Singapore’s Energy Policy in the Indo-Pacific Region



Singapore lies at the heart of the modern energy world.

It is the central point of the energy world where hydrocarbon resources migrate from the Indian Ocean to the Pacific Ocean.



1. The geopolitical situation of the city state of Singapore also means that the city state needs a sophisticated energy policy to thrive in a geopolitically unstable world


Singapore was once a colony of the British Empire and has inherited many of its legal traditions and structures from the British Empire. Nevertheless, due to its geographical location, Singapore also has strong ties to other East Asian countries. Chinese culture in particular has shaped Singaporean society, as a large portion of the city-state’s population has cultural and ethnic ties to Chinese civilization and culture. 

Singapore’s unique location has shaped the cultural mix that prevails in the city-state, as Indian, Southeast Asian, Malay and East Asian cultural elements can be found in Singapore. This may have had an impact on the development of Singaporean English. Singapore is directly connected to one of the world’s busiest waterways, sitting comfortably on the southern edge of the Malay peninsula, by the Strait of Malacca.

This particular location has historically led to some confrontations. Singapore withdrew from the Federation of Malaysia after conflicts. This may have led Singapore to focus even more on maritime trade and, because of its size, to find new ways to satisfy its hunger for energy.

This is because Singapore’s biggest problem is the city’s population density and the size of Singapore itself. Therefore, it is very difficult for Singapore to steer its energy policy in any desired direction. This may be one reason why it is difficult to use biomass for energy production. The use of solar energy and wind energy may be difficult in some parts of the urban area due to population density. However, Singapore’s equatorial location should make it ideal for generating energy from solar radiation, especially since seasonal fluctuations hardly play a role.


2. Singapore’s geostrategic location makes it a player in the trade of energy commodities. It also makes Singapore dependent on the leading maritime power in the Indian Ocean and the Pacific.


So Singapore has few options to provide energy to its own population if we focus only on domestic energy availability. So far Singapore has decided to use oil supplies for energy production via the sea routes and due to the favourable location at the Strait of Malacca. But because up to 85% of Singapore’s energy supply depends on the oil industry, the independence of the city state’s energy supply is not guaranteed in the long term.

We have already discussed the consequences of peak oil in more detail and why highly modernised countries in particular have to accept cuts in their local energy supply. Only recently Singapore decided to expand its energy supply and to switch to LNG supplies from the Middle East, receiving natural gas from Qatar. The main problem, however, is Singapore’s geopolitical dependence on the countries of the Middle East.

This dependence can now become Singapore’s undoing, emerging from the geopolitical distortions and energy market turbulances in the Middle East, while attempting to develop its own domestic energy policy independent of the turmoil of distant countries, because the majority of the oil supplies flowing to Singapore come from the Gulf States. Singapore is particularly affected by such distortions because the main strength of the state is its international, global trade in goods and services. Nevertheless, Singapore has profited from this.

The bottleneck, the Strait of Malacca, is a blessing for Singapore’s financial survival, but the powerful states of East Asia are also all in one way or another dependent on oil supplies from the Middle East, especially China, which represents another energy policy pole for Singapore. Singapore’s prosperity therefore depends to a large extent on its core competence, namely to keep the Strait of Malacca and the adjacent oceans, i.e. the Indian Ocean and the Pacific Ocean, open to world trade. It is precisely the opening of the Asian continent to free trade, the strengthening of China, that has made Singapore a centre of global trade. 

Singapore’s prosperity is fed by the free trade of goods across the world’s oceans. Singapore therefore relies on a level of security that only the United States can currently provide. Other countries in Southeast Asia face this problem to a lesser degree. Indonesia can pursue a relatively independent energy policy thanks to its domestic hydrocarbon reserves. Other countries in the Western Pacific seem to face the same problem, but in reality they have other options. New Zealand can draw on its considerable renewable energy sources. Unlike New Zealand, Singapore is confined between powerful neighbors.


3. Singapore’s enormous international trade in energy was due to the enormous economic growth of the East Asian countries, especially China.


We have already mentioned that economic growth is accompanied by increasing energy consumption. One could say that Singapore’s economic growth would not have been possible without the economic growth of the People’s Republic of China. China’s economic growth would not have been possible without the increasing energy supplies from the Middle East that are brought to China through the Strait of Malacca. The Strait of Malacca is in fact the link of international energy trade between the Indian Ocean and the Pacific Ocean.

We can spin this idea further. We could say that the Russian Federation has increased its energy deliveries to the People’s Republic of China. Until now, these volumes were in no way comparable to the supplies sent through the Strait of Malacca. Energy deliveries from the Strait of Malacca exceed Russian oil deliveries many times over. The same is true for natural gas deliveries.

Only recently have natural gas deliveries from Russia to China risen through the Power of Siberia natural gas pipeline. However, it will take years for China to purchase enough oil and gas from various supplier countries to avoid the continued dominance of the Strait of Malacca over energy transits in this region. Singapore has certainly benefited from the role that the Strait of Malacca plays in international energy trade.


4. Singapore will reach the limits of growth in the international energy business if China succeeds in establishing alternative trade routes to the Strait of Malacca.


China will most likely complete the new port in Gwadar, Baluchistan, which will then be able to transmit large amounts of energy through Pakistan to Xingang. These energy supplies will support China’s huge expansion plans in its own western provinces, which will help secure China’s borders.

