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Digitalisation and R&D key for Jurong Island's growth: EDB

Singapore is banking on digitalisation as well as research and development to keep its petrochemical sector relevant for the long haul.

SINGAPORE is banking on digitalisation as well as research and development to keep its petrochemical sector relevant for the long haul.

In an industry transformation map (ITM) for the sector unveiled on Saturday, the government is aiming to have 20 of the largest facilities on Jurong Island digitally-enabled by the end of the decade.

It also hopes to raise business expenditure on research and development (R&D) for specialty chemicals by another S$55 million by 2025, with 20 new or expanded R&D centres.

R&D expenditure for specialty chemicals came in at S$82 million in 2014, and has been growing at an average rate of 8.7 per cent for the 10 years before that, according to the Economic Development Board (EDB).

These are part of a strategy to transform an ageing asset base on Jurong Island, and ensure its growth in the medium and long term, said EDB executive director for energy and chemicals Damian Chan.

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The ITM is expected to lift value-add in the industry to S$12.7 billion by 2025, from S$10.6 billion in 2015.

The number of jobs will also grow by 1,400 by then, from 28,400 in 2015, with more of the sector's headcount filled by locals. Currently, more than 70 per cent of the headcount in the energy and chemicals sector are filled by Singaporeans.

Many of the refineries and chemical plants on Jurong Island have been built in the 1960s-1980s, Mr Chan noted in an interview with The Business Times.

"The key thing is how we can work with the companies in terms of upgrading the assets, going toward... higher value products," he said.

For instance, the International Maritime Organisation (IMO) is introducing from Jan 2020 regulations that cap sulphur limits in marine fuels at 0.5 per cent, from the current 3.5 per cent level. EDB will work with the companies to upgrade the refineries to produce to the necessary specifications, said Mr Chan.

One key thrust is the use of technology to improve productivity of manufacturing plants. The 20 plants that will be digitally-enabled by 2020 will include the three refineries and crackers - the largest plants on Jurong Island which today has more than 100 companies.

These systems will integrate data and apply them for use in areas such as health and safety, predictive maintenance, and production optimisation, among others. The 20 facilities will comprise a "significant base" from which the effort can be widened to the entire sector.

"This is very important for us from various aspects," said Mr Chan. "Digitalisation will help the most when it comes to labour and carbon (constraints)."

Already, some companies have moved ahead with digitalising their plant. Fuel and lubricant additives manufacturer Chevron Oronite last year started a pilot project using Big Data and sensing technology in its Jurong Island plant for personnel tracking and safety purposes, a move that is estimated to save 30,000 man-hours.

Meanwhile, Shell is working with local SME Avetics to deploy drones plant maintenance and inspection, which will result in manpower savings of 25 per cent.

After 2020, the digitalisation effort will move into a second phase: the systems level.

For instance, third-party logistics providers could develop solutions that integrate their customers' operations with supporting systems such as customs clearance and safety inspection. These could optimise berthing time and cut costs for chemical companies.

"These are some of the possibilities which will take time to develop," said Mr Chan, adding that plans for this phase remain at the conceptual stage.

In terms of growth, the government agency continues to look to specialty chemicals, a sub-sector it has been nurturing over the past few years. With these chemicals feeding into over 100-end markets, it has identified five to focus on: lubricant additives, oilfield and water chemicals, consumer care, agricultural chemicals and animal health and nutrition.

R&D activities that EDB wants to capture will be technology areas that are relevant to a majority of these five end-markets, said EDB director of energy and chemicals Cindy Koh. EDB and A*Star have worked together on a joint technology road mapping exercise to identify the scientific and technological needs and gaps of companies.

"For specialty chemicals companies the ability to react fast to demand is quite important," she said. With Singapore playing an important role in the commercialisation of new products, "at least a significant amount of the profits and revenues could justifiably be captured here".

Even within the commodity petrochemical complex, EDB will gun for higher value-added derivatives, for which profit margins tend to be higher.

Meanwhile, the Jurong Island version 2.0 initiative launched in 2010 - which focuses on feedstock options and infrastructure developments to create new competitive advantages for the sector - continues to be relevant, said Mr Chan.

As part of the initiative, EDB in April this year signed an agreement with Keppel Infrastructure to develop, own and operate a facility which will turn coal and refinery by-products into hydrogen, carbon monoxide, syngas and other industrial gases. These will provide alternative feedstocks for petrochemical plants and refineries here.

"We will still continue to push forth on these initiatives," said Mr Chan. "The energy and chemicals industry is a very long cycle industry; it's not like the internet where the whole thing can change within a year."

Asked whether the coal gasification plant represented a step back in Singapore's climate change goals, he replied that it had been taken into consideration when planning for the Republic's commitments for the Paris accord.

"Inevitably (petrochemicals) is an emissions-intensive industry," he said. "But the key thing when it comes to this type of projects, to enable the continued growth and competitiveness of the sector, is to make sure they are efficient and using the best-in-class technologies when it comes to energy efficiency."

In order to mitigate the sector's emissions, Singapore could see more of the new sodium bicarbonate plant that French chemicals group Novacap opened in July, which captures carbon emissions from neighbouring plants for use in the manufacturing process.

"We're talking to a company or companies, so there's still potential for more of such projects," said Mr Chan. "But there is a limit to how many sodium bicarbonate plants we can have on Jurong Island."

A longer term solution will be to make use of carbon capture and utilisation technologies, though these will take time to become commercial. The low hanging fruit in managing carbon emissions would be digitalisation and energy management, he added.

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