A pioneering investor in Singapore

Oil and gas major is here for the long run, as it sees growth in the region

FROM its first days as a small trading company selling kerosene and lubricants in 1893, ExxonMobil has grown its presence in Singapore significantly in tandem with the nation. But even with an already-large footprint in the form of the world's largest integrated refinery and petrochemical complex and its regional headquarters for Asia-Pacific in the chemicals and downstream businesses here, the oil and gas major continues to invest more money in Singapore - a testament to its confidence in the city-state.

The group in 2013 started up its expanded multi-billion-dollar petrochemical complex on Jurong Island, its largest investment here and also Singapore's biggest manufacturing investment ever.

Since then, it has also revealed plans to add more downstream facilities to the complex: a halobutyl rubber plant and hydrocarbon resins plant that will both be the largest of their kind in the world. It is building a third cogeneration plant in Singapore as well, to further enhance energy efficiency in its operations.

These investments make ExxonMobil one of the largest investors into Singapore, with over US$15 billion in assets. The group also hires more than 3,300 employees across its corporate offices and its integrated manufacturing complex, up from less than 100 staff when Singapore became independent.

Business operations aside, the oil and gas major has also contributed to the Singapore community in many ways. For example, it has been organising mobile blood donation drives since 1999 to encourage both employees and the public to give blood, and has, since 2003, been recognised as the top corporate donor by the Singapore Red Cross and Health Sciences Authority.

ExxonMobil is also one of the sponsors of the new Lee Kong Chian Natural History Museum, a partnership that evolved from its tie-up with what was previously known as Raffles Museum of Biodiversity Research.

For ExxonMobil Asia Pacific's chairman and managing director Gan Seow Kee, being in Singapore has brought the group tremendous benefits. "Just being in Singapore is an advantage because Singapore is in the middle of the Asia-Pacific region, and this is the region that has got the highest growth rate in terms of energy and petrochemical demand," says Mr Gan.

"There's a rapidly expanding middle class in the Asia-Pacific region which translates to demand for appliances, cars and all the things that go with a higher standard of living. Being right here has allowed us to grow with the region."

When ExxonMobil first invested in refineries in Singapore (as Esso and Mobil separately) in the few years after Singapore's independence in 1965, the country's founders were then promoting foreign investments and free trade - not a politically fashionable concept at that time, Mr Gan notes. "That set the stage for companies like ExxonMobil to come here to invest and grow with the country."

Fast forward 50 years, and Singapore continues to be "very well-placed". The city-state's rigorous education system is critical for ExxonMobil's knowledge-intensive business; the strong protection of intellectual property here has also enabled ExxonMobil to invest in proprietary technology in its plants.

"Just setting the stage for the environment to be positive for businesses to operate and to grow here is something that we can't take for granted because that doesn't exist everywhere in the world," says Mr Gan. "The long-term orientation of the Singapore government has been very helpful for us. We, too, take a long-term approach when we make our investment decisions."

But while being in the midst of a thriving Asia-Pacific region would certainly provide many opportunities for the group, the cost of doing business in Singapore - including energy costs - continues to be a challenge that ExxonMobil is constantly working on.

Already, the new petrochemical complex is the most energy-efficient plant that ExxonMobil has in the world. "Given the kinds of standards and technology that ExxonMobil deploys all over the world, it really says something about what we're doing here," says Mr Gan.

Energy efficiency initiatives that the group has introduced over the past 12 years has reduced its consumption of energy, equivalent to taking 290,000 cars off the road in Singapore.

After its third cogeneration plant starts operations, the group will be self-sufficient in its electricity needs. "Other than being energy-efficient, cogeneration generates steam at the same time, which is another big energy consumer in the refinery complex."

Some of the petrochemicals that ExxonMobil produces also help to reduce global energy consumption, as they go into making products that are more durable, recyclable and lighter, says Mr Gan.

ExxonMobil hires mainly Singaporeans and permanent residents, who make up 90 per cent of its total workforce here. When asked about the manpower shortage that has affected many other businesses here, Mr Gan's response was that it has some impact on the company, mainly on its construction and maintenance projects. However, he notes, more importantly, ExxonMobil supports the government's push towards higher productivity in the sector.

The energy and chemicals industry in Singapore has been involved in discussions relating to productivity in the process, construction and maintenance sector which supports the industry. A committee made up of representatives from major plant owners, contractors and government agencies was started in 2013 to discuss ways to improve productivity in the sector.

ExxonMobil has management representatives in the committee, and has also been leading some of the discussions. It has also implemented new initiatives to support productivity. "We've worked with various government agencies on training and certification programmes for foreign workers, so that they become more skilled."

"We do it on an industry basis so that when the contract work for ExxonMobil finishes, because they are trained and certified, they can then go on to other projects with other companies in Singapore," Mr Gan says. "With higher productivity, you need fewer numbers and you can afford to pay higher wages." The shortage of foreign labour is but one of many challenges ExxonMobil will face as it expands its business. But "we do what we can within our control to manage that".

Looking back at Singapore's journey, Mr Gan who, at nine years old, watched the proclamation of Singapore's separation from Malaysia on television, recalls "getting the sense that something momentous has changed". "I'm optimistic about the outlook for Singapore, because we are going to be building from a much stronger base than we had 50 years ago."

There will be challenges, of course. A key one will be for Singapore, in Mr Gan's view, to balance between growing the economy and maintaining its competitive edge - which will lead to a higher standard of living - while meeting the different aspirations of society and allowing every Singaporean to develop to his or her full potential.

ExxonMobil remains optimistic on its outlook for doing business in the city-state. Says Mr Gan: "With low oil prices, some may think it's doom and gloom, but we're in the midst of many exciting projects in Singapore. We see that there will be growth in the region and we are here for the long run."

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes