Distinguished guests,

Ladies and gentlemen,

Good morning.

It gives me great pleasure to officiate at the groundbreaking ceremony of the Jurong Rock Cavern – the first underground rock cavern for the oil and chemicals industry in Singapore and Southeast Asia.

2                    Over the last two decades, Singapore has truly blossomed into a global chemicals hub.  In the mid 1990s, the innovative vision and bold decision to proceed with the reclamation and amalgamation of seven islands to create a 3,200-hectare Jurong Island had laid the foundation for the growth of a highly competitive and robust industry cluster.  This cluster extends from oil to petrochemicals to specialty chemicals.  Collectively, the chemicals cluster has had a compounded annual growth rate of more than 14% over the past 10 years.  Last year, the output from the chemicals cluster grew by over 10% to exceed S$74 billion.  In so doing, the size of the industry is now on par with the output from the electronics cluster, which has long held the position of being Singapore’s largest industry sector in manufacturing.

Growth & Expansion of Singapore’s Chemicals Cluster

3                    2006 has indeed been an exciting year for Singapore’s chemicals cluster, with more than S$2.6 billion in fixed asset investments committed.  The year was marked by several milestone events such as the groundbreaking of Shell’s new ethylene cracker and downstream MEG plant, and Concord Energy’s decision to establish Singapore’s first greenfield refinery in the past 30 years.  2006 was also a year when several new plants on Jurong Island commenced operations, including Sumitomo Chemical’s second Methyl Methacrylate Monomer (MMA) Plant, and Petrochemical Corporation of Singapore’s Metathesis Plant.

4                    These developments which I have highlighted reflects Singapore’s competitive position in this industry, which has allowed us to ride the current industry upturn to capture a series of projects and take Singapore’s chemicals cluster to the next higher level.  As Asia’s demand remains robust, the Economic Development Board is expecting to announce more projects this year.  More importantly, this wave of projects will bring about a significant transformation of the industry over the next 3 to 5 years.  Singapore’s chemicals cluster would have acquired a critical mass and its highly integrated nature will mean that we have high value-added downstream activities.

5                    The Singapore Government is committed to the long-term growth of the chemicals cluster.  With the current strong investment climate, we are mindful that competition for resources and infrastructure will be intense.  If not well managed, costs could spiral out of control and as a result, projects may be delayed or even completely cancelled.  As such, we will do our best in adopting a holistic and multi-faceted approach that will give current and future investors in Singapore the confidence that their projects can be seamlessly and expeditiously implemented in the coming years. 

6                    Several initiatives are being developed to support Jurong Island’s and the chemicals cluster’s rapid expansion.  I would like to take this opportunity to highlight two of them.

7                    The first is in growing our Process Construction and Maintenance industry, sometimes also called the supporting process industry.  Construction of new plants requires a substantial pool of manpower, even though we recognize that this requirement is normally for a temporary period of 2 to 3 years.  As such, the Singapore Government will work towards ensuring that the supporting process industry has access to sufficient manpower resources to cope with the anticipated spike in chemical construction projects over the next few years.  Through this phase of growth, we will also work to upgrade the supporting process industry so that they will be able to provide ongoing support to the chemicals cluster, post construction.  By building up a strong track record in Singapore, these companies in the supporting process industry can venture into the region and beyond. 

8          The second is infrastructure enhancements on Jurong Island, to facilitate the increased throughput of construction workers, equipment and materials to and from mainland.  JTC will be upgrading the capacity of Jurong Island’s checkpoint to accommodate more people during peak hour.

9          While we prepare ourselves to maximise opportunities for growth, we must also be on the lookout for new, bold and innovative ideas to maximise available resources, optimise existing infrastructure and enhance Jurong Island’s competitive advantage.  The Jurong Rock Cavern is a shining example of this spirit and mindset.  

First underground cavern for Singapore’s oil & chemical industries

10        The Singapore Government has decided to spend S$700 million to design and construct Phase 1 of the Jurong Rock Cavern.  Built at subterranean depths beneath the seabed of Banyan Basin in Jurong Island, Phase 1  will  be  commissioned  in 2011 and will offer 1.47 million cubic metres of storage space for liquid hydrocarbons such as crude oil, condensate, naphtha and gasoil.  The Jurong Rock Cavern is able to save an equivalent of at least 60 hectares of surface land.  Such land savings can now be allocated for higher value manufacturing activities. 

11        I am told that both existing and new manufacturers on Jurong Island have expressed keen interest to utilise the Jurong Rock Cavern.  JTC expects Phase 1 to be completely taken up prior to its completion and is already exploring a second phase that could add an additional 1.3 million cubic metres of underground storage.  For both phases, the primary objective of the Jurong Rock Cavern will be to support the operations of Jurong Island manufacturers.  This is no different from the existing business models on Jurong Island whereby manufacturers optimise plant operations and investments by outsourcing non-core activities such as logistics and utilities, to third party service providers.

12        Turning Jurong Rock Cavern into reality took years of hard work, imagination and perseverance by many parties both within and outside the Government.  But it is this spirit of constant innovation and breaking new ground that will ensure that Singapore retains her ability to compete in this fast changing and dynamic competitive environment.

Conclusion

13        The future of Singapore’s chemicals cluster is bright.  The Government will work together with the industry, to capture this continued growth.  Let us also continue to push ahead on new frontiers such as the Jurong Rock Cavern, which are crucial to our future competitiveness.

14        On this note, I would like to take this opportunity to wish the JTC project team and its contractors every success for the smooth execution of the Jurong Rock Cavern project.