Jurong Island: What it takes to achieve a world-class petrochemicals hub

The stellar success of Singapore’s Jurong Island Chemical Hub can be attributed to clever land utilisation, adaptability to volatile markets and adequate attention to safety and security

 Jurong Island Chemical Hub, the pillar of Singapore’s petrochemicals industry, is an embodiment of Singapore’s success. The island is an amalgamation of seven small islands in the western part of Singapore, formed through land reclamation. The process started in 1983 through the combined effort of various government agencies in Singapore, in particular the Economic Development Board and JTC Corporation.

Despite having no feedstock advantage or a substantial domestic market to support the petrochemical production, Jurong Island has persevered through stiff competition and maintained its position as one of the top global petrochemical hubs. Today, Jurong Island Chemical Hub is home to almost 90 international petroleum and chemical companies, and has contributed to investments of over S$47 billion. The Hub manufactures refined & chemical products from integrated petrochemical complexes of oil majors Exxon Mobil and Shell, intermediate products from chemical producers such as Sumitomo & BASF, to automotive chemicals and agro-chemicals, from firms such as Evonik and Solvay.

We look at some of the critical reasons for this success.

1. Effective utilisation of land space

The effective utilisation of land has allowed all these facilities to be built within a relatively small area. There is a large focus on infrastructural support such as common pipeline corridors to make plant-to-plant transfers easier and more cost efficient. The close proximity of the plants allow one company’s output to be used as feedstock for another, thereby reducing logistics costs. Additionally, the presence of third-party providers that handle non-manufacturing services helps reduce costs. The network also offers companies alternative options for product storage, freeing up space to carry out more processing.

2. Adaptability and flexibility

Singapore has been able to adapt to market volatility, allowing the industry to flourish. With the Jurong Island Version 2.0 Initiative announced, the focus expanded from investment attraction to enhancing competitiveness and sustainability through creating robustness, optimization and optionality. Instead of building more refineries, Jurong Island will transform itself to focus on specialty chemicals, which are generally used in the textile, automotive and agriculture sectors. They are higher up the value chain as they serve more unique functions, and in 2015 it was reported that one-third of more than S$6 billion in fixed asset investments over recent years came from specialty chemicals alone.

Some countries have seen some difficulty in attracting specialty chemical investments due to lax intellectual property laws. Singapore has managed to gain investor confidence in this sector due to its intellectual property protection laws, access to skilled labour and research and development capabilities.

Flexibility is important in finding solutions to challenges. Take for example the ongoing development of the Pengerang Integrated Petroleum Complex, a petrochemicals hub in Johor, Malaysia. Although at first glance it might seem to pose a threat, there is also potential for both Singapore and Malaysia to collaborate and mutually benefit, given that land is limited in Singapore.

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