forum today, and a fruitful plenary meeting of the Singapore-British Business Council tomorrow.

Thank you.

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