By Cheang Chee Yew
Many government leaders recently met in Singapore to bid farewell to the republic’s first Prime Minister Lee Kuan Yew, who died March 23 at age 91, bringing to a close a chapter in the country’s history, including the establishment of the island-state as a key oil and gas hub in the region, albeit one without hydrocarbon resources.
How was this achieved? Singapore, under Lee, found the answer in foreign investments, something which remains relevant today as many Asia Pacific countries continue to seek external funds and expertise to develop their industry.
Brunei’s Sultan Hassanal Bolkiah acknowledged the significance of foreign investment in his country’s development. He noted that “the nation will benefit in the long term if it continues to be open to foreign expertise. This will help the country establish its business culture and environment faster, based on international best practice.”
Lee’s tapping of foreign investments in developing Singapore’s economy was ahead of the times, especially in a post-colonial world where fervent nationalism led many newly independent states to reject such a policy. Running against the conventional wisdom, Lee invited multinational companies (MNC) to invest in Singapore after gaining self-government from Britain in 1959. This resulted in an inflow of foreign investments and the establishment of the island as a major refining center in Asia.
Lee “crafted the key policies to attract MNCs to Singapore and create jobs for Singaporeans. He would personally meet and exchange ideas with CEOs of leading MNCs to learn how Singapore could help them to do better with their investments here,” Lee Boon Yang, chairman of Keppel Corp. Ltd. – parent company of rig builder Keppel FELS Ltd. – said in his tribute to the former Singapore premier.
Today, Singapore is a major oil refining center in Asia and companies like Chevron Corp., Exxon Mobil Corp., PetroChina Co. Ltd. and Royal Dutch Shell plc. are stakeholders in the island’s refineries, which can process around 1.3 million barrels of crude oil per day. In addition, Shell and ExxonMobil operate huge petrochemical complexes in Singapore.
Shell acknowledged the vital role Lee had played in fostering a business-friendly environment in Singapore.
“Royal Dutch Shell owes our success in Singapore to the many years of prosperity Mr. Lee helped to nurture,” company’s CEO Ben van Beurden said in his condolence message to Lee’s son Prime Minister Lee Hsien Loong. The European major added that “Lee’s pro-business policies have built the foundation for many global companies, like Shell, to have the faith to continue investing” in Singpaore.
The existence of a conducive business environment also enabled Singapore to attract a range of global upstream petroleum services firms to base their operations there in support of exploration and production projects in the region. Oilfield services firms like Cameron International, Halliburton Co. and FMC Technologies Inc. have operations in Singapore, while offshore services providers such as Swire Pacific Offshore Pte Ltd. and geoscience company CGG are also present in the Southeast Asian state.
Indonesia’s President Joko Widodo, who was amongst the government leaders that attended Lee’s funeral service in Singapore, hopes to rebuild foreign investors’ confidence in the country’s shrinking oil and gas sector. The task is fairly urgent as the former member of the Organization of Petroleum Exporting Countries (OPEC) tries to boost oil and gas exploration and production to cope with declining output at its mature fields and rising domestic energy demand.
Further south in New Zealand, the government led by John Key continues with efforts to enhance the country’s appeal as a destination for foreign oil and gas investments. The country recently launched Block Offer 2015, an annual tender for companies to bid for exploration blocks which was introduced by the government in 2012.
“It is clear that companies are seeking frontier acreage and long-term opportunities like those which New Zealand has to offer, and this government remains committed to attracting major international companies to invest in exploration and development in this country,” Energy and Resources Minister Simon Bridges said in a March 30 press release.
The tender process in New Zealand seems to be working and the government awarded in December 2014 exploration permits under the Block Offer 2014 to major industry players such as Chevron, Norway’s Statoil ASA and India’s ONGC Videsh Ltd.
The current government in New Zealand is placing greater attention on the petroleum industry as it has increased in its contribution to the economy in recent years. Oil sales – which was the country’s fourth largest export – generated $1.45 billion or NZD 1.7 billion in 2013, while the industry provided employment for more than 7,000 people who earned twice the average New Zealand salary and contributed around $680.89 million (NZD 800 million) in royalties and taxes.