The future reduction in energy volumes will certainly impact Singapore as a trans-shipment hub for oil and gas. Trade with the eastern provinces of the People’s Republic of China will continue to flourish because energy delivered by sea will remain a competitive option for Chinese oil importers. Singapore will therefore reach the limits of its trade volume at some point in the future. That said, the transshipment and distribution of energy commodities has rarely been Singapore’s weak point.

Rather, it has almost always been the availability of land to build energy facilities that has put Singapore in a position where it was itself dependent on energy suppliers from abroad. That is Singapore’s main security risk. In order to ensure the continuous supply of energy over enormous geographical distances, Singapore needed a protective power that, with its own independance from the Federation of Malaysia, had become the United States.

The fact that Singapore has no energy resources of its own and has a growing population in a very small geographical area means it is crucial for Singapore to expand its LNG supplies in order to become less dependent on just one raw material, oil. But the diversification away from petroleum is an important trend in East Asia in general.

Whereby, however, Singapore differs significantly from the other major cities in East Asia. The Singaporean government is particularly interested in improving the energy efficiency of buildings through energy-saving devices, as Singapore seeks to minimize the need for imported energy. This can be achieved through measures that help reduce the energy consumption of homes.


5. Singapore had been considering the civilian use of nuclear energy because of its own energy problems. Singapore ultimately decided against it.


Due to the geographical limitations of the city-state, much consideration was also given to the civilian use of nuclear energy, which offers the advantage of supplying Singapore with sufficient energy to cover its own electricity needs. However, there was also enormous resistance to nuclear power due to the fact that Singapore is too densely populated and has little space to build a nuclear power plant.

Certainly, Singapore would be in some way dependent on uranium supplies from Australia. On the other hand, nuclear energy actually expands the availability of energy from various energy sources and creates more flexibility in the power supply. However, the real reason why Singapore ultimately decided against using nuclear energy was, in my opinion, quite different.


6. For Singapore, the question of military and civilian use of nuclear energy is a central issue. This goes far beyond pure energy issues.


The geopolitical situation in East Asia and Southeast Asia is currently very tense. Let us take a look back at the history of the city-state. Great Britain was once the protecting power of Singapore, and basically founded the city-state. At that time, Singapore was rather backward, and miles away from the current centers of global power.

However, this changed due to growing global trade and the importance of rubber, later by the exchange of goods between Europe, India and China, Singapore became increasingly important. The Japanese invasion showed how important Singapore’s position along the Strait of Malacca really is. It quickly became clear that Singapore was the gateway to the Indian Ocean for the Japanese.

It is also not surprising that Singapore gained more prestige in the following years and left the Federation of Malaysia, because Singapore was able to conduct its own economic and energy policy, particularily when it came to the international exchange of goods. But with the departure of the British, and the Japanese’s entertaining supremacy in the Indo-Pacific region, and the steady disintegration of the British Empire, it quickly became clear that Singapore, like Australia, had to seek a new protector.

This was essential to maintain the flow of goods and to secure the prosperity and supply of the city-state. It was a fundamental strategic reorientation for Singapore to untie the knot with the British, and to commit to the Americans.

Due to the fact that the United States had already been in the process of gaining greater influence in the Indo-Pacific region, and the Japanese had been defeated in the Second World War, the United States took on the protective role after the British had withdrawn.  Although the British maintained their own naval base in Singapore until 1958, the United States was the real naval power in the Pacific.

With the rise of China in recent decades, the geopolitical situation is changing and becoming more complex. China wants to secure the sea routes to the Indian Ocean out of its own interest, and for this to happen China must exercise a certain degree of control over the Indo-Pacific region. Singapore is the central chokepoint in this geographical area.

It is difficult for Singapore to strike a good balance between a global military power like the U.S., which guarantees trade in goods and energy, and a major Asian power like China, on whose economic growth Singapore depends to secure its prosperity. Ultimately, this also explains why Singapore performs a diplomatic balancing act on the issue of civilian and military use of nuclear energy in order to assert its geopolitical interests.

That this does not always succeed is clear, but Singapore sees itself as a regional power in between formidable global powers, quite similar to Venice in Italy. Not surprisingly, the meeting on nuclear disarmament of North Korea, attended by the heads of state of the United States and North Korea, took place in Singapore.


07. New world powers will emerge. This will require even more diplomatic skill from Singapore.


More and more powers are claiming the lifelines of global maritime trade and trade in energy commodities. This has implications for Singapore. India now has a functioning Navy that is very powerful, but is more active in the Indian Ocean. These entanglements lead to a situation where energy issues can become a problem for Singapore as a whole because of its geostrategic importance. One last option would be stronger cooperation with neighbouring countries, especially Indonesia, which, unlike Singapore, has its own natural gas reserves. However, this requires a fine-tuned and targeted cooperation at various levels, and energy policy is just one area.


References:


The Diplomat, The Trouble with Indonesia-Singapore Relations, 2015, https://thediplomat.com/2015/10/the-trouble-with-indonesia-singapore-relations/

OilPrice.Com, Russia’s Huge Natural Gas Pipeline To China Nearly Complete, 2018, https://oilprice.com/Latest-Energy-News/World-News/Russias-Huge-Natural-Gas-Pipeline-To-China-Nearly-Complete.html


Many thanks for the shared interest in the energy world!



